Tesla Inc’s enigmatic CEO, Elon Musk, has once again captured the world’s attention with a significant move in the financial markets. Musk recently sold $6.9 billion worth of Tesla shares, a decision driven by a mix of strategic foresight and a potential legal battle with the social media giant, Twitter.
In a tweet late on Tuesday, Musk revealed the motivation behind the massive stock sale. He explained that the funds raised could be used to finance a possible Twitter deal if he ends up losing the ongoing legal battle with the social media platform. Musk expressed his hopes that such an outcome would be unlikely. Still, he emphasized the importance of avoiding an emergency sale of Tesla stock should the need arise.
As the news of Musk’s Tesla stock sale emerged, Twitter’s shares experienced a modest boost, rising 3.5% to $44.35 in early trading. However, it’s worth noting that these shares remained significantly below Musk’s original offer price of $54.20 per share. On the other hand, Tesla’s stock saw a rise of nearly 4%, reaching $882.
The legal drama between Musk and Twitter began earlier in July when the Tesla CEO made a dramatic U-turn on his agreement to buy Twitter for a staggering $44 billion. Musk cited his belief that he had been misled about the number of spam accounts on the platform as the reason behind his decision. Twitter, however, responded by filing a lawsuit against Musk, seeking to compel him to complete the transaction. The social media company dismissed Musk’s claims as mere buyer’s remorse triggered by the broader decline in technology stocks. Now, both parties are gearing up for what promises to be a closely watched trial scheduled for October 17.
Elon Musk’s strategic financial moves often captivate investors and analysts alike. Following the announcement of his share sale, Musk took to Twitter to address the public’s curiosity. When asked if he was done selling Tesla stock, Musk confirmed with a simple “yes.” He further added that he would consider buying back Tesla shares if the Twitter deal ultimately falls through. This clarification helped alleviate concerns about a potential “firesale” risk.
Market analysts weighed in on the implications of Musk’s latest actions. Mark Taylor, a sales trader at Mirabaud Securities, noted that the removal of the “firesale” risk, coupled with Musk’s readiness to raise cash in response to a possible adverse outcome with Twitter, all played into creating a positive bias for Tesla.
Gary Black, managing partner of Future Fund LLC, speculated on the likelihood of the Twitter deal being finalized at a slightly lower price, in the range of $50-$51 per share. He attributed this possibility to Musk’s recent share sales, suggesting that they could increase the odds of the deal getting done.
The recent sale of $6.9 billion worth of Tesla shares is not the first time Musk has divested a substantial portion of his holdings. In April, Musk sold $8.5 billion worth of Tesla shares, stating that he had no further sales planned at that time. However, legal experts have since opined that if Musk is compelled to complete the Twitter acquisition or face a hefty penalty, he may be more likely to sell additional Tesla shares.
As a result of the latest share sale, Musk’s ownership in the company has decreased. Reuters’ calculations show that Musk sold approximately 7.92 million shares between August 5 and August 9, reducing his ownership to just under 15% of the automaker. This brings the total value of Tesla stock sold by Musk to an astonishing $32 billion in less than a year.
Beyond the financial moves, Musk continues to maintain his aura of unpredictability. In a teasing manner, he hinted at the possibility of creating his own social media platform. When a Twitter user asked if he had considered starting his own platform in case the Twitter deal falls through, Musk cryptically replied with a single word: “X.com.”
Amidst the Twitter deal and stock sales saga, Tesla has been making strides in its core business. The company announced plans to begin shipping the longer-range and higher-cost version of its battery-powered Semi commercial truck later this year. This highly anticipated 500-mile range truck is expected to come with a price tag of $180,000, though it would be eligible for a tax break of up to $40,000 under a U.S. subsidy program approved by the U.S. Senate. The launch of the Tesla Semi has faced delays due to issues surrounding the availability of the new 4680 battery cells, but Tesla remains committed to delivering this innovative product to the market.
Despite the legal uncertainties and financial maneuvers, Tesla has been on a positive trajectory. The company’s shares rose nearly 15% following the announcement of better-than-expected earnings on July 20. As Elon Musk navigates these complex financial and legal matters, the electric vehicle industry and Tesla’s stakeholders eagerly await the outcome, eager to see how the enigmatic billionaire will continue to shape the future of the automotive and technology sectors.
