Friday-Tuesday sales were announced in a series of filings with the Securities and Exchange Commission late Tuesday night. They mark Musk’s first sale of Tesla shares since April, when he sold 9.6 million shares, raising $8.5 billion at the time.
Musk did not reveal the reason for the stock sales. But after someone asked him on Twitter if he was done selling Tesla stock, he replied “yes,” and then pointed to the possibility of Twitter being forced to buy as the reason for this latest sale.
“In the (hopefully unlikely) event that Twitter forces this deal *and* some equity partners don’t go through, it’s important to avoid a fire sale of Tesla stock,” he said in his tweet.But back then, he sold Tesla (TSLA) shares in April tweeted “No further TSLA sales are planned after today.”
When someone else asked on Twitter Tuesday if he would buy back Tesla shares if the Twitter deal didn’t go through, he replied, “Yes.”
Tesla’s shares are down nearly 20% of their value so far this year, though they have recovered 14% since the company announced earnings in late July. Tesla shares are up about 2% in premarket trading. Twitter’s shares are up almost 4%.
“This is the last thing Tesla investors want to see,” said Daniel Ives, tech analyst at Wedbush Securities. “The biggest fear was that Musk would sell more stock, and that’s what just happened. It’s a momentary punch in the pit of the stomach. There is no explanation and that adds to the uncertainty.”
Musk has previously sold Tesla stock primarily when he needed to raise cash to pay taxes on the exercise of options that would expire. The stock sale in April, shortly after the Twitter deal closed, marked Musk’s first significant sale of Tesla stock for reasons other than a looming tax bill. Musk received an average price of $869 per share for the shares he sold over the past few days. That’s less than an average price of $883 per share in his Tesla sales in April and well below the average of $1,046 he received when he sold 15.7 million shares late last year. That sale was intended to cover an expected record income tax bill he was facing as a result of the exercise of options that were due to expire.
Despite the recent stock sales, Musk owns 155 million shares of Tesla and has an option to buy nearly 100 million more at a fraction of current prices. The shares he owns, along with the options he holds to purchase other shares, give him control of about 20% of Tesla’s outstanding stock. And the 7.9 million shares he just sold accounts for less than 3% of the stocks and options he owns.