Update: Musk reported selling 4.4M TSLA shares valued at close to $4B on Tuesday, driving the price down over 100 points and likely to purchase TWTR shares. Musk noted this evening that he wouldn’t sell any additional TSLA shares.
Tesla’s stock (TSLA) is currently taking a beating and losing over $150 billion in value amidst the confusion around Elon Musk’s Twitter(TWTR) acquisition. The main question on investors’ minds is: is Elon Musk selling Tesla stocks?
After a few weeks of back and forth, Twitter’s board of directors approved the acquisition on Monday, and Tesla’s stock has been in a freefall ever since. There are definitely other broader market factors at play, but the bulk of the drop appears to be related to uncertainty around the Twitter deal.
There’s a lot of confusion.
Tesla’s stock is down 16% since the announcement that Twitter accepted the deal, and there were large sales of stock as soon as it was announced:
Tesla erased over $150 billion in market valuation throughout the week, and it doesn’t look like it’s stopping. There seems to be some confusion around the Twitter deal and its impact on Musk and Tesla, if any.
One of the main concerns is that Twitter is going to take time from Musk away from Tesla, which is inevitable, and the only question is …how much time?
Musk himself recently valued the time he spends at Tesla as being worth north of $1 million a minute because of the kind of business Tesla is doing these days, and the impact he has on it.
The other big factor is that investors don’t know if Musk is going to sell more Tesla shares to cover the Twitter acquisition deal. Musk already pledged shares of Tesla against $12 billion in debt for the deal, but he also needs to come up with $21 billion in equity.
Musk has not indicated whether or not he plans to sell Tesla shares to cover the deal, but it is a likely possibility.
It might be already happening, which could explain part of the drop in price, and if so, Musk would have to disclose it in the coming days.
I don’t know if Musk is selling. If he is, we should know in the next few days. What is interesting, though, is that he can’t afford Tesla’s shares to get too low or it will prevent him from securing the loans he needs for the deal, which are backed by the value of Tesla shares.
If Tesla’s stock drop below $750 per share, it will start to be a problem and some of the banks offering Musk the money might start to backtrack.
Also, Musk has often said that he would be the last one to sell Tesla stock, which if he is indeed selling would be a bad signal to investors. Of course, he did it last year, but that was mainly to pay taxes on stock options as part of his CEO compensation deal. His stock holdings actually went up.
To do it to buy a social media platform which would limit his time with Tesla is a completely different thing.
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