Within three days of Elon Musk closing a deal to buy Twitter, he sold about $8.5 billion worth of Tesla stock to help fund the purchase.
Musk announced the sale of 9.6 million shares in filings with the Securities and Exchange Commission on Thursday and Friday. The trades were made at prices ranging from $822.68 to $999.13 per share.
The world’s richest man, who is the CEO of Tesla, tweeted Thursday evening that he does not anticipate any further sales of shares in the company.
Kevin Kaiser, professor of finance at the Wharton School at the University of Pennsylvania, said the sale of Musk stock means the Twitter deal is more likely to go through because it indicates Musk has the intention to find the money.
San Francisco-based Twitter said on Monday it had agreed to be bought by Musk for $54.20 a share, or about $44 billion. Analysts said the deal could make Tesla investors nervous that Musk is distracted by Twitter and less engaged in running the electric car company – and has to sell a large number of Tesla shares to fund the acquisition. Musk is Tesla’s largest shareholder.
Shares of Tesla closed down 12% on Tuesday, the biggest one-day drop since Sept. 8, 2020. Shares of Tesla Inc., based in Austin, Texas, were selling for around $884 on Friday.
Kaiser said selling shares now, instead of moving closer to when the deal is expected to close, is a “cautious” move by Musk.
“It makes sense to sell stock before people expect it so that selling it doesn’t put unusual short-term downward pressure on the price” of Tesla stock, Kaiser said.
Before Musk’s Twitter deal closes, shareholders will have to weigh in. So will regulators in the United States and countries where Twitter does business.
So far, however, few obstacles are expected, despite objections from some of Twitter’s own employees and users who are concerned about Musk’s stance on free speech and what it could mean for harassment and hate speech on the platform.
Twitter shares rose slightly to $49.17, still well below the trade price of $54.20.