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Tesla CEO Elon Musk is selling shares in the company.
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Investors now know one reason why Tesla shares are declining – CEO Elon Musk had many shares to sell.
Musk revealed the sale of shares of Tesla (ticker: TSLA) on Thursday night in a 4s form submitted to the Securities and Exchange Commission.
Form 4 is used to disclose sales by company management and other corporate insiders.
Musk sold 4.4 million shares of Tesla’s shares worth about $ 4 billion, presumably to fund part of his Twitter purchase (TWTR). Musk sold his shares on April 26 and 27, according to Form 4, which is usually filed within days of the sale.
Musk’s $ 54.20 offer for Twitter was accepted by the board on the social media platform earlier this week. The organization, set up by Musk to buy Twitter, will be funded with about $ 25 billion in debt and $ 21 billion in equity. How Musk will finance part of the capital has been hotly debated by analysts and investors.
It turns out that part of this amount was financed by the sale of Tesla shares to Musk.
He said on Twitter Thursday night that he no longer plans to sell shares.
This could be a relief for Tesla investors. According to Wedbush analyst Dan Ives, Musk’s potential sales outweighed Tesla’s shares. Tesla shares have fallen about 12% since Musk’s offer was accepted. The S&P 500 and Nasdaq Composite fell about 0.2% and 1%, respectively.
$ 4 billion is far less than the total share of $ 21 billion listed in the Twitter merger documents. This could mean that some other sources will be involved in the deal to raise the remaining $ 21 billion in equity needed for the purchase. The rest of the money could come from a combination of Musk’s cash – from cryptocurrency profits or something else – existing Twitter shareholders who stay with Musk, or partners who want to invest with Musk.
Shares of Tesla fell 0.5% on Thursday, closing at $ 877.51 after trading at only $ 821.70. Shares were down 2.6% in after-hours trading at $ 854.50.
Musk still owns about 168 million shares of Tesla shares, not counting the more than 100 million share options awarded as part of his 2018 compensation package.
Musk does not like to use brokers to organize secondary sales. He sold his shares in about 140 separate smaller deals. This is not the way large stakes are usually sold, but this is the way Musk sold shares in 2021. These sales were about exercising options and speeding up tax payments on unrealized capital gains.
Write to Al Route at allen.root@dowjones.com
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