Tesla’s chief executive officer sold about 7.92 million
shares on Aug. 5, according to a series of regulatory filings that landed after
U.S. markets closed Tuesday. As speculation mounted over the reason for the
disposal, Musk responded in a series of late night tweets, saying he wanted to
avert an emergency sale of stock if he is compelled to complete the $44 billion
takeover of Twitter, which he walked away from last month.
Asked by followers if he was done selling Tesla shares and
would buy the stock again if the deal doesn’t close, Musk responded:
"Yes.”
The sale comes just four months after Musk, the world’s
richest person, said he had no further plans to sell shares in the carmaker
he’s built into a global force after disposing of $8.5 billion of stock in the
wake of his initial offer to buy Twitter. Since then, Tesla’s shares have
rebounded from lows reached in May, benefiting from broader gains in U.S.
equities.
"He certainly is clarifying that he is cashing up for
Twitter,” said Charu Chanana, strategist at Saxo Capital Markets Pte in
Singapore. "The timing of the sale — just ahead of the U.S. CPI release —
does say something though. The bear market rally has started to falter, and
further repricing of Fed expectations could mean more pain for equities ahead,
especially in tech.”
Tesla shares have risen about 35% from this year’s lows,
though are still down about 20% this year.
Tesla’s market fortunes have been tied to those of the
Twitter deal since Musk made his surprise overture earlier this year.
The billionaire said last month he was terminating the
agreement to buy the social network where he has more than 102 million
followers and take it private, claiming Twitter had made "misleading
representations” over the number of spam bots on the service. Twitter has since
sued to force Musk to consummate the deal, and a trial in the Delaware Chancery
Court has been set for October.
In May, Musk dropped plans to partially fund the purchase
with a margin loan tied to his Tesla stake and increased the size of the equity
component to $33.5 billion. He had previously announced that he secured $7.1
billion of equity commitments from investors including billionaire Larry
Ellison, Sequoia Capital and Binance. In his tweets late Tuesday, Musk said the
stock sale was also a contingency for if those private investors don’t come
through.
At the weekend, Musk tweeted that if Twitter provided its
method of sampling accounts to determine the number of bots and how they are
confirmed to be real, "the deal should proceed on original terms.”
The Twitter deal included a provision that if it fell apart,
the party breaking the agreement would pay a termination fee of $1 billion,
under certain circumstances. Legal experts have debated whether the conflict
over spam bots is enough to allow Musk to walk away from the deal.
Musk, 51, has now sold around $32 billion worth of stock in
Tesla over the past 10 months. The disposals started in November after he
polled Twitter users on whether he should trim his stake in the platform,
kicking off the rollercoaster ride that’s stunned even the most seasoned Musk
watchers. He now owns 14.84% of Tesla, leaving him still by far the largest
stakeholder.
Commenting before Musk’s tweets clarifying the reason for
the sale, Gene Munster, managing partner of Loup Ventures, said he put the odds
of the tycoon buying Twitter at 75%.
"I’m shocked,” Munster said. "This is going to be
a headwind for Tesla in the near term. In the long term, all that matters is
deliveries and gross margin.”
Musk’s $250.2 billion fortune is the world’s largest,
according to the Bloomberg Billionaires Index, but his wealth has fallen around
$20 billion this year as Tesla shares declined.
The carmaker’s shareholders approved a three-for-one stock
split last week, a move designed to attract an even larger number of retail
investors given the shares’ recent rebound.
Tesla’s better-than-expected second-quarter earnings have
been a tailwind, along with landmark U.S. climate change legislation that aims
to boost the use of clean energy through a series of tax incentives.
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