Why Has CEO Elon Musk Offloaded Tesla Stock of About $25B?

Billionaire CEO of Tesla, Elon Musk disclosed an extra $4.5 billion in Tesla Inc. stock sales in fresh regulatory filings on Friday, bringing his total stock sales to more than $8.5 billion since his deal to buy Twitter Inc.

According to the new disclosures, Tesla’s chief executive officer sold more than 5 million shares on April 28. These came after the company said late Thursday that it had sold 4.4 million shares in the two days prior. During the last six months, Musk has sold approximately $25 billion worth of Tesla stock.

Tesla’s CEO has put $21 billion of his own money into the financing package for the social networking platform, which he agreed to buy for $44 billion on Monday. According to filings with the US Securities and Exchange Commission, Musk has sold 9.6 million Tesla shares, or about 5.6% of his holding in the company, since then.

The billionaire is borrowing $12.5 billion to pay the takeover, in addition to his own $21 billion. Another $13 billion will be provided by a bank consortium led by Morgan Stanley. It was unclear how the billionaire planned to raise the remaining equity funding.



Musk owns 43.6% of the unlisted SpaceX rocket company, which is reputedly worth $100 billion. According to the Bloomberg billionaires index, Musk’s current net worth is $250 billion.

With Musk negotiating $25.5 billion in debt and margin-loan financing from lenders including Morgan Stanley, the Twitter deal is set to be one of the largest leveraged buyouts in history. If the agreement were to fall apart, the party who broke it would be compelled to pay a $1 billion termination fee under certain situations.

Musk’s pursuit of Twitter has once again demonstrated how much Tesla’s value is based on how committed and invested its CEO is in the company. He has been the company’s CEO since 2008 and its largest stakeholder for a long time.

Tesla’s CEO is reportedly considering a wage freeze for executives and has a new CEO in mind to replace Parag Agrawal, who is stepping down. Musk said he hoped to increase revenue by developing new features such as charging for quoting popular tweets or embedding in an attempt to persuade banks to co-fund the takeover.

Tesla shares jumped 5% in Friday morning’s trading after they tumbled about 20% since the billionaire’s disclosure of his 9% stake in Twitter early this month.

Image Wikimedia

 



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