Elon Musk, the current owner of Twitter, sold an additional 22 million shares of his publicly traded vehicle manufacturer Tesla, generating about £2.95bn.
This comes after the auction of 19.5 million Tesla shares [TSLA] in November, and the investors of Tesla are becoming more and more outspoken over new actions.
Musk pledged there would be no additional sale of Tesla shares in April, when he also sold a sizeable portion of the company ahead of his £36bn acquisition of Twitter (unlisted), but he released another chunk in November.
This week on Monday, Tuesday, and Wednesday, based on a filing with the SEC, Musk sold his most recent batch of shares. They were auctioned in a number of transactions, with the average sale cost per share varying from around £127 to over £144.
It wasn't explained why. However, Twitter has a heavy debt load with high rates of interest and by Musk's own admittance, the company is losing a lot of money due to a rapid decline in income. Despite widespread lay-offs, he has been cutting expenditures.
He tweeted last week, at the risk of expressing the obvious: “At the risk of stating the obvious, be cautious of debt in unstable macroeconomic situations, particularly while the Fed is hiking rates.” The Federal Reserve has increased its interest rate seven times since March, most recently by 0.5% yesterday.
Tesla Trajectory 2022-23
Tesla stock has decreased by about 60% so far this year. They are slightly up in this week's early trade.
According to one analyst Dan Ives at Wedbush Securities, “the Twitter problem persists as Musk leverages Tesla as a personal ATM machine to continue paying the red ink at Twitter that becomes more severe every day with advertisers leaving Twitter over rising Musk-driven controversies.”
The truth of that statement is yet to be seen, considering that much of business today is driven by strategic attention.
“When will it be over?” asks Dan, who believes this cycle continues to be the Tesla story's biggest concern because Musk has changed the focus of the company's tale, since he bought Twitter, from the radical transformation of EVs to a “funding source” financing the comeback of Twitter, which is still a train wreck and, in our opinion, the most expensive tech purchase in the annals of M&A.
After making valiant attempts to back out of the agreement, Musk eventually paid out for Twitter in October and turned the social media business private. Some sponsors have left due to uncertainty concerning its moderation practises or lack thereof, further straining financials. Musk's own frequent and sometimes contentious tweets, notably those directed at former Twitter employees and in email dumps, have fuelled the perception of a corporation in disarray.
Due to the transactions, Musk's personal ranking on the list of the world's highest earners has dropped from first to second, behind LVMH CEO Bernard Arnault.