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Why Did Elon Musk Sell Tesla Stock Worth $7B?

Story Highlights

After selling a whopping 7.9 million shares of Tesla in several transactions made between August 5 and August 9, Elon Musk is in the limelight once again.

Elon Musk is on a selling spree. The billionaire sold 7.9 million Tesla (TSLA) shares worth a whopping $7 billion between August 5 and August 9, as per the SEC filings from the last few days that went public yesterday.

Amid growing concerns over the final outcome of his disputed $44 billion deal to buy Twitter, Musk clarified that the sale of Tesla shares was to avoid an emergency sale of the stock if he is forced to buy Twitter for the said amount.

Following the news, shares of Tesla slipped 2.5% to close at $850 on August 9.

Notably, this is not the only gigantic Sell that Musk has made on the stock. Earlier in April, Musk had exited a substantial stake, worth $8.5 billion, in the auto company.

The sale of Tesla shares is directly related to Elon Musk’s legal battle with Twitter (TWTR), a social networking giant, which he committed to buy in April for $44 billion or $54.20 per share.

In July, however, Musk terminated the deal, accusing Twitter of not giving him rightful and complete information on the company’s future.

Consequentially, Twitter filed a lawsuit, forcing Musk to go ahead with the signed deal.

On being questioned if Musk was done selling Tesla, he replied, “Yes. In the (hopefully unlikely) event that Twitter forces this deal to close and some equity partners don’t come through, it is important to avoid an emergency sale of Tesla stock.”

TipRanks’ Insider Trading Tool shows Elon Musk’s Informative Sells of TESLA stock over the past few weeks and months.

Wall Street’s Take on TESLA

On TipRanks, Tesla has a Hold consensus rating, which is based on two Buys and 16 Holds. Tesla’s average price target of $41.46, implies 3.2% downside potential from current levels.

Meanwhile, TipRanks’ Stock Investors tool shows that retail investors currently have a Negative stance on TESLA, with 1.1% of investors decreasing their exposure to TSLA stock over the past 30 days.

Concluding Thoughts

While one may believe that Musk will not sell any more shares of Tesla, history may repeat itself. Back in April, when he made the huge Sell call of approximately $8.5 billion, Musk had stated on social media that he was done selling Tesla stock.

However, Musk also added that he may buy back shares of Tesla if the Twitter deal falls apart. Further, he wishes to create his own social media platform X.com.

The world will know better once the lawsuit over the Twitter deal is played out in court in October.

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