Tuesday, December 5, 2023

Tesla sinks to almost two-year low on Elon Musk stock sales, Twitter distraction

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Tesla CEO Elon Musk speaks at an event in Hawthorne, California April 30, 2015.

Patrick T. Fallon | Reuters

Tesla shares dropped more than 7% on Wednesday to close at $177.59, their lowest since November 2020, after CEO Elon Musk disclosed the sale of close to $4 billion worth of stock in the electric car company.

The stock is down 50% year-to-date. As of Tuesday’s close, it was the 465th worst performer this year in the S&P 500.

Musk apparently sold the latest batch of Tesla shares at least in part to finance his $44 billion acquisition of Twitter, which closed in late October. His sales were revealed through financial filings with the SEC on Tuesday night, published as votes from the U.S. mid-term elections were being tallied.

According to an analysis by Ben Silverman, Director of Research for VerityData, Musk’s latest Tesla stock sales were very well-timed. Silverman tracks insider sales by company executives.

Tesla closed at $215.31 on Nov. 3, the day before his first sale in this batch, and closed at $191.30 on Nov. 8, the day of his most recent disclosed sale. Shares declined about 11% over those three trading days.

VerityData’s InsiderScore notes that Musk had 267.6 million shares of Tesla pledged as collateral for personal indebtedness as of Mar. 31. He holds about 19.7% of Tesla’s outstanding shares following the latest sale of about 19.5 million shares, a decline from about 22.4% ownership at the end of 2020.

Musk still owns 445.6 million Tesla shares and holds exercisable options for 177.3 million more Tesla shares at $23.34, as well as some smaller tranches of options.

Musk sold $8.5 billion worth of Tesla shares at $294.36 per share in April and $6.9 billion worth of his stock at $289.79 per share. Late last year, Musk sold $6.6 billion worth of Tesla shares at $357.23.

“Regardless of his reasoning for selling TSLA shares right now, it’s hard to ignore the expert timing of his previous sales,” InsiderScore wrote. “In other words, Musk is no dummy, so following his lead may not be a bad idea.”

Musk has pulled dozens of Tesla employees, mostly Autopilot engineers, to Twitter to help him with code review and other work. He hasn’t made clear how he or these employees will divide their schedules and responsibility at the companies.

WATCH: Musk sells more Twitter shares

Musk sells $19.5 million more Tesla shares

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