Musk disclosed Tesla (ticker: TSLA) stock sales Thursday evening and Friday morning on Form 4s filed with the Securities and Exchange Commission.
Musk disclosed Tesla (ticker: TSLA) stock sales Thursday evening and Friday morning on Form 4s filed with the Securities and Exchange Commission.
Form 4 is used to disclose selling by company management and other corporate insiders and is typically filed with days of a sale.
Musk sold 9.6 million shares of Tesla worth about $8.5 billion, presumably to fund part of his purchase of the social-media platform
Twitter TWTR –0.18% (TWTR). Musk sold his stock on April 26, 27, and 28, according to the forms.No further TSLA sales planned after today
— Elon Musk (@elonmusk) April 29, 2022
Musk’s $54.20 per-share bid for Twitter was accepted by its board earlier in the week. The entity formed by Musk to buy the company will be funded with about $25 billion in debt and $21 billion in equity. How Musk would fund the equity portion has been debated by analysts and investors.
It turns out part of that amount will be funded with the sale of Musk’s Tesla stock.
Late Thursday, the billionaire entrepreneur tweeted that he has no plans to sell any more shares. “No future TSLA sales planned after today,” Musk wrote.
Tesla investors should be relieved. Potential Musk sales were an overhang for the stock, according to Wedbush analyst Dan Ives. Coming into Friday trading, shares has dropped about 12% since Musk’s Twitter bid was accepted. The S&P 500 and Nasdaq Composite have dropped about 0.2% and 1% over the same span.
Tesla stock dropped 0.5% Thursday, closing at $877.51 after trading as low as $821.70. Shares are up 5.2% in early trading Friday.
The $8.5 billion from Musk’s Tesla stock sales is far less than the $21 billion equity portion listed in the Twitter merger documents, which could mean other sources will be involved to raise the remainder of the equity required for the purchase.
The rest of the money could come from a combination of Musk’s cash on hand—from cryptocurrency gains, for example—Twitter shareholders that stay with Musk, or partners willing to invest alongside Musk.
Musk still owns about 163 million shares of Tesla, not counting the 100-plus million stock options awarded as part of his 2018 compensation package.
Musk doesn’t like using brokers to organize secondary sales. He sold his stock in more than 210 separate, smaller transactions. That isn’t the way large blocks of stock are typically sold, but it is how Musk sold stock in 2021. Those sales had to do with options exercise and accelerating tax payments on unrealized capital gains.
When Musk sold shares last year, shares dropped about 16% in the two days following the revelation he might sell stock. Tesla shares rallied to just below where they were before Musk’s sale announcement—about $1,200—a few days after he finished selling.
That is one example of how Musk’s selling affected Tesla shares. But that selling process stretched on for weeks. And, of course, there is always more going on with Tesla stock than Musk’s stock sales.
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