Musk sold 5.3 million shares of Tesla shares at an average price of $ 905.30, according to documents he made with the Securities and Exchange Commission on Thursday. Sales accounted for only 3.1% of Tesla’s shares, which it held straight at the beginning of Tuesday’s day, and just under 2% of its total holdings in Tesla, if the options for shares it controls are included.
The documents do not reveal the reason for the sale, but it seems to raise funds to make his planned purchase on Twitter and make the company private. In a tweet later Thursday night, Musk answered a question about the sale of shares with the remark: “No more sales of TSLA are planned after today.” But it was unclear whether that meant there would be no other sales after the sales he announced took place on Tuesday, or whether there were additional sales on Wednesday and Thursday that he has not yet made. has reported.
Company insiders, such as Musk, must report purchases or sales of their company’s SEC shares to inform the wider investment community about their activities. But they have a few days to make that submission and still follow the rules.
Musk’s sales of Tesla shares were large enough to put down the share price. The number of shares sold was 20% of the normal trading value of Tesla shares so far this year before Tuesday. And Tesla shares lost 12.2% of their value during trading on Tuesday, the biggest one-day decline in Tesla shares since September 2020. The fall in shares sparked a sharp sale from other investors as 45 million shares traded, about twice the volume of transactions the day before.
Tesla investors could also sell shares this week for fear that Musk will not be able to devote as much time and attention to Tesla, which has very ambitious growth plans and growing competition from traditional carmakers who spend billions on their own electric vehicles. means. offers. Musk is expected to use his vast Tesla holdings, which have made him the richest man on the planet, as a way to fund his Twitter purchase, but that doesn’t mean he has to sell all the stocks he needs to pick up. the full purchase price. Instead, he can use the shares as collateral for loans to raise money.
But there are limits to how much money he can raise simply by pledging his shares to Tesla as collateral. He can raise more money by simply selling some of his shares to Tesla. Tesla’s corporate rules state that employees and directors of the company can raise only 25% of the value of the shares pledged as collateral.
As of June 30, 2021, company records show that he had already pledged 88.3 million of his shares in Tesla as collateral, but those shares were pledged years ago when Tesla’s shares were worth a small part of their current value. He will probably be able to borrow more money even for some of these shares. And the roughly 79 million unlisted shares he owns after Tuesday’s sale could be used to borrow $ 17 billion, even with the recent drop in Tesla’s share price.
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