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Elon Musk surprised everyone when he declared he wanted to buy Twitter. Nevertheless, he is now entangled in a $44-billion deal and he needs to come up with $21.5 billion in cash to finance the takeover. Musk started selling Tesla shares, and a regulatory filing disclosed late Thursday shows that Tesla’s CEO sold roughly $4 billion worth of stock.
Elon Musk is the richest person in the world, although he does not own almost anything, except stock in his companies like Tesla and SpaceX. Indeed, he does not have properties, having sold all of them a while back, and his only extravagance might be considered the jet that ferries him on business trips. He argues that this actually allows him to have more time to work. For that, he is compensated in stock and he does not accept a cash salary.
The key takeaway from this is that Musk has a hard time finding the cash to fund his fantasies or even pay taxes. The only way he can do that is by selling some of his Tesla shares, and he did so several times before. Now, according to several Form 4 SEC filings, Musk sold around 4.4-million shares worth $4 billion. The 138 transactions occurred on two separate dates, April 26 and April 27, and were enough to send Tesla shares tumbling. Musk later tweeted he plans no further Tesla shares sales.
Musk’s Twitter whim proves to be a costly adventure. The sell-off wiped out $126 billion of Tesla’s market cap. According to Wall Street Journal, Musk will also borrow $12.5 billion for which he uses more than $62.5 billion worth of Tesla shares as collateral. The rules of the loan require him to put up even more collateral if the company’s share price falls. The same source says more than half of Elon Musk’s Tesla stock—or roughly 88 million shares—was already pledged as collateral to secure personal debt as of last year.
Although you might think Musk’s ventures will lead to diluting his control over Tesla, this isn’t necessarily true. Last year, Musk sold 10.1 million Tesla shares and still ended up owning more, thanks to him exercising his stock options for 10.7 million shares. Considering the stellar financial performances that Tesla just announced for the first quarter, Musk’s compensations likely include more stock options.
The key takeaway from this is that Musk has a hard time finding the cash to fund his fantasies or even pay taxes. The only way he can do that is by selling some of his Tesla shares, and he did so several times before. Now, according to several Form 4 SEC filings, Musk sold around 4.4-million shares worth $4 billion. The 138 transactions occurred on two separate dates, April 26 and April 27, and were enough to send Tesla shares tumbling. Musk later tweeted he plans no further Tesla shares sales.
Musk’s Twitter whim proves to be a costly adventure. The sell-off wiped out $126 billion of Tesla’s market cap. According to Wall Street Journal, Musk will also borrow $12.5 billion for which he uses more than $62.5 billion worth of Tesla shares as collateral. The rules of the loan require him to put up even more collateral if the company’s share price falls. The same source says more than half of Elon Musk’s Tesla stock—or roughly 88 million shares—was already pledged as collateral to secure personal debt as of last year.
Although you might think Musk’s ventures will lead to diluting his control over Tesla, this isn’t necessarily true. Last year, Musk sold 10.1 million Tesla shares and still ended up owning more, thanks to him exercising his stock options for 10.7 million shares. Considering the stellar financial performances that Tesla just announced for the first quarter, Musk’s compensations likely include more stock options.
No further TSLA sales planned after today
— Elon Musk (@elonmusk) April 29, 2022
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