Elon Musk caught the market by surprise this week when filings revealed he had sold nearly $7 billion worth of Tesla stock, a move that will help him shore up his finances as he begins a high-risk battle against Twitter in Delaware court.
Less than four months ago, just after the social media platform accepted his now-contested $43 billion buyout offer, Musk had separately sold $8.5 billion worth of Tesla stock. At that time, he sought to assuage worried investors about the dump, pledging that there were “No further TSLA sales planned after today.”
News of this week’s reversal stirred commotion on the online message boards that track Tesla’s activity, with users posting hundreds of animated comments.
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One highly rated post in the “Tesla Investors Club” subreddit recounted Musk’s earlier promise to uphold a “first in, last out” approach to investing in the electric carmaker.
“Good thing he was never in the Marine Corps,” griped another frustrated user.
In a separate thread, another commenter vented that “getting involved with this Twitter shenanigans was the wrong move” for Musk. “It's cool if he wanted to vent his frustrations with how Twitter operated,” the person said, “but sometimes he goes too far.”
Others simply lamented that the stock sales had become a “drag” on Tesla’s share price, while users on the r/WallStreetBets subreddit posted memes mocking Musk’s prior claim that there were no more sales planned.
Musk took to Twitter on Tuesday evening and stated that his selling spree was over. He defended the stock dump as insurance in “the (hopefully unlikely) event that Twitter forces this deal to close *and* some equity partners don’t come through,” lest he be forced into an “emergency sale of Tesla stock.”
“This is really Musk reading the room that with a weak case going into Delaware, the chances that he's going to have to acquire Twitter are increasingly getting higher,” Dan Ives, a managing director at Wedbush Securities, attested to The Daily Beast.
Musk pledged to invest money back into Tesla if the Twitter deal ultimately doesn’t go through. And as usual, this week he enjoyed a stream of support from some of his loyal acolytes, who have emerged as a vocal constituency on social media.
On the Tesla Investor Club subreddit, multiple users cheered the price drop that resulted from his sell-off, believing that it gave them the opportunity to buy more stock at a bargain price.
“To me Elon selling is great news,” one commenter wrote. “Now I feel better about the drop and more comfortable to add.”
Another user speculated that Musk, having sold roughly $6.9 billion worth of stock, would be unlikely to add to that figure. The billionaire has repeatedly expressed an affinity for the sexual innuendo, much like he has for the number “420,” which is frequently associated with marijuana. His initial Twitter offer was priced at $54.20 per share.
Since signing a binding agreement with Twitter last spring, Musk has tried to cancel the deal, claiming that the company has severely undercounted the amount of spam and fake accounts on its platform. The company responded last month by suing Musk in the Delaware Court of Chancery and urging a judge to force him to complete the transaction.
Soon after, the billionaire fired back with what he claimed was evidence of Twitter’s inaccurate estimates, alleging, for instance, that it has severely overstated the volume of active users it can target with ads.
Twitter sought to slap down those claims in embarrassing fashion, arguing that the app Musk used to estimate spam on the platform had flagged his own account as potentially fake.
In a research note distributed on Wednesday, Wedbush Securities outlined four possible conclusions to the saga.
The two most likely, it said, were Musk paying Twitter a settlement or damages in the range of $5 billion to $10 billion, or the court forcing him to follow through on the full $43 billion deal.
While the initial agreement included a $1 billion breakup fee, Ives said it is a “pipe dream” that Musk would only have to pay that amount. Wedbush called it equally unlikely that the Delaware court finds entirely in Musk’s favor and lets him walk away without paying any fee.
Ives thinks Musk and Twitter could settle on a reduced acquisition price of around $50 per share, though it will be up to the social media firm’s board if it’s willing to entertain a modified offer.
Twitter investors are evidently growing more confident that a deal will go through. The company’s stock, which had tanked earlier this summer to less than $33 per share, has since rallied by more than a third.
