Just when Tesla investors thought CEO Elon Musk was done selling shares, he caught them off guard again. In filings with the Securities and Exchange Commission (SEC) revealed on Wednesday, Musk sold about 22 million shares worth $3.58 billion.
The share sales took place sometime between Monday and Wednesday of this week. It’s unclear what Musk is doing with the funds raised from his Tesla shares sales, but they may be related to his recent acquisition of Twitter for $44 billion.
Reactions to Musk’s share sale were quick on Twitter. According to Gary Black, Managing Partner, The Future Fund LLC, he said “As we expected @elonmusk sold 22 [million] $TSLA shares (0.8% float) for $3.58 [billion] between Mon-Wed, at an [average] price of $162.81.”
“During the 3-day period, TSLA fell -12.4% vs [Nasdaq-100] +1.5%. Since the TWTR deal closed 10/28, TSLA -29% vs NDX +4%. Elon’s avg price received was $163/share,” said Black.
“The sloppiness of trading was on full display again: In 3 days of trades, $TSLA declined 12% vs just 0.8% of float sold. Since Elon bought TWTR, Elon has sold 94M TSLA shares for $23B (avg price $244). We expect some of proceeds to retire $3B of $13B [leveraged buyout] debt (@ 11.75% int rate),” continued Black.
Black believes Musk is done selling Tesla shares. “Based on past patterns, we believe Elon is again done selling $TSLA shares for the time being. TSLA’s 4Q trading window will close starting Friday through end-of-Jan when TSLA 4Q earnings are reported. After the sales, Elon now owns 423.6M shares (13.4% of TSLA shares),” said Black.
Troy Teslike, who shares specialized analysis of Tesla’s production and delivery estimates, replied to Black to say, “That suggests the $13B loan might drop to $9.4B and the yearly interest payments on that might drop from $1.2B to $823M per year.”
“Twitter was losing $281M/year before Elon bought it. That means he needs to increase the income by $1.1B/year to break even,” postulated Teslike.
No further TSLA sales planned after today
— Elon Musk (@elonmusk) April 29, 2022
Back in late April, Musk said “no further TSLA sales planned after today.” But of course, things can change.
Cathie Wood’s ARK Investment Management revealed today its ARKK fund bought 61,537 shares of Tesla today, while its ARKQ fund bought 10,066 shares. ARKW bought 3,259 shares of Tesla today as well, taking advantage of the company’s stock price at two-year lows.