Elon Musk Just Sold $3.95 Billion of Tesla (TSLA) Stock. Here’s Why.

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Shares of Tesla (NASDAQ:TSLA) are in the red after it was disclosed that CEO Elon Musk had sold 19.5 million shares of TSLA stock worth $3.95 billion. The funds will likely go toward costs related to his $44 billion acquisition of Twitter, which was completed on Oct. 28.

The sale comes as somewhat as a surprise for some investors, as Musk noted in August that he was most likely done selling shares, and that “it is important to avoid an emergency sale of Tesla stock.”

The Future Fund managing partner Gary Black believes that its “possible” Musk is now done selling. He added the sale was likely made to back the bridge loans necessary to close the acquisition. Furthermore, Black believes the sales were not made to fund Twitter’s cash burn. The social media platform has seen many advertisers depart following the acquisition.

TSLA Stock: Elon Musk Sells 19.5 Million Shares

The first sale was made on Nov. 4. On that day, Musk sold 9.65 million shares worth $2.01 billion. On the same day, CFO Zachary Kirkhorn also sold 3,751 shares, although his sale was made using a prearranged 10b5-1 plan that was adopted on July 29.

Three days later, Musk sold another 5.45 million shares worth $1.09 billion. His last sale, which occurred yesterday, consisted of 4.4 million shares worth $843.16 million. Following the last sale, he still owns 445.62 million shares through the Elon Musk Revokable Trust.

In August, Black estimated Musk needed an additional $5.4 billion to complete the Twitter deal. Since Musk’s shares sold in November have totaled $3.95 billion so far, he may need to sell even more shares.

Still, Musk may have other leftover cash. In 2021, he sold a total of 15.7 million pre-split shares that had a value of $16.4 billion. CNN estimates these sales contributed to a tax bill of more than $10 billion, as the shares were acquired through exercising options. Even after taxes, Musk “likely had roughly $5 billion left.”

The Tesla CEO seems to be confident about his acquisition, although that’s expected. At a conference last week, he noted Twitter will be much easier to manage once he enacts his changes. He has also hinted at the possibility of a new CEO, as the acquisition has forced him to increase his workload from 78 hours per week to 120 hours.

On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Eddie Pan specializes in institutional investments and insider activity. He writes for InvestorPlace’s Today’s Market team, which centers on the latest news involving popular stocks.

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