U.S. Securities and Exchange Commission (SEC) filings show that Elon Musk has sold over $23 billion of his Tesla (NASDAQ: TSLA) stock so far this year. Most of it after he became CEO of Twitter.
The rationale here is, supposedly, two-fold: 1.) Finance his portion of the Twitter deal and 2. Prop up Tesla's stock which has fallen more than 60% since its peak in late 2021 as EV sales slump and investors and analysts worry that Musk is "distracted". Most recently, Musk offloaded nearly 22 million shares between December 12 - 14, worth $3.6 billion.
Shares of Tesla tumbled in the aftermath. So far this year, Musk sold more than 94 million Tesla shares with an average exit price of $243.46 per share, according to the research firm VerityData. This translates to almost $23 billion.
Tesla investors are less than enthralled about Elon Musk's agenda to revamp Twitter - his role as Twitter CEO means that he is spending much less energy and time on Tesla. Therefore there is an almost inverse relationship in the impact he has at Twitter (either good or bad) and Tesla's stock price because actions in one translate to inaction in the other. Tesla shares are down ___ for year-to-date and many investors are pointing fingers at Musk's involvement with Twitter as the main culprit.
Ross Gerber, head of Gerber Kawasaki Wealth and Investment Management, a Tesla shareholder, shared his views ""We all know why Tesla stock is down and it has nothing to do with the company...The company is doing great. The company has the best environment it could possibly want. It's about to get a bunch of incentives from the government. The factories are ramping up. New products are launching. The only problem is the optics of having the CEO on Twitter every day discussing the problems of Hunter Biden."
Elon Musk recently took to Twitter to poll users on whether they want him to step down as CEO of the social media giant. Almost 18 million users voted, with 58% voting Yes. In typical Musk fashion, he responded to the results in a tweet, stating "I will resign as CEO as soon as I find someone foolish enough to take the job....One catch: you have to invest your life savings in Twitter and it has been in the fast lane to bankruptcy since May. Still want the job?"
According to Musk himself, Twitter was losing over $4 million per day and was on track to hit $3 billion in negative cash flows before he implemented drastic rifs and layoffs.
As part of the $46.5 billion deal to take Twitter private ($44 billion purchase price plus closing costs), Musk had to put down over $27 billion in personal assets / cash, $5.2 billion from investment groups and high-net worth individuals, and finally ~$13 billion in syndicate bank loans. The loans are backed by Twitter, not Elon Musk, which means that Twitter just added $13 billion of debt to its balance sheet that it is responsible for paying back. Musk's $27 billion comes from his sale of Tesla shares.
Musk points to macroeconomic events as explanation for Tesla's falling stock price instead of his share liquidations, "As bank savings account interest rates, which are guaranteed, start to approach stock market returns, which are not guaranteed, people will increasingly move their money out of stocks into cash, thus causing stocks to drop". However, this is clearly not the only reason as it is reported that the Company will be implementing hiring freezes and layoffs over the next fiscal quarter.
An assistant professor at Vanderbilt University and former economist at the SEC, Joshua White, countered this view, ″Only some of the drop in Tesla's value can be blamed on interest rates. Twitter overhang is one important component. China is another huge component. We still don't know if China will be open all the way, and we see there is supply and demand pressure here in light of the increase in covid cases, and disruptions."