Tesla (NASDAQ:TSLA) is in the spotlight today after filings with the U.S. Securities and Exchange Commission (SEC) revealed Elon Musk sold about $8.4 billion, or 9.6 million shares, of TSLA stock in total this week. These sales represent the first time that Musk has sold Tesla since his $16 billion sale last year.
Musk did not disclose his reasoning for the sale. However, he likely sold shares to satisfy his acquisition of Twitter (NYSE:TWTR). The Tesla CEO has said that he is willing to put up $21 billion of his own capital to satisfy the acquisition. Furthermore, Musk has pledged TSLA stock as collateral for a $12.5 billion margin loan from a group of banks led by Morgan Stanley (NYSE:MS). After accounting for collateral, Musk has about $13.2 billion in unpledged Tesla shares after his $8.4 billion sale.
Here’s what investors should know.
Elon Musk Sells $8.4 Billion of TSLA Stock
After the filings were made public, Musk tweeted, “No further TSLA sales planned after today.” However, Gary Black of The Future Fund believes “planned” was likely a word added by Musk’s lawyers.
In addition, a large portion of Musk’s sales were made on Tuesday, when Tesla plunged 12%. He sold 3.7 million shares that day, which accounted for 17% of Tesla’s average daily trading volume this year. According to CNN, Tuesday marked the company’s biggest one-day decline since September 2020.
The timing of this sale is interesting, as the deal for Twitter won’t close until Oct. 24 if successful. Despite being one the richest men in the world, Bloomberg also estimates Musk’s liquid net worth to be $3 billion. This is because most of his wealth is tied up in investments like Tesla and SpaceX. After selling $8.4 billion of Tesla, Musk is still on the hook for $12.6 billion for the Twitter acquisition.
What’s Next for Tesla?
The electric vehicle (EV) company reported earnings this month, posting revenue of $18.76 billion versus the consensus analyst estimate of $17.8 billion. Meanwhile, earnings per share (EPS) tallied in at $3.22, beating estimates of $2.26 per share.
Despite the impressive earnings, Tesla may present volatility in the near term, however. This is primarily due to the Twitter acquisition and Musk’s sales. Still, the company’s fundamentals remain strong, which should reward investors in the long-term.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
