Musk Sells 22 Million Tesla Shares Worth $3.6 Billion, Analysts Questioning Tesla Leadership

Tesla CEO Elon Musk walks next to a screen showing an image of Tesla Model 3 car during an opening ceremony for Tesla China-made Model Y program in Shanghai, on Jan. 7, 2020. (Aly Song/Reuters)

Elon Musk recently sold millions of shares of his auto firm Tesla, which comes just weeks after the billionaire entrepreneur acquired Twitter.

Between Dec. 12 and 14, Musk sold around 22 million Tesla shares valued at roughly $3.6 billion, according to a filing done with the Securities and Exchange Commission (SEC) on Wednesday night. Since April, Musk has sold almost $23 billion worth of Tesla shares, with much of the funds going into the $44 billion Twitter acquisition.

Musk had earlier said that he had no further plans to sell Tesla shares. But in August, he sold 7.92 million shares in the electric carmaker. Musk completed the Twitter buyout in October, after which he sold around $4 billion worth of stock in Tesla during the following days.

Musk had initially aimed to put up $15 billion of his own personal funds into the $44 billion Twitter acquisition. He planned on pledging Tesla shares and raising $12.5 billion for this purpose.

However, Musk eventually decided against the loan and sold $15.5 billion worth of Tesla shares in April and August. In total, Musk has invested $27 billion cash in the deal.

He also raised around $13 billion as loans from the Bank of America, BNP Paribas, Morgan Stanley, Barclays, and others. An additional $5.2 billion came from large hedge funds and investment groups.

Problems at Tesla?

Musk’s focus on Twitter has attracted criticism due to his alleged neglect of Tesla. In an interview with the Associated Press, Wedbush analyst Dan Ives said that Musk is now a villain in the eyes of Tesla investors.

Though the fundamentals of the carmaker remain healthy, Musk’s behavior with Twitter is said to be hurting the company’s brand. “The Twitter overhang is a nightmare that is growing with no one but Musk to blame,” he said.

In a tweet on Dec. 14, Leo Koguan, the third-largest individual shareholder at Tesla, indicated that though Elon was the “proud father” of the automaker, Tesla has now “grown up.” What the company now needs is “not Elon” but an executioner like Apple CEO Tim Cook, he insisted.

“Elon abandoned Tesla, and Tesla has no working CEO. Tesla needs and deserves to have working full-time CEO. What Tesla BOD should do, do nothing? Elon will find his own successor under BOD independent supervision,” Koguan commented in a tweet. BOD refers to the board of directors.

Musk and Tesla

With the $3.6 billion sale, Musk’s total stake in Tesla has now shrunk to around 13 percent, according to an analysis by Bloomberg. Musk’s fortune has declined by $109.4 billion as of this year, and now ranks at the second spot on Bloomberg’s Billionaire Index.

Tesla shares have fallen by around 60 percent year to date. In the past week alone, shares have declined by roughly 15 percent.

In an interview with Reuters, Tony Sycamore, an analyst at brokerage IG Markets, said that by Musk diverting his attention to Twitter from Tesla, he does not put “a lot of confidence” in the business.

After speaking to several investors who hold Tesla shares, Sycamore apparently found that many of them are “absolutely furious” at Elon. “It’s not a good situation,” he added.

Some investors are looking at the situation positively. Tesla investor Ross Gerber, who is known to be a strong Musk supporter, believes the decline in share prices presents a good opportunity for Tesla to announce a buyback.