Musk’s Tesla share sales approach US$40b
ELON Musk has sold another US$3.58 billion worth of Tesla shares, bringing the total amount he has offloaded since late last year to almost US$40 billion.
The latest disposal of about 22 million shares this week coincided with the Twitter chief executive falling from the top spot on the Bloomberg Billionaires Index (BBI), a position he had occupied since September 2021.
Bloomberg data showed that the recent sales shrank Musk’s stake in the company to about 13 per cent. He was worth US$160.9 billion at Wednesday’s close, ranking second to France’s Bernard Arnault on the BBI.
Tesla’s market value slumped below the US$500 billion mark for the first time since November 2020. The disclosure sent its shares down as much as 3.5 per cent, to US$151.33, before the start of regular trading on Thursday (Dec 15).
Musk’s persistent selling, even after repeated assurances that he was done offloading Tesla shares, reflected mounting pressure on Twitter’s finances. His erratic and impulsive approach to running the social media company alienated advertisers, and efforts to bring in more revenue from subscription fees backfired when impostor accounts exploited a poorly-executed rollout of verification badges.
The chaos at Twitter has been an overhang on Tesla, which is facing its own set of challenges. The carmaker has cut prices and production this quarter in China. It has also taken the rare step of offering incentives in the US.
Musk said the company is struggling to cope with the effects of China’s slumping property market, Europe’s energy crisis and the Federal Reserve’s interest rate increases on demand.
For months, Musk tried to get out of the Twitter deal, but ultimately failed. To finance the purchase, he offloaded more than US$15 billion of Tesla shares before closing the transaction – about US$8.5 billion in April, then another US$6.9 billion in August. In November, he sold another US$3.95 billion of his holdings.
He layered a significant amount of high-interest debt on Twitter’s balance sheet as part of his buyout. The company’s debt load swelled to about US$13 billion, from US$1.7 billion before the deal. The company now faces annual interest payments approaching US$1.2 billion. This could get more expensive, because the rates on about half of Twitter’s debt are not locked in, and will rise with the market.
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Earlier this week, Musk tweeted: “At (the) risk of stating the obvious, beware of debt in turbulent macroeconomic conditions, especially when (the) Fed keeps raising rates.”
This year, Musk’s fortune dropped by US$109.4 billion, while Tesla stock plunged 55 per cent through Wednesday’s close. BLOOMBERG
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