Elon Musk is, according to Forbes, the world’s richest person. But most of his wealth is wrapped up in Tesla stock.
In order to buy Twitter for $44 billion—a deal he is now trying to weasel out of in court—Musk secured loans from various banks and raised money from investors. (Originally, the deal included loans on Tesla stock.)
For all of his aggregate wealth, the billionaire did not have the liquid cash to buy Twitter. But in the past year, Musk has sold about $32.8 billion worth of Tesla stock, according to disclosures to the US Securities and Exchange Commission (SEC), including $6.9 billion liquidated just this week.
On Aug. 9, Musk disclosed the sale of 7.9 million shares of Tesla stock for $6.9 billion, about 5% of his total position. The sale dropped Musk’s ownership in Tesla to just under 15%, though he is still the largest shareholder by a wide margin (The Vanguard Group owns the next-largest stake with about 6%, according to data from FactSet.)
This latest stock dump is not an isolated incident: Musk has largely spent the last year in selling mode. Musk has dumped about $33 billion worth of Tesla stock while acquiring about $24 billion worth in the same period.
On April 28, after Musk sold $8.5 billion in Tesla stock, he pledged to stop selling, telling his Twitter followers, “No further TSLA sales planned after today.”
But Musk reneged on that promise in a matter of months.
After Musk’s most recent stock sale was disclosed, Tesla investor Sawyer Merritt asked Musk if he is done selling. Once again Musk replied, “Yes.”
“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.” Musk told another Twitter user that if he can successfully get out of the Twitter sale he will buy up more shares in Tesla.
Both Twitter and Tesla stock rose about 3% in trading today, the first day after the news was announced. In a tweet, Wedbush Securities analyst Daniel Ives called Musk’s attempt to terminate the deal a “poker move,” and Wedbush raised Twitter’s price target from $30 to $50, just shy of the agreed-upon $54.20 per share price. This change accounts for the likelihood that the deal will close—either by Twitter winning in court this autumn, or by the two parties settling out of court.
Greg Martin, co-founder of the investment firm Rainmaker Securities, said in an email to Quartz that Musk’s sale came at an opportune time. Not only does Twitter have the upper hand in court, but Tesla stock has risen 25% over the past month, helped by the Senate passage of the Inflation Reduction Act, which promises tax credits for electric vehicle purchases.