Musk is selling $6.9 billion in Tesla stock, citing the possibility of a forced Twitter deal

Musk is selling $6.9 billion in Tesla stock, citing the possibility of a forced Twitter deal
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Aug 10 (Reuters) – Tesla Inc (TSLA.O) Chief Executive Officer Elon Musk sold $6.9 billion worth of shares in the electric vehicle maker and said the proceeds could be used to fund a potential Twitter deal if he loses a legal battle with the social media platform.

“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 a tweet late Tuesday.

Shares of the microblogging site are up 3.5% in premarket trading at $44.35, but still trade well below Musk’s asking price of $54.20 per share. Tesla shares rose 1.6% to $863.1.

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In early July, Musk tore up his April 25 agreement to buy Twitter for $44 billion. Twitter has sued Musk for forcing him to complete the deal, dismissing his claim that he miscalculated the number of spam accounts on the social media platform as buyer remorse following a slump in tech stocks. The two sides are due in court on October 10. 17

Following Tuesday’s stock sale announcement, Musk took to Twitter and said “yes” when asked if he was done selling Tesla shares, adding that he would buy them again if the Twitter deal went through is not completed.

“The elimination of the ‘firesale’ risk, the fact that Musk has already raised funds should a Twitter decision go against him, and the comment that he will buy back shares if the Twitter deal is dropped is all meaningful contributing to a positive bias for Tesla,” said Mark Taylor, sales trader at Mirabaud Securities.

Tesla did not immediately respond to a Reuters request for comment.

Tesla CEO Elon Musk attends the groundbreaking ceremony for the Tesla Shanghai Gigafactory in Shanghai, China, 7 January 2019. REUTERS/Aly Song

The stock sale comes shortly after Musk said Tesla was a “buying opportunity” at the company’s annual meeting.

“Elon’s sale of (Tesla shares) over the past three days significantly increases the odds that the (Twitter) deal will close, albeit at a slightly lower price of $50-$51 per share,” Gary said Black, managing partner of Future Fund LLC, in a tweet.

Musk, the world’s richest person, sold $8.5 billion worth of Tesla stock in April and said at the time that no further sales were planned. But legal experts had since suggested that Musk would likely sell more Tesla stock if he was forced to complete the acquisition or settle the dispute with a hefty penalty.

Musk sold about 7.92 million shares between Aug. 5 and 9 and now owns nearly 15% of the automaker, according to Reuters calculations.

The recent sales bring Musk’s total Tesla stock turnover to about $32 billion in less than a year.

Tesla shares are up nearly 15% since the automaker reported better-than-expected earnings on July 20, also helped by the Biden administration’s climate bill that, if passed, will cap tax credits for electric vehicles would cancel.

Musk also teased on Tuesday that he could launch his own social media platform. When asked by a Twitter user if he had thought of starting his own platform if the deal didn’t go through, he replied: “”

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Reporting by Hyunjoo Jin in San Francisco and Akriti Sharma, Medha Singh and Sruthi Shankar in Bengaluru; Additional reporting by Shubham Kalia and Shivam Patel; Adaptation by Edwina Gibbs and Anil D’Silva

Our standards: The Thomson Reuters Trust Principles.

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