Raising money for the acquisition of Twitter? Musk cashed out $4 billion, so what about Tesla?

Tesla CEO Elon Musk dumped Tesla stock to cash out.

On April 28, local time, according to documents submitted by Musk to the U.S. Securities and Exchange Commission (SEC), Musk sold a total of 4.41 million tesla shares on April 26 and 27, worth nearly $4 billion.

This is just 3 days after Twitter announced that it has reached an acquisition agreement with Musk. It is believed that Musk cashed out to raise funds for the acquisition of Twitter, which is also one of the concerns of Tesla investors - Musk will focus on Twitter or affect Tesla stock prices.

The market has given a clear signal, just on April 26, the day after the news of the acquisition, Tesla's stock price plunged 12%, the market value evaporated about $125 billion in one day, becoming the worst performing stock in the NASDAQ 100 index dominated by technology stocks that day.

Stretched back to early April, Tesla shares have fallen more than 23 percent since Musk first revealed himself as Twitter's largest shareholder on April 4.

Some people believe that Musk's quick decision to acquire Twitter has stimulated Tesla's stock price to fluctuate in the short term. However, some analysts believe that the decline in Tesla's stock price is not a short-term phenomenon, but comes from the market's concerns about its development prospects.

Tesla stock is still at risk of falling

After the SEC disclosed on April 28 that Musk had sold 4.41 million shares of Tesla stock, Musk immediately tweeted, "There are no plans to sell Tesla shares after today." ”

Musk tweet

This move may be to stabilize the hearts and minds of the shareholders and the military, but it has attracted a lot of questions.

Some netizens said on Twitter that Musk's implication is that "he will continue to sell stocks today (April 28)."

Some netizens left messages saying that Musk's tweet forgot to add the word "for now", and he will definitely continue to sell Tesla stocks afterwards.

Previously, investors believed that Musk had to sell Tesla stock to complete the $44 billion acquisition of Twitter.

Arthur Hogan, chief market strategist at National Securities, said, "In addition to bringing a broader stock sell-off, Musk may dilute his own stock to meet this new challenge." ”

In addition to selling stocks, the use of Tesla stock as collateral is also a bit of a concern for investors.

"Musk used Tesla stock as collateral, taking a lot of risk." Russ Mould, head of investments at stockbroking firm AJ Bell, said.

According to Musk's filing with the SEC, the financing plan to buy Twitter includes a $13 billion bank loan, $21 billion in cash, and a $12.5 billion margin loan.

According to the Analysis of the Consumer News and Business Channel (CNBC), the $21 billion in cash is likely to come from the sale of Tesla stock.

At the same time, the above documents show that due to the high volatility of Tesla stock, banks need more buffers, so Musk will need to pledge tesla stock worth up to $65 billion.

The BBC quoted OANDA senior market analyst Ed Moya as saying that if Tesla's stock price continues to fall, it will also jeopardize Musk's financing to acquire Twitter.

Tesla may face a management crisis

Thomas Hum, author of Yahoo Finance, pointed out in the article that Tesla's management is already sparsely populated, and currently only Musk, CFO Zachary Kirkhorn and Drew Baglino, senior vice president of engineering who plays the role of CTO.

Tesla is in the midst of high growth, with a production target of 1.5 million vehicles this year and a production target of 20 million vehicles in 2030.

In the first quarter of this year, Tesla delivered a total of 310,100 vehicles, an increase of 68% year-on-year; total revenue was $18.756 billion, an increase of 81% year-on-year; net profit was $3.318 billion, an increase of 658% year-on-year.

Thomas Hum believes that in the face of supply chain challenges and production affected by the epidemic, Tesla must rely heavily on the management ability of management to achieve the goal of high-speed growth.

John Coffee, a law professor at Columbia University, said, "The crisis with Tesla is that Musk sometimes acts like a child, and when you give a child a new toy, he often ignores the old toy. He believes that Tesla is a company that needs a lot of attention, after all, Tesla's management is too small.

Previously, Tesla also mentioned many times in the "risk warning" of the earnings report that Tesla is highly dependent on Musk's personal management and influence on Tesla.

The BBC said in the report that Musk will spend a lot of energy on Twitter: how to make it turn a profit, consider regulatory issues, etc., and people are curious about how Musk will allocate his energy. After all, Musk is going to run 5 companies at the same time: Tesla, SpaceX, Neuralink, Boring Company, and upcoming Twitter.

Tim Higgins, author of Game of Thrones: Musk, Tesla, and the Bet of the Century, says, "Unless Elon Musk can invent a new way to increase the number of hours worked throughout the day." ”

The Wall Street Journal noted that Musk sold more than $16 billion worth of stock last year because he had a large number of stock options that expired this year, and that Tesla stock was sold to pay the taxes due to exercise those options. Selling shares could weaken Musk's grip on Tesla. Shares of companies such as Facebook's parent company Meta and Google's parent company Alphabet fall into several categories, with founders having super voting rights that common shareholders don't have. Tesla does not have such an architecture.