Elon Musk has sold $3.95 billion worth of Tesla stock since buying Twitter late last month.
Musk’s Tesla stock sales, totaling 19.5 million shares, have been widely anticipated since the Tesla CEO struck a deal to buy Twitter for $44 billion. Musk had sold blocks of Tesla shares worth a total of $15.4 billion earlier this year since announcing his deal to buy Twitter.
Twitter confirmed that Musk bought the social media company on October 27, but he waited until November 4 to start selling additional shares of Tesla. It also sold blocks of Tesla shares on Monday and Tuesday of this week, according to documents filed with the Securities and Exchange Commission late Tuesday evening.
It’s unclear whether the money Musk raised was used to buy Twitter or to support Twitter’s losses since he took over.
Musk revealed last week that Twitter had experienced a “massive drop in revenue” as a growing number of advertisers suspended spending on the platform following its takeover of the company. He blamed “activist groups” pressuring advertisers for the loss of advertising dollars.
Twitter lost $270 million in the quarter ending June 30, long before Musk took over and advertisers started fleeing. It had just $2.7 billion in cash on its balance sheet as of June 30. He announced plans to charge users $8 a month for having verified accounts, and also announced deep staff cuts.
Musk’s two-week ownership of Twitter was a “debacle of epic proportions,” said Dan Ives, technology analyst at Wedbush Securities. While it’s possible that money from Musk’s sale of Twitter sales over the past two weeks was used to repay short-term funding used to close the Twitter deal, it can’t be ruled out that he was necessitated by big losses at Twitter.
“The more he gets into Twitter, the more it becomes a quicksand type deal,” Ives said.
Now is not the best time to sell Tesla shares, which have lost 46% of their value so far this year due to disappointing sales caused by supply chain issues. Musk has received an average price of $202.52 for the Tesla shares he has sold since the Twitter deal was struck, which is down 10% since he made his deal to buy Twitter.
Shares of Tesla (TSLA) fell 1.5% in premarket trading on Wednesday.
The company faces increasing competition in the electric vehicle market from established automakers such as Volkswagen, Ford and General Motors. And some investors have expressed concern that Musk will be too distracted by his Twitter purchase to pay enough attention to Tesla’s troubles.
“Tesla investors are exacerbated by this endless Twitter albatross,” Ives said. “Musk needs to look in the mirror and end this constant Twitter merry-go-round of Tesla history by focusing on the Tesla golden child who needs his time more than ever.”
These three most recent blocks of Tesla stock sales represent just 4% of the shares Musk owns directly through a trust, and less than 3% of his holdings if the options he has to buy shares extras are included.
Musk agreed to buy Twitter (TWTR) in April, shortly after filings showed he had purchased 73 million shares, or a roughly 9% stake, for $2.6 billion. The purchases made him the largest shareholder in the company.
Shortly after the deal was announced, he revealed he had sold $8.5 billion worth of Tesla stock, a move seen as a first step in raising the funds he would need to complete the deal. purchase of Twitter.
Even after Musk announced a change of heart and fought a lawsuit by Twitter to force him to buy the company, he continued to sell Tesla stock. Filings in August showed he had sold an additional $6.9 billion worth of Tesla stock.
Documents filed by Musk did not disclose the reason for these earlier stock sales. But after someone on Twitter asked him if he was done selling Tesla stock, he replied “Yes” and then pointed to the possibility of being forced to buy Twitter as the reason for the sales.
Since Musk’s first Tesla sales, Tesla’s shares have been cut threefold, meaning he had to sell three times as many shares to raise that much cash. But his holdings of Tesla shares also tripled due to the split.
Prior to his Twitter interest, Musk rarely sold Tesla stock, mostly selling stock needed to pay taxes when exercising stock options.
He sold a total of 15.7 million pre-split shares at the end of 2021, bringing in a total of $16.4 billion, as he had to exercise stock options or risk them. expire. He probably ended up with a tax bill of over $10 billion. But even after paying that tax bill and the cost of exercising those options, he was probably left with about $5 billion. He may have used some of that money to buy his initial Twitter stake.
These latest sales represent the lowest price at which Musk has sold Tesla shares recently, down about 30% from his April and August sales after adjusting for the Tesla stock split since then, and in down 42% from what he received when he sold shares in late 2021.
– Clare Duffy and Catherine Thorbecke of CNN Business contributed to this report