Elon Musk sells Tesla shares worth $8.5bn in apparent bid to fund Twitter takeover

Billionaire says he does not plan to sell more of the electric car maker's shares

Elon Musk has been Tesla chief executive since 2008 and has long been its largest shareholder. Reuters

Elon Musk, who struck a deal to acquire Twitter for $44 billion, has sold about $8.5bn worth of Tesla shares in an apparent move to begin funding his buyout of the microblogging platform.

The world's richest person offloaded about 9.6 million shares of the electric vehicle maker this week, according to regulatory filings made with the US Securities and Exchange Commission.

Mr Musk offloaded about 4.4 million shares of his electric vehicle company on Tuesday and Wednesday. The latest Friday filings showed sales of an additional 5.2 million shares on Thursday.

“No further TSLA sales planned after today," Mr Musk said on Twitter.

Mr Musk personally guaranteed $21bn of the equity portion of his acquisition of Twitter, which was announced on April 25.

Analysts and Tesla investors have long believed that he would need to sell more Tesla shares to cover this amount.

A further $12.5bn of the Twitter deal is secured by his stake in Tesla. The transaction is expected to be finalised in 2022.

Mr Musk began offloading Tesla shares late last year as part of a pledge to sell 10 per cent, or about 17 million shares, of his stock in the EV maker.

However, Thursday's revelation is different and could rattle Tesla's shareholders, most of which are retail investors.

The EV maker's valuation dropped by $126bn on Tuesday after its share price fell 12 per cent — the most since September 2020 — on the speculation that Mr Musk may sell shares to complete his Twitter takeover.

“It is a brutal cycle for Tesla investors to navigate and casts a shadow on the name, with Mr Musk selling more stock,” said Dan Ives, managing director of Los Angeles-based Wedbush Securities.

“The Twitter deal is becoming an albatross for Tesla’s stock and this pours gasoline on the raging fire.”

Mr Musk made his surprise bid to buy Twitter on April 14, shortly after he quietly bought shares in the company and declined a seat on its board of directors.

Twitter tried to thwart the takeover bid by adopting a limited-duration shareholder rights' plan, which would enable its shareholders to buy additional stock, otherwise known as a “poison pill” strategy.

The Twitter deal is becoming an albatross for Tesla’s stock and this pours gasoline on the raging fire

Daniel Ives,
managing director of Wedbush Securities

A proponent of free speech and prolific tweeter, Mr Musk said he wanted to buy social media platform so that he could introduce several reforms.

Some of the pledges he made were to promote free speech, open up Twitter's algorithms to the public and add an “edit” button, which is now being tested by the microblogging platform.

However, Mr Musk has yet to give concrete details on his plans to bring about these changes.

Critics are concerned that Twitter might turn into a battleground for unfiltered content and prove to be a challenge for regulators, who already have their hands full as they try to regulate content — disinformation and harmful posts, in particular — on the internet.

Last week, the EU approved a law to regulate online content on platforms owned by big technology companies, which face billions of dollars in fines if they do not comply.

There is also the issue of user verification, which is used by Twitter to denote a real account through the placement of a blue tick next to the account user's name.

Current Twitter rules stipulate that a user can receive a blue tick if they provide links to an official website, provide a photo of a valid official government-issued identification document or an official email address.

Mr Musk said on Tuesday that he would ensure all users are human, a reference to another of his pledges to combat bots on the platform.

“I also want to make Twitter better than ever by enhancing the product with new features, making the algorithms open source to increase trust, defeating the spam bots and authenticating all humans,” he said, without providing specifics.

The acquisition also triggered a firestorm, with several politicians taking sides and reactions ranging from “encouraging” to “dangerous".

Mr Musk was worth about $252bn on the Bloomberg Billionaires Index as of Friday.