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Elon Cautions Against Debt, Sells More Tesla Stock

By Will Ellis
Last Updated on January 2, 2023

Elon issued a debt warning to others, in a tweet, after selling more Tesla stock, in order to keep Twitter afloat. Cautions “unstable macroeconomic conditions.”

  • Elon Musk has sold another portion of Tesla shares, worth roughly $3.6bn, an action that runs the danger of infuriating already irate electric car firm stockholders even more.
  • Since unveiling his acquisition of Twitter, the tycoon who gained control of the social media business in October has auctioned four tranches of shares totalling about $23bn.
  • Since announcing in April that there would be “no future TSLA sales” to fund the agreement, this is the third selling.
  • Last week’s Monday through Wednesday was the time period for the current sell-off, which involved 22mn shares of the car company.

Chief of Twitter, Elon Musk, raised around $3.6bn through the sale of 22mn additional shares of his publicly listed car company, Tesla.

This follows his November sale of 19.5 million Tesla shares (TSLA), as Tesla’s shareholders are speaking up a lot more about the new moves.

In April, when he sold a sizable percentage of the car company in preparation for Elon’s $44bn Twitter buyout (no longer publicly-listed), Musk promised that there would be no more sales of Tesla shares. However, he sold another piece in November.

Based on an SEC filing, Musk traded his latest recent batch of shares for the first three days of last week. 

Latest: TSLA Stock and Twitter Company

The median sale price per share ranged from about $155 to about $175 throughout the course of the several transactions in which they were sold.

No rationale was given. However, Musk is the first to confess that Twitter is losing a substantial amount of money as a result of a sharp decrease in revenue and that the firm has a large debt burden with high interest rates. Although there have been many redundancies, he has been reducing spending.

“At the risk of stating the obvious, be wary of debt in turbulent macroeconomic conditions,” he tweeted last week, to paraphrase. Since March, the Federal Reserve has increased the interest rate 7 times, with the latest by 0.5%.

In 2022, Telsa share price has dropped by roughly 60%. Early trading for this week shows a small increase.

Bottom Line

The Twitter crisis is purportedly seeing advertisers quit Twitter. Given that most business nowadays is driven by strategic attention, it is still unclear whether or not that assertion is accurate.

There are various factors Musk may find appealing when purchasing debt. Bloomberg calculated that this would spare Twitter $350 million in interest charges every year. Additionally, Musk will probably be able to purchase the bonds at a significant discount, lowering the firm’s debt load. 

Fulfilling the responsibilities would improve Musk’s situation if Twitter’s profitability worsens; last month, he notoriously warned there might be staff insolvencies.

Musk fought tooth and nail to get out of the deal, but in the end paid for Twitter in October and took the social network independent. Due to ambiguity around its regulation methods or absence thereof, some partners withdrew, further stretching finances. The idea of a company in chaos has been fuelled by Musk’s own regular and occasionally combative tweets, particularly those aimed at former Twitter workers and in email leaks.

Due to the trades, Musk’s position as the highest-paid individual in the world has plummeted to second, after LVMH CEO Bernard Arnault.

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