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In the three days after Elon Musk engineered a deal to buy Twitter, he sold roughly $8.5 billion worth of shares in Tesla to help fund the purchase.
Musk reported the sale of 9.6 million shares in filings with the U.S. Securities and Exchange Commission on Thursday and Friday. The trades were made at prices ranging from $822.68 to $999.13 a share.
The world’s richest man, who is the CEO of Tesla, tweeted Thursday night that he doesn’t plan any further sales of the company’s shares.
Kevin Kaiser, a finance professor at the Wharton School at the University of Pennsylvania, said Musk’s share sale means it is more likely that the Twitter deal will close because it indicates Musk intends to come up with the money.
San Francisco-based Twitter announced Monday that 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 will be distracted by Twitter and less engaged in running the electric car company – and have to sell a large number of Tesla shares to finance the acquisition. Musk is Tesla’s largest shareholder.
On Tuesday, Tesla shares closed down 12%, the biggest single-day drop since Sept. 8, 2020. On Friday, shares of Tesla Inc., which is based in Austin, Texas, were going for around $884.
Kaiser said selling shares now, instead of closer to when the deal is expected to close, is a “prudent” move by Musk.
“It makes sense to sell shares before people are expecting it to happen so that his selling doesn’t put unusual short-term downward pressure on the price” of Tesla’s stock, Kaiser said.
Before Musk’s deal for Twitter is completed, shareholders will have to weigh in. So will regulators in the United States and in countries where Twitter does business.
So far though, few hurdles are expected, despite objections from some of Twitter’s own employees and from users who worry about Musk’s stance on free speech and what it might mean for harassment and hate speech on the platform.
Twitter shares rose slightly to $49.17, still well below the deal price of $54.20.