Selling Musk Stock in Tesla Dwarves Twitter’s Loss

July 11 (Reuters) – Elon Musk’s attempt to cancel his purchase of Twitter (TWTR.N) may leave the world’s richest person in a stronger financial position than he was before he unveiled a $44 billion deal, with billions of dollars in cash from the sale of Tesla. Now sitting in the bank.

After Musk on Friday tore up an April 25 agreement to buy the social media platform, with Twitter promising to force him to do good, the two sides face a protracted legal battle that could cost Musk billions of dollars, according to the law. experts.

Whatever the outcome, it appears that Tesla’s CEO is currently sitting on about $8.5 billion in cash raised from the automaker’s stock sale in late April to fund the Twitter acquisition. In the last week of April, Musk sold 9.6 million shares of Tesla at an average price of about $885 per share.

“He’s almost certainly in a better cash position now than he was a year ago because he sold a lot of Tesla stock, especially at a fairly high price,” said Sam Abu Samid, analyst at Guidehouse Insights.

“However, depending on the final outcome of the litigation on this matter, he could end up in a much worse situation.”

Abu Samid said that if Musk loses his legal battle against Twitter and is forced to complete the acquisition or pay a heavy fine, he could be forced to sell more Tesla shares, upsetting investors and hurting the value of his remaining stake in Tesla.

Tesla shares fell 6.5 percent on Monday. After his April stock sales, Musk tweeted, “No further plans for TSLA sales.”

Brian Quinn, a professor at Boston University Law School, said he wouldn’t be surprised if Musk and Twitter eventually agreed to compensate Twitter more than $1 billion.

“For his part, Musk will be poorer, but he won’t cling to owning the company,” Quinn said.

While Musk sold his shares in April, Tesla investors were concerned that buying Twitter could become a distraction for Musk as Tesla faces mounting concerns about the economy and increased competition from rivals. But while CEO stock sales usually make investors nervous, the Twitter deal offered a plausible explanation for Musk to reduce his huge stake in Tesla.

In December, Musk cited the impending expiration of options and tax payments for the sale of more than $16 billion of Tesla stock.

Since selling Tesla shares in April, the stock has fallen 19%, as other growth stocks weighed by investor concerns about inflation and a possible recession. If Musk had not sold these Tesla shares, they would now be worth about $1.6 billion less.

It’s not clear how much income tax Musk might pay on the proceeds from the sale of his Tesla stock.

Musk receives no salary from Tesla, and instead earns billions worth of stock options after hitting several stock and performance goals in recent years. He still owns about 16% of Tesla, which is worth about $115 billion.

Musk wasn’t very good at handling the Twitter shares he bought before announcing his acquisition of the company. Musk bought 73 million Twitter shares for $2.64 billion during the January-April period, at an average price of about $36 a share. Twitter stock fell 9.5% to $33.50 on Monday. At this price, the value of his Twitter stake is down around $200 million.

(Reporting by Noel Randwich and Hyunjoo Jin) Editing by Jonathan Otis and Chris Reese

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