Elon Musk Sells Tesla Shares Worth Nearly 8 Million Dollars To Avoid Twitter Fire Sale

Elon Musk Sale 7.9 Million Shares Of Tesla

Elon Musk, Tesla CEO, sold 7.9 million shares of Tesla's current days, raising $6.9 billion with the sales.

They disclosed the sales from Friday through Tuesday in a series of filings with the Securities and Exchange Commission late Tuesday night. They marked Musk's initial sale of Tesla shares in April, when he sold 9.6 million shares, raising $8.5 billion at that time.

Musk’s 44 Billion Dollars Twitter Deals

Those April sales came soon after Musk had reached a deal to buy Twitter for 44 billion dollars. But a month ago, he confirmed that he does not plan to go through with that deal, arguing that Twitter management did not disclose material data about how many user accounts were bots and spam accounts rather than accounts run by actual people.

Twitter quickly asked 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. However, 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 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 when he sold the Tesla shares in April, he tweeted that they planned no further TSLA sales after today. When someone else asked on Tuesday on Twitter if he would repurchase Tesla shares if the Twitter deal did not close, he replied Yes.

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Tesla Lost And Rebounded

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.

This is the final thing Tesla investors wanted to see, said Daniel Ives, a tech analyst for Wedbush Securities. The biggest fear has been that Musk will sell more stock, which just happened. It is a near-term gut punch. There is no explanation, and that adds to the uncertainty.

Musk had previously sold Tesla shares primarily when he needed to raise cash to pay taxes on the exercise of options that were due to expire.

Twitter Deal – The First Significant Sale

Soon after he reached the Twitter deal, the stock sales in April were Musk's first significant sale of Tesla shares for reasons other than an approaching tax bill.

Musk received an average price of 869 dollars a share for the shares he sold in recent days. That is down from an average price of $883 a share on his Tesla sales in April, and well below the $1,046 average, he received when selling 15.7 million shares late last year.

That sale was to cover an expected note of personal income tax bill he faced due to exercising options he had set to expire.

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Musk’s Latest Stock Sales

Even with the recent stock sales, Musk owns 155 million shares of Tesla and has options to buy nearly 100 million more at a fraction of prices.

The shares he owns merged with the options he holds to buy other shares, giving him control over about 20% of Tesla's outstanding shares. And the 7.9 million shares he sold represent less than 3% of the shares and options he holds.