Tesla Shares Slide 7% after Elon Musk’s $4B Fresh Stock Sale

Tesla share’s value was expected to decline following the sustained cryptocurrency crash in the past few months.

Tesla Inc (NASDAQ: TSLA) shares closed Wednesday trading at $177.59, down 7.17 percent from the day’s opening price. While the shares drop may be attributed to several market factors, the new Tesla stock sales by CEO Elon Musk have contributed significantly. According to SEC filings, Musk offloaded TSLA shares worth approximately $4 billion days after he closed the Twitter deal.

As a result, the tech billionaire holds approximately 19.7 percent of Tesla’s outstanding shares following the latest sale of about 19.5 million shares. Notably, Musk owned about 22.4 percent of Tesla’s outstanding shares by the end of 2020.

While the billionaire sold his stake to fund the Twitter acquisition, the losers in the entire transaction have been identified as the shareholders of the electric company. Moreover, TSLA shares are down approximately 50% YTD, according to statistical data from MarketWatch.

Nonetheless, Tesla’s direct exposure to digital assets, Bitcoin, in particular, has significantly contributed to the stock market volatility. Reportedly, Tesla holds Bitcoin worth approximately $200 million on its balance sheet.

As such, Tesla share’s value was expected to decline following the sustained cryptocurrency crash in the past few months.

Tesla Shares and Market Outlook

The electric company produced over 365,000 vehicles and delivered over 343,000 vehicles during the third quarter. While the demand for electric cars is still high, Tesla faces fierce competition from other companies, especially public companies like NIO Inc. (NYSE: NIO), which produces the EP9 supercar and ES8 7-seater SUV.

In the past two years, Musk has sold a huge chunk of his Tesla shares on what analysts think is strategic timing.

“Regardless of his reasoning for selling TSLA shares right now, it’s hard to ignore the expert timing of his previous sales,” InsiderScore wrote. “In other words, Musk is no dummy, so following his lead may not be a bad idea.”

The Biden administration has advocated for billionaires to pay for unrealized gains on their stock holdings. Moreover, billionaires in the United States have paid very small or close to zero in taxes during the past decade. As such, Musk has sold a huge stake in his Tesla shares in the past two years.

According to Musk, he is capable of multitasking his managerial skills on several billion-dollar projects. Reportedly, the billionaire is using Twitter to accelerate his all-inclusive app dubbed x.com.

As such, market strategists are left out of the future connections between the Twitter acquisition and Tesla’s market outlook. Nonetheless, the billionaire might incorporate the Web3 application on Tesla cars and give them more value, especially in autonomous driving.

Meanwhile, Tesla has a reported market capitalization of approximately $604 million, with 3.16 billion in shares outstanding.

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Steve Muchoki

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