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Tesla CEO Elon Musk sold 7.9 million shares of Tesla in recent days, raising $6.9 billion with the sales.
The sales from Friday through Tuesday were disclosed in a series of filings with the Securities and Exchange Commission late Tuesday night. They mark the first sale of Tesla shares by Musk since April, when he sold 9.6 million shares, raising $8.5 billion at that time.
Those April sales came soon after Musk had reached a deal to buy Twitter (TWTR) for $44 billion. But a month ago he announced that he does not plan to go through with that deal, arguing that Twitter (TWTR) management did not disclose material information about how many user accounts were bots and spam accounts rather than accounts run by actual people. Twitter (TWTR) quickly sued to force Musk to go ahead with the deal on the terms reached in April.
Musk’s filings did not disclose the reason for the stock sales. But after someone on Twitter asked him if he was done selling Tesla shares, he responded “Yes” and then pointed to the possibility of being forced to buy Twitter as the reason for this latest sale.
“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,” he said in his tweet.
But at the time he sold the Tesla (TSLA) shares in April, he tweeted “No further TSLA sales planned after today.”
When someone else asked on Twitter Tuesday if he would repurchase Tesla shares if the Twitter deal does not close, he replied “Yes.”
Shares of Tesla have lost nearly 20% of their value so far this year, although they have rebounded 14% since reporting earnings in late July. Tesla’s stock rose about 2% in premarket trading. Shares of Twitter were up nearly 4%.
“This is the last thing Tesla investors wanted to see,” said Daniel Ives, tech analyst for Wedbush Securities. “The biggest fear has been that Musk sells more stock, and that’s what just happened. It’s a near-term gut punch. There’s no explanation and that adds to the uncertainty.”
Musk has previously sold Tesla shares primarily when he needed to raise cash to pay taxes on the exercise of options that were due to expire. The sales of stock in April soon after the Twitter deal was reached was the first significant sale of Tesla shares by Musk for reasons other than a looming tax bill.
Musk received an average price of $869 a share for the shares he sold in recent days. That’s down from an average price of $883 a share on his Tesla sales in April, and well below the $1,046 average that he received when selling 15.7 million shares late last year. That sale was to cover an expected record personal income tax bill which he faced as a result of exercising options that had been set to expire.
Even with the latest stock sales, Musk owns 155 million shares of Tesla, and has options to buy nearly 100 million more at a fraction of current prices. The shares he owns, combined with the options he holds to buy other shares, gives him control over about 20% of Tesla outstanding shares. And the 7.9 million shares he just sold represent less than 3% of the shares and options he holds.
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Elon Musk's Tesla Stock Sales
Elon Musk, the CEO of Tesla, recently sold 7.9 million shares of Tesla, raising $6.9 billion with the sales. These sales were disclosed in filings with the Securities and Exchange Commission. It is worth noting that these sales mark the first time Musk has sold Tesla shares since April, when he sold 9.6 million shares, raising $8.5 billion at that time.
The reason for the recent stock sales was not explicitly disclosed in the filings. However, Musk responded to a question on Twitter, stating that the possibility of being forced to buy Twitter as part of a deal was the reason for the latest sale. He mentioned that if Twitter were to force the deal to close and some equity partners didn't come through, he wanted to avoid an emergency sale of Tesla stock.
It is important to note that Musk's stock sales have previously been primarily driven by the need to raise cash to pay taxes on the exercise of options. However, the sales in April, which occurred soon after the Twitter deal was reached, were the first significant sales of Tesla shares by Musk for reasons other than a looming tax bill.
Elon Musk's Ownership of Tesla Shares
Even with the recent stock sales, Elon Musk still owns 155 million shares of Tesla. Additionally, he has options to buy nearly 100 million more shares at a fraction of the current prices. In total, Musk's ownership of shares and options gives him control over about 20% of Tesla's outstanding shares. The 7.9 million shares he sold represent less than 3% of the shares and options he holds.
Impact on Tesla Investors and Stock Performance
The recent stock sales by Elon Musk have raised concerns among Tesla investors. Shares of Tesla have already lost nearly 20% of their value so far this year. The uncertainty surrounding Musk's stock sales adds to the concerns of investors. Daniel Ives, a tech analyst for Wedbush Securities, stated that this was the last thing Tesla investors wanted to see and described it as a near-term gut punch.
It is worth noting that Tesla's stock rose about 2% in premarket trading following the disclosure of Musk's stock sales. On the other hand, shares of Twitter were up nearly 4%.
Conclusion
Elon Musk's recent stock sales of Tesla shares have raised questions and concerns among Tesla investors. While the reason for the sales was not explicitly disclosed, Musk mentioned the possibility of being forced to buy Twitter as part of a deal as a reason for the latest sale. Despite the sales, Musk still retains a significant ownership stake in Tesla. The impact of these stock sales on Tesla's stock performance and investor sentiment remains to be seen.
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