Elon Musk has reportedly sold £5.7 billion worth of shares in Tesla in a bid to shore up his funds if he loses his legal battle against Twitter.
In the event the SpaceX tycoon loses the case, he would be forced to carry out his initial agreement to buy the social media platform.
Musk struck a $44 billion deal to purchase Twitter in July this year, however he soon walked away on claims that the company was untruthful concerning the number of bot and spam accounts on the site.
Twitter has since launched a lawsuit against Musk for attempting to walk away from the deal, with a trial scheduled to take place in Delaware in October 2022.
“Tesla shareholders may well be seething at Elon Musk’s latest share sale, no doubt arguing they didn’t sign up to such erratic behaviour. To be fair, they have every right to be furious,” said AJ Bell financial analyst Danni Hewson.
“Musk may argue it is better to have the readies at hand in case he needs to cough up for Twitter. If he were to lose the legal battle with Twitter and not have funds available to pay the bill, the market would assume he would then have to sell Tesla shares and the stock could plummet.”
“However, whether he sold now or down the line, the whole episode is still very annoying to Tesla investors. Shareholder would expect the value of their investment to be influenced by sales of electric vehicles and battery storage systems, not the fortunes of an entirely separate company.”
The Tesla founder currently has $30 billion in his own money linked to the deal, with over $7 billion of his funds supplied by a selection of backers including Binance, the largest global crypto exchange, and Oracle founder Larry Ellison.
Since the start of this year, Musk sold approximately $8.5 billion in Tesla shares in April, and said he had no extra sales upcoming. However, he sold 7.9 million shares between 5 August and 9 August, and currently owns 155 million Tesla shares, representing a little under 15% of the electric car group.
“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,” said Musk in a tweet.
The tycoon has sold approximately $32 billion in Tesla shares under 12 months, however he said he would buy Tesla stock again if the Twitter deal does not go through.
“You could argue that Musk might buy back the Tesla shares if he doesn’t have to shell out for Twitter, but whatever happens it is another black mark against the entrepreneur,” said Hewson.
