Elon Musk’s stake in Tesla keeps shrinking, and so is his overall wealth.
Between Dec. 12 and 14, the Tesla CEO sold nearly 22 million shares worth almost $3.6 billion, according to a filing with the Securities and Exchanges Commission (SEC), the US’s financial regulator.
Meanwhile, Tesla’s stock hit a two-year-low. The electric automaker’s share price has now fallen more than 50% in the past 12 months, as investors’ concerns about Musk’s commitment to the company keep increasing. Tony Sycamore, an analyst at brokerage IG Markets, told Reuters that the latest sale “doesn’t put a lot of confidence in the business, or speak volumes for where his [Musk’s] attention is at.”
Musk’s wealth is closely tied to Tesla’s stock. His focus on Twitter, and away from Tesla, has cost him his top spot as the world’s richest person. The CEO of French luxury group LVMH, Bernard Arnault, has overtaken Musk in both Forbes’s and Bloomberg’s rankings.
Charted: Tesla stock hits two-year low
Musk’s making money for Twitter, by the digits
17%: Musk’s stake in Tesla a year ago, according to Refinitiv data
13.4%: Musk’s stake in Tesla now, according to Refinitiv data
29%: Fall in Tesla shares since Musk closed the Twitter acquisition on Oct. 28
$40 billion: Musk’s total Tesla stock sales over the last year
Less than $500 billion: Value of Tesla shares listed on Nasdaq, down from $1 trillion a year ago
$13 billion: Debt Musk took on to foot part of the Twitter deal bill. Banks that lent him the money are preparing to book losses on the loans this quarter
$8: Twitter’s fee for its subscription blue tick service, which it hopes will create a viable monetization stream for the site which gets 90% of its revenue from advertising–a path that’s been thrown into the lurch since Musk’s takeover
Why did Elon Musk sell Tesla shares again?
On April 29, Musk said he had no more Tesla stock sales planned “after today.” But in August, he sold around 8 million shares for around $7 billion. Even then, he said it’d be the last selloff. “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,” he responded to a tweet asking him if he was done selling.
The Twitter deal closed on Oct. 28. On Nov. 9, Musk again sold almost 20 million shares worth $4 billion. And now this.
Investor Gary Black, managing partner at the Future Fund, whose largest shareholding is Tesla, speculated that Musk was offloading shares before the SEC disclosure. After seeing his suspicion confirmed, Black said he expects the money to go towards clearing some of Musk’s high-interest Twitter loans.
Musk is also reportedly seeking to cut costs at Twitter, whether that’s by refusing to pay for office leases, or withholding severance payments. “There you go. Elon forced to sell Tesla shares to pay bills,” Ross Gerber, co-founder, president, and CEO of Gerber Kawasaki Wealth and Investment Management, tweeted after the SEC filing dropped.
Can Tesla’s stock recover?
Musk seems unperturbed. He said his teams at Tesla and SpaceX are so good that they don’t really need him, and that Tesla “will be great” in the long run. On the third day of selling stock, Dec. 14, Musk tweeted: “I will make sure Tesla shareholders benefit from Twitter long-term.” When a user asked him not to get distracted from Tesla, he replied, “think long-term & avoid leverage.”
Black believes Musk will soon realize that his political views are hurting the Tesla brand, and the board will ramp up pressure for him to come back to Tesla as full-time CEO after handing over Twitter’s reins to someone else. Several overhangs—China production clarity, Biden’s $7,500 subsidy for made-in-America EVs under the Inflation Reduction Act, Tesla’s potential $5-10 billion buyback, its CyberTruck coming mid next year, and so on—are also expected to lift soon.
But others aren’t so optimistic. After all, Musk’s stock sales are only one of many problems plaguing the electric vehicle maker. His general attitude is another. While Musk fanned the flames of political controversies, Tesla’s approval rating has dipped, UK-based survey platform YouGov found. Liberals now view Tesla more negatively than before, and conservatives aren’t stepping in and filling the gap. In Germany, Tesla cars rank low compared to competitors on most accounts, from likability to quality.
Then, there’s growing fear and uncertainty around electric car sales in a weak economy where costs of borrowing is high and rivals are beefing up their offerings. Plus, Tesla’s dealing with millions of recalls, and several investigations target crashes and its autopilot feature.
Plus, expecting the board to act seems like a tall order. As journalist Dave Troy points out, the board is made up of “Musk’s brother and a bunch of people close to them,” and it’s unlikely to oust him—it has yet to take any action.
One more thing: Musk’s Tesla share charity begins at home
The stock sales aside, Musk has also offloaded some shares under the guise of philanthropy. In November 2021, he gifted more than 5 million shares of Tesla to an unnamed organization. According to a tax filing obtained by Bloomberg News, it went to the Musk Foundation, which he launched with his brother Kimbal Musk 20 years ago, in 2002. At the end of 2021, Musk Foundation had assets worth over $9.4 billion.
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