Elon Musk sold Tesla Inc. stock worth $6.9 billion, claiming he didn’t want to make a quick transaction in case he had to proceed with his plan to buy Twitter Inc.
Following the closure of US markets on Tuesday, regulatory filings revealed that on August 5, Tesla’s CEO sold 7.92 million shares. If the Twitter transaction falls through, Musk stated in a tweet that he would purchase shares of the electric vehicle manufacturer.
Musk stated, “It is crucial to avoid an emergency sale of Tesla stock in the (hopefully improbable) event that Twitter pushes this deal to close *and* some equity partners don’t come through.
Before the start of normal trading on Wednesday, Tesla increased by 3.4% to $879, and Twitter increased by 4.3% to $44.69.
In the (hopefully unlikely) event that Twitter forces this deal to close *and* some equity partners don’t come through, it is important to avoid an emergency sale of Tesla stock.
— Elon Musk (@elonmusk) August 10, 2022
Since November, Musk has sold about $32 billion worth of Tesla stock. The richest man in the world claimed less than four months ago that he had no more stock transactions planned. Since then, he has tried to cancel his $44 billion purchase of Twitter. The trial for the lawsuit filed by the social media business to compel Musk to complete the transaction is set for October.
According to Charu Chanana, a strategist at Saxo Capital Markets Pte in Singapore, Musk is “cashing up for Twitter” and may be looking to profit from the roughly 35% rise in Tesla stock since late May. “The bear market rally is starting to break down, and further downgrading of Fed expectations could lead to further losses for stocks, particularly in tech.
Investors had doubts that Musk, was done selling Tesla stock; 68% of 1,562 respondents to an MLIV Pulse survey last month indicated that Musk, regardless of the outcome of the Twitter acquisition, was likely to sell more stock.
Jim Dixon, a senior equities sales trader at Mirabaud Securities, used Musk as an example. “Musk indicated at the Tesla shareholder meeting that any downturn in the share price was a buying opportunity, and then 24 hours later started selling stock himself,” Dixon said. Dixon deemed it “extremely unlikely” that Musk had finished selling the stock at this time.
Since Musk made his unexpected overtures in April, the market performance of Tesla has been correlated with the Twitter offer. The initial decline in the stock of the automaker was caused by worries that the chase would divert him and by the danger of the margin loan, he planned to take out against his Tesla holdings. When Musk gave up on the financing strategy and in the weeks that followed, when he declared he wanted to cancel the deal, the price rose.
The equity portion of the deal climbed to $33.5 billion when Musk abandoned plans to use a Tesla margin loan to help pay for a portion of the Twitter acquisition. According to prior reports, he has raised $7.1 billion in equity commitments from backers like Sequoia Capital, Binance, and billionaire Larry Ellison.
Musk tweeted over the weekend that “the deal should proceed on original terms” if Twitter disclosed how it samples accounts to count the number of bots using its network.
Good summary of the problem.
If Twitter simply provides their method of sampling 100 accounts and how they’re confirmed to be real, the deal should proceed on original terms.
However, if it turns out that their SEC filings are materially false, then it should not.
— Elon Musk (@elonmusk) August 6, 2022
In the Twitter agreement, it was stated that in certain situations, the party who violated the terms would be required to pay a $1 billion termination fee. Legal experts have disagreed on whether the dispute over spam bots is sufficient for Musk to withdraw from the agreement.
After asking Twitter followers if he should reduce his ownership, Musk began selling Tesla stock over the past ten months. Continually the top shareholder, he still holds approximately 14.8% of the corporation, according to statistics gathered by Bloomberg.
Gene Munster, the managing partner of Loup Ventures, made a statement prior to Musk’s tweets explaining the reason for the transaction, stating that he believes the likelihood that the billionaire will ultimately purchase Twitter is 75%.
Munster exclaimed, “I’m startled. In the near future, this will be a challenge for Tesla. Deliveries and gross margin are all that counts in the long run.
According to the Bloomberg Billionaires Index, Musk is the world’s richest person with a fortune of $250.2 billion; however, as Tesla’s stock has fallen this year, Musk’s wealth has decreased by around $20.1 billion.
Last week, the automaker’s shareholders adopted a three-for-one stock split in an effort to draw in more retail investors. Along with unprecedented US legislation that includes tax subsidies for buying electric cars and loans to corporations building plants that create clean vehicles, Tesla’s better-than-expected second-quarter earnings have been a boost.
FAQs about Tesla
Why is Tesla stock so high?
The announcement that Tesla’s factory in Shanghai produced over 33,000 cars in May, a 212% increase over the previous month, when the production was halted due to tight Covid-19 lockdowns in the city, also helped to lift the company’s shares higher on Thursday.
Why has Tesla’s stock prospered so much?
Tesla has historically benefited from a sizable core of shareholders who hold the shares and support the company’s long-term goals. The company’s valuation skyrocketed by over $1 trillion throughout the years, considerably enhancing the returns for these investors.
Is Tesla stock too expensive?
We examined the math. Tesla’s market cap recently surpassed $1 trillion, but according to independent investment research firm New Constructs, the company is overpriced by around that amount—roughly $1 trillion.
Waiting or buying a Tesla right away?
On the other hand, he needed a vehicle to get around, so it’s not surprising that he acquired another Tesla. The 2018 Model 3 was the greatest choice because he had purchased a new Model Y, but it wouldn’t be arriving anytime soon.
How durable are Tesla batteries?
300,000-500,000 miles, According to Tesla CEO Elon Musk, the batteries in Tesla cars are built to endure 300,000–500,000 miles, or roughly 21–35 years, based on the mean annual mileage of Americans, which is around 14,263.