Musk Sells Tesla Shares Worth $8.5 Billion Ahead of Twitter Takeover

Billionaire entrepreneur Elon Musk has sold off about $8.5 billion worth of his shares in Austin-based automaker Tesla in the wake of announcing plans to acquire social media platform Twitter.

Musk reported the sale of 9.6 million shares, worth roughly $8.5 billion, in filings with the U.S. Securities and Exchange Commission on Thursday and Friday. The trades were made at prices ranging from $822.68 to $999.13.

On Friday afternoon, Tesla shares were going for right around $900.

Musk tweeted Thursday night that he doesn't plan any additional sales of his Tesla shares. Musk's stock sale was likely to help finance the deal for Twitter. Musk is the richest person in the world, but much of his wealth is tied up in Tesla stock.

Twitter announced Monday that it had agreed to be purchased by Musk for $54.20 a share, or about $44 billion. Analysts said the deal could make Tesla investors nervous that Musk will be distracted by Twitter and less engaged in running the electric car company — and have to sell a large number of Tesla shares to finance the acquisition. Musk is Tesla's largest shareholder.

To fund the purchase of Twitter, Musk secured $25.5 billion in debt financing, with $12.5 billion coming from loans against his Tesla stock. He also is using $21 billion in equity.

Tesla's growth in Austin

Tesla moved its corporate headquarters to Central Texas late last year, to the site of its new $1.1 billion manufacturing facility. The facility in southeastern Travis County, which started producing cars last year and started delivering its first Model Y SUV vehicles this month, has become increasingly important to Tesla and Musk. Giga Texas, as Tesla has dubbed the factory, is expected to hire 10,000 people through 2022, and will produce Model Y SUVs, the Cybertruck, Semi, Model 3 compact sedan and batteries.

This month, the company held a grand opening of Tesla's Austin facility with a "Cyber Rodeo" event, where Musk said Tesla aims to make as many as half a million vehicles in Austin next year.  Austin is the company's most advanced facility to date, and along with the company’s other new factory in Berlin, is expected to play a key role in helping scale production for the company’s products.

“We’re going to move to a truly massive scale, scale that no company has achieved in the history of humanity,” Musk said at the time.

Musk, who moved to Texas in 2020, has also expanded his other companies into the region in recent years.  Musk moved the headquarters of his tunneling and infrastructure firm, the Boring Company to Central Texas, and relocated his private foundation to Austin. His aerospace company SpaceX, and his neurotechnology company Neuralink have also hinted at having Austin facilities in job postings. 

If Musk's purchase of Twitter does go through, it's not clear if the billionare would also want to move the social media company's headquarters or open an office in Austin, but analysts and Austin-area tech experts have said it could be possible.

Musk's sale of Tesla shares come amid a week of rollercoaster stock moves for the Austin-based company. On Tuesday, Tesla shares closed down 12%, the biggest single-day drop since Sept. 8, 2020. The shares are up more than 3% Friday but still down 10% for the week. Analysts have said the moves are likely related to the Twitter purchase, but are not a long-term concern.

Earlier this month, Tesla reported a profit of $3.32 billion in the first quarter on revenue of $18.76 billion. But it might be harder for the company to post similar numbers going forward, as it faces costs of ramping the facilities in Austin and Germany, rising commodity prices, increased competition, and supply chain issues.

April 29, 2022