Elon Musk sold nearly $4 billion in Tesla stock since Twitter deal closed

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CNN Business

Elon Musk has sold $3.95 billion worth of Tesla stock since completing the Twitter purchase late last month.

Sales of Musk’s Tesla shares, 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 stock worth a total of $15.4 billion earlier this year since his deal to buy Twitter was announced.

Twitter confirmed Musk bought the social media company on Oct. 27, but waited until Nov. 4 to start selling additional Tesla shares. He also sold blocks of Tesla stock on Monday and Tuesday of this week, according to documents filed with the Securities and Exchange Commission on Tuesday night.

It’s unclear whether the money Musk raised was used to buy Twitter or to absorb losses at Twitter since he took over.

Musk revealed last week that Twitter has seen a “massive drop in revenue” as a growing number of advertisers pause spending on the platform following his takeover of the company. He blamed “activist groups” pressuring advertisers for the loss of ad dollars.

Twitter lost $270 million in the quarter that ended 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. It has announced plans to charge users $8 a month to have verified accounts and also announced deep staff cuts.

Musk’s two weeks of owning Twitter have been a “debacle of epic proportions,” said Dan Ives, technology analyst at Wedbush Securities. While it’s possible that the money from the sale of Musk’s Twitter sales in the past two weeks was intended to pay for some of the short-term financing used to close the Twitter deal, it can’t be ruled out that it was necessary for big losses on Twitter.

“The more it goes into Twitter, the more it becomes a quicksand kind of deal,” Ives said.

This 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 problems. Musk received an average price of $202.52 for the Tesla stock he sold since the Twitter deal closed, which is down 10% just since he closed 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 is too distracted by his Twitter purchase to pay enough attention to addressing Tesla’s problems.

“Tesla investors are exacerbated by this never-ending Twitter albatross,” Ives said. “Musk needs to look in the mirror and end this constant Twitter carousel about the Tesla story, focusing back on the golden boy Tesla 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 are included additional actions.

Musk agreed to buy Twitter (TWTR) in April, shortly after filings showed he had bought 73 million shares, or about a 9% stake, for $2.6 billion. The purchases made him the largest shareholder in the company.

Shortly after the deal was announced, he revealed that he had sold $8.5 billion in Tesla stock, a move seen as a first step in raising the money he would need to complete the Twitter purchase.

Even after Musk announced a change of heart and fought a lawsuit filed by Twitter to force him to buy the company, he continued to sell Tesla stock. August filings showed he had sold an additional $6.9 billion in Tesla stock.

Musk’s filings did not reveal the reason for those 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 a reason for those sales.

Since Musk’s previous sales of Tesla, Tesla stock has split three for one, meaning he had to sell three times as much stock to raise as much cash. But his Tesla stock holdings also tripled because of the split.

Before his interest in Twitter, Musk rarely sold shares of Tesla stock, mostly selling shares needed to pay taxes when he exercised stock options.

It sold a total of 15.7 million shares pre-split by the end of 2021, for a total of $16.4 billion, because it had to exercise stock options or risk them expiring. 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 probably had roughly $5 billion left over. He may have used some of that cash to buy his initial Twitter stake.

These latest sales represent the lowest price at which Musk has sold Tesla stock recently, down 30% from his sales in April and August when adjusted for Tesla’s stock split from since then, and 42% less than he received when he sold shares in late 2021.

— Clare Duffy and Catherine Thorbecke of CNN Business contributed to this report

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