Il Tesla CEO Elon Musk has sold over 22 million shares of the company between Monday and Wednesday, for a price around 3.4 billion euros. The title on Wall Street drops below $500 billion in capitalization, reaching its lowest since November 2020, when it had begun its ascent that seemed unstoppable. Many investors blame the CEO’s involvement on Twitter.
Musk sells 22 million Tesla shares, the stock at a two-year low
In the last period it seems that the major shareholder of Tesla is in need of liquidity. Just a month ago he unloaded $4 billion in stock. He sold $8.5 billion of stock in April, then dumped another $7 billion in August. In no case, Musk had explained the reasons for this choice. But without a doubt, they are started after the billionaire had begun the negotiation for Twitter.
Elon Musk still holds the majority of the company shares, with approximately $66 billion of Tesla shares available. But the sale of shares had a negative impact on the value of individual shares. At the time of this writing the shares are worth 146.34 euros. And 60.6% drop compared to January 2022: this was the worst year in terms of performance (also due to the excellent last two years).
Musk’s motivations
As in the past, Musk has not explained why he sold his shares in the company. Some analysts speculate that it is to pay the ups accrued interest to raise the $44 billion needed to purchase Twitter. Musk had in fact requested a loan of 13 billion dollars, of which 3 billion uninsured debt on which Twitter pays rates of 11.75%.
Some investors are frustrated with the way Musk sells Tesla stock. After assuring that he would not sell shares in this company, he sold them in November last year after holding a poll on Twitter. This year, after the first shares downloaded for the acquisition of the social network, he had assured that he would no longer sell: instead he did it several times. This Friday Tesla goes into the period of winter breakthen Musk should no longer download allowances by the end of 2022.
During the third quarter 2022 revenue announcement, Musk had assured that the company would implement some “buyback” in 2023, repurchasing between 5 and 10 billion shares during next year. In all likelihood, that figure will allow him to buy back many more shares than he sold. Especially since it looks like the Federal Reserve will raise i interest rates up to 4.25-4.5%: When interest rates rise, stocks usually lose value. Musk has possibly also sold in anticipation of a decline in share value.
So Musk may have decided to dump nearly 22 million shares on other Tesla shareholders before they lose value. Obtaining liquidity in exchange to repay the debt accumulated with Twitter. But at the moment only speculations remain: the beginning of next year could give us a more accurate view of the strategy (or lack thereof) adopted by Musk.