Elon Musk, the CEO of Tesla Inc., sold shares in the electric vehicle manufacturer for $6.9 billion, claiming that the money might be used to finance a prospective Twitter takeover if he loses a court battle with the social media site.
“In the (hopefully unlikely) event that Twitter forces this deal to close *and* some equity partners don’t come through, it is important to avoid an emergency sale of Tesla stock,” he said in a tweet late on Tuesday.
In early trading, the microblogging platform’s shares increased 3.5% to $44.35 but remained substantially below Musk’s offer price of $54.20 per share. At $882, Tesla stock was up roughly 4%.
Early in July, Musk broke his promise to pay $44 billion to acquire Twitter. Musk’s claim that he was deceived about the number of spam accounts on the social media platform has been dismissed by Twitter as buyer’s remorse following a decline in technology stocks. Twitter has sued Musk to compel him to finish the transaction. On October 17, the two parties will go on trial.
When asked if he was done selling Tesla shares after the share sale was announced on Tuesday, Musk responded “yes” on Twitter and added that he would buy it again if the Twitter acquisition did not go through.
“The removal of the ‘firesale’ risk, the fact Musk has already raised cash in case of a Twitter decision going against him and the comment that he’ll buy back stock if Twitter deal gets dropped all builds into a positive bias for Tesla,” said Mark Taylor, a sales trader at Mirabaud Securities.
The stock sale happens soon after Musk stated that Tesla was a “buying opportunity” during the company’s annual general meeting.
“Elon’s sale of (Tesla shares) over the past three days significantly increases odds the (Twitter) deal gets done, albeit at a slightly lower price $50-$51/share,” Gary Black, managing partner of Future Fund LLC, said in a tweet.
According to a source, Musk sold 7.92 million shares between August 5 and August 9 and now owns slightly under 15% of the company. With the most recent sales, Musk has now sold roughly $32 billion worth of Tesla stock in less than a year.
On Tuesday, Musk also hinted that he would launch his own social media service. He responded with “X.com” after a Twitter user questioned him about the possibility of starting his own platform if the acquisition failed through.
Additionally, he stated that Tesla would start selling the more expensive, longer-range Semi commercial truck this year.
The 500-mile range truck is anticipated to cost $180,000, but under a U.S. subsidy programme that was passed by the U.S. Senate, it would be eligible for a tax cut of up to $40,000. Since the automaker released better-than-expected profits on July 20, Tesla shares have increased by about 15%.