Musk’s “stock speculation” hit the big luck: buying Twitter lost $200 million, but selling Tesla earned 1.6 billion more

On the morning of July 12th, Beijing time, according to reports, Tesla CEO Elon Musk announced a few days ago,Will cancel the $44 billion acquisition of social media giant Twitter. The move will lead to a large amount of cash that Musk had previously sold Tesla stock to cash out, and continue to lie in the bank account.

Recently, Musk announced that he would tear up the agreement to acquire Twitter announced at the end of April.The reason is that Twitter refuses to provide information about fake accounts, bot accounts. Then Twitter officially said it would urge Musk to execute the acquisition agreement. Some legal experts say Musk and Twitter will face a protracted “legal battle” that could cost Musk billions of dollars in legal bills in the future.

In April, before and after announcing the acquisition, Musk began to cash out his Tesla shares on a massive scale, totaling $8.5 billion. Statistics show that,Musk sold 9.6 million Tesla shares at the end of April, at an average cash price of $885 per share. Regardless of how the dispute over his refusal to buy Twitter evolves, Musk will continue to hold that sizable amount of cash.

U.S. financial analyst Sam Abuelsamid said that compared to a year ago, Musk is in a more accommodating position in terms of cash, because he has sold so many Tesla shares, and the cash-out price is also quite high.

When Musk announced that he would buy Twitter and began to sell Tesla stock, many Tesla shareholders worried that the company was facing many challenges, such as the poor macro economy in the United States and the increasing challenges of competitors in the electric vehicle industry. Seriously, Musk’s acquisition of Twitter at this time will distract him and affect his focus on Tesla.

Typically, the chief executive officer of a publicly traded company can make shareholders feel anxious when they sell their shares on a large scale. But for Musk, “the need for funds to buy Twitter” provides the most plausible reason to cash out in Tesla stock.

At the end of last year, Musk sold Tesla stock, cashing out about 16 billion US dollars,The reasons include the need to exercise the stock option when it expires, the heavy tax burden, etc..

Since Musk cashed out his stock in April,Tesla’s share price has fallen by 20%. However, in addition to the single event of Musk’s sell-off, high-growth stocks, including Tesla, also encountered a sell-off in the U.S. capital market, due to widespread concerns about U.S. inflation and a possible economic recession.

Assuming Musk doesn’t cash out these Tesla shares,then the market value of those shares would also evaporate by $1.6 billion.

It’s unclear what income tax burden Musk will face as he made a huge capital gain by selling Tesla stock.

For a long time, Musk has not received salary from Tesla. His main salary return comes from stock option awards. In the past few years, after achieving predetermined performance indicators and stock price indicators, Musk has received a large number of option awards ( After the option is cashed out, it becomes actual Tesla stock).So far, Musk holds a 16% stake in Tesla with a market value of $115 billion.

Abuelsamid said that if Musk loses a lawsuit with Twitter in the future and is forced to complete the acquisition agreement or pay liquidated damages, Musk may need to sell more Tesla shares at that time, which will affect his holdings Investors, hurting the market value of Musk’s stake.

Before announcing the acquisition of Twitter, Musk had bought Twitter shares in the open market, but the “level of speculation” was not ideal.

It is reported that from January to April, Musk spent $2.64 billion to buy a total of 73 million Twitter shares, with an average purchase cost of $36 per share. On Monday, Twitter’s stock plunged 9.5% to close at just $33.50. At this price, Musk has lost $200 million on the purchase of Twitter shares.