Elon Musk sold 22 million shares of Tesla this week, netting about $3.6 billion, he said in a regulatory filing.
The sales bring the total he’s sold this year to around $40 billion. Wall Street is worried that the enigmatic CEO, who earns $55 million a year to run Tesla, is pouring not only his cash but also his attention into the money-losing Twitter at the expense of the electric car maker.
Tesla shares dipped at the market open as investors digested the news, then rebounded to a 1.2% gain, to $158.63. The gains came even as the broader markets declined about 1.5%.
Tesla shares are down 49% in the last 52 weeks.
Musk previously sold 7.92 million Tesla shares in August for about $6.9 billion, and in April sold $8.5 billion worth of his stock. The sales have reduced his stake in the company to 13.4%, from about 17% a year ago, according to filings submitted to the Securities and Exchange Commission.
While Musk is no longer the world’s richest man, thanks largely to the drop in Tesla share price, he still controls a vast fortune, which he appears to be using to prop up Twitter, which he bought in late October for $44 billion.
The multiple sales have shaken Tesla investors, and Wall Street is growing increasingly critical.
“The Twitter nightmare continues as Musk uses Tesla as his own ATM machine to keep funding the red ink at Twitter, which gets worse by the day as more advertisers flee the platform with controversy increasing driven by Musk,” Wedbush Securities analyst Dan Ives wrote in a note to clients. “When does it end? This remains the worry on the Tesla story as Musk has managed to change the narrative of Tesla from the fundamental EV transformation story to a ‘source of funds’ funding the Twitter turnaround, which we believe will go down as the most overpaid tech acquisition in the history of M&A and remains a train wreck situation.”
Musk’s tenure at the social media platform has been fraught, to put it mildly. More than half the staff has melted away through layoffs and attrition, in part driven by Musk’s demands that the remaining employees commit to “extremely hardcore” work or leave. He’s insisted that staff return to the office, though he reportedly has not paid the rent for the San Francisco headquarters and has threatened employees who leak inside information to the press.
While the mercurial Musk has restored Donald Trump — who has yet to use his resurrected account — and many other previously banned accounts, critics have said the use of hate speech has leaped since he took over.
Under the banner “The Twitter Files,” Must has also enlisted several journalists to release internal communications over how accounts and news stories were shut down or blocked from the service under the prior leadership in the past few weeks. But the rollout of the material has been widely panned as offering only select material, including private conversations between employees, rather than offering the broad transparency they are being touted as.
And amid the chaos on the platform, advertisers have fled. Twitter has lost half of its top 100 advertisers since Musk took over. These 50 companies spent a combined $750 million on Twitter ads in 2022, and $2 billion since 2020, according to Media Matters.
“The nightmare of Musk owning Twitter has been an episode out of the Twilight Zone that never ends and keeps getting worse,” Ives wrote. “In late April, Musk said he was done selling Tesla stock. Instead, the exact opposite has happened and put massive pressure on Tesla shares, which have significantly underperformed the market since Musk took over Twitter in late October.”
Ives said it’s a “boy that cried wolf situation,” with investors, even those bullish on Tesla, “worried what is around the corner for Musk in this spider web of Tesla and Twitter.”
“Investor frustration is building as the Musk brand has quickly deteriorated over the past six months and has taken an accelerated turn for the worse since he officially took over Twitter ownership,” the analyst continued. “The perception of the Street is reality for now and Musk appears to be laser focused on Twitter instead of his golden child Tesla, which instead is seeing him sell stock on a consistent basis.”
While Ives remains bullish on Tesla and said the stock has fallen below its inherent value, he wrote that “Musk continues to throw gasoline in the burning fire around the Tesla story by selling more stock and creating Tesla brand deterioration through his actions on Twitter. We believe its getting to the point that more activism and growing investor frustration will force the Board of Tesla to confront some of these issues head on in the near-term.”
“This is a moment of truth for Musk and Tesla.”
