Elon Musk’s unanticipated Tesla share sale dwarfs Twitter losses

Elon Musk’s attempt to cancel a purchase Twitter Inc could leave the richest man in the world in a stronger financial position than before it unveiled a $44 billion deal, with billions of dollars in cash from the sale Tesla the shares are now in the bank.

After Musk canceled his April 25 deal to buy the social media platform on Friday, and Twitter promised to force him to fix things, both sides have faced a potentially drawn-out legal battle that could cost Musk billions of dollars, according to legal data. experts.

Whatever the outcome, Tesla’s CEO currently appears to be handling roughly $8.5 billion in cash from the automaker’s late-April stock sale to finance Acquisition of Twitter. In the last week of April, Musk sold 9.6 million Tesla shares for an average price of about $885 per share.

“Now he is almost certainly in a better financial position than a year ago because he sold so many Tesla sharesespecially at a fairly high price,” said Sam Abuelsamid, an analyst at Guidehouse Insights.

“However, depending on what the final outcome of the trial over this is, he could be in a much worse position.”

Elon Musk trades Twitter and Tesla: https://fingfx.thomsonreuters.com/gfx/mkt/myvmnlnzdpr/Pasted%20image%201657562098365.png

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At the time Musk was selling his shares, Tesla investors were worried that buying Twitter might distract Musk as Tesla faces growing economic concerns and increased competition from competitors. But while CEO stock sales usually make investors nervous, the Twitter deal provided Musk with a reasonable rationale for cutting his massive stake in Tesla.

In December, Musk cited pending option expiration and tax payments for the sale of more than $16 billion in Tesla shares.

Since selling Tesla shares in April, they have fallen 19%, and shares in other companies have suffered due to investor fears about inflation and a potential recession. If Musk had not sold those Tesla shares, they would be worth almost $1.6 billion less now.

It is not yet clear how much income tax Musk may pay on the proceeds from the sale of his Tesla shares.

Musk does not receive a salary from Tesla, instead earning billions of dollars in stock options after hitting several stock and performance targets in recent years. He still owns about 16% of Tesla, worth about $115 billion.

If Musk loses his lawsuit with Twitter and is forced to complete the acquisition or pay a hefty fine, Abuelsamid said, he would likely have to sell more Tesla shares, scaring investors and eroding the value of his remaining stake in Tesla.

The mask failed Twitter shares he bought before announcing he would acquire the company. Musk purchased 73 million shares of Twitter for $2.64 billion between January and April at an average price of about $36 per share. Shares of Twitter fell 9.5% to $33.50 on Monday. At that price, the value of his Twitter stake has dropped by about $200 million.

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