Tesla CEO Elon Musk sold $4 billion worth of shares in the electric carmaker on Tuesday and Wednesday, days after Twitter’s board agreed to sell the company to him.
Musk sold 4.4 million shares of Tesla for an average price of $903.58, according to filings he filed with the Securities and Exchange Commission on Thursday.
The sales represent 2.6% of the Tesla shares he held as of early Tuesday and less than 2% of his total Tesla stakes if the stock options he controls are included.
The documents don’t reveal the reason for the sale, but Musk appears to be raising funds to buy Twitter.
In a tweet Thursday night, Musk said, “No more TSLA sales planned after today.” But it was unclear whether Musk has made more sales since Wednesday that have yet to be reported.
No further TSLA sales planned after today
— Elon Musk (@elonmusk) April 29, 2022
Insiders such as Musk must report purchases or sales of their company’s stock to the SEC to inform the wider investor community of their activity.
But they have a few days to do this filing and still abide by the rules.
Musk’s sales of Tesla stock were large enough to sink the company’s stock price. Most of the shares he reported selling this week – 3.7 million – were sold on Tuesday (26).
That represented 17% of the normal daily trading value in Tesla stock so far this year before Tuesday.
Tesla shares lost 12.2% of their value during Tuesday’s trading session, the biggest one-day drop in the company’s shares since September 2020.
Tesla investors could also have sold shares this week out of concern that Musk might not be able to devote as much time and attention to Tesla. The company has ambitious growth plans and increasing competition.
Tesla’s stock was virtually unchanged on Wednesday and Thursday. Shares were up 3% in premarket trading on Friday.
Musk is expected to use his massive Tesla stakes as a way to fund his purchase of Twitter. But that doesn’t mean he has to sell all of his shares to increase the total purchase price.
Instead, he can use the shares as collateral for loans to raise the money.
But there are limits to how much money he can raise simply by offering his Tesla shares as collateral. He can raise more money by selling some of his Tesla shares.
Tesla’s corporate rules state that the company’s executives and directors can only raise 25% of the value of shares offered as collateral.
As of June 30, 2021, company records show that Musk had already pledged 88.3 million of his Tesla shares as collateral, but those shares were pledged years ago when Tesla shares were worth a tiny fraction of their current value. .
He would probably be able to borrow more money even against some of those stocks.
And the estimated 79 million unpromised shares he owns after Tuesday’s sales could be used to borrow $17 billion, even with the recent drop in Tesla’s share price.
Source: CNN Brasil
I am Sophia william, author of World Stock Market. I have a degree in journalism from the University of Missouri and I have worked as a reporter for several news websites. I have a passion for writing and informing people about the latest news and events happening in the world. I strive to be accurate and unbiased in my reporting, and I hope to provide readers with valuable information that they can use to make informed decisions.
