Elon Musk upsets Tesla analysts and investors with ‘trainwreck’ stock sales to fund Twitter
Elon Musk sold an additional $3.58 billion in Tesla stock this week, bringing its total sales to almost $40 billion since last November — and investors aren’t happy about it.
Wedbush tech analyst Dan Ives argues that Musk is using his “golden child” Tesla to not only fund the initial $44 billion cost of his Twitter acquisition, but also to offset the losses of the social -Balance media giants.
“The Twitter nightmare continues,” he wrote in a Thursday research note. “Musk uses Tesla as his own ATM to fund the red ink on Twitter, which is getting worse by the day.”
Twitter has struggled throughout its history as a public company to turn a steady profit, but Musk’s privatization left the company with a sizeable $13 billion in debt. Before the acquisition, Twitter was only $1.7 billion in debt, but now it will have to pay $1.2 billion in interest payments every year.
Ives has long been a Tesla bull, but he recently removed the EV giant from Wedbush’s top ideas list over Musk’s stock sales, which accounted for more than 75% of the $52 billion market value of the world’s fifth-largest automaker, Ford, make out.
Ives wrote that he believes Musk tarnished Tesla’s reputation with his Twitter acquisition and the subsequent media “controversy”.
“Investor frustration is mounting as the Musk brand has rapidly deteriorated over the past six months and has accelerated for the worse since Twitter’s official acquisition,” he said, adding that advertisers are fleeing Twitter and Musk is in a “train wreck situation.”
Tesla stock is down more than 60% this year and 17% this month amid Musk’s selling and the ongoing bear market in shares. The Tesla boss even lost his title as the world’s richest person to French billionaire Bernard Arnault this month.
“When does it end?” Ive wrote. “Musk continues to add fuel to the burning fire surrounding the Tesla story by selling more stock and causing Tesla brand degradation through his actions on Twitter.”
Musk’s recent Tesla sales may surprise the company’s loyal investors, as Tesla’s CEO said back in April that he was done selling shares.
“No further TSLA sales are planned after today,” he said tweeted.
Ives isn’t so sure, as Musk hasn’t said one thing for the first time but done another, selling $6.9 billion in Tesla stock in August and another $3.95 billion in the month sold Nov.
Ives said these sales are putting “massive pressure” on Tesla’s stock.
“This is a boy screaming a wolf situation with the street and the cops in this spider web of Tesla and Twitter which is around the corner for Musk,” he wrote.
Ives also wrote that he believes investor frustration with Musk’s sales will eventually boil over, forcing Tesla’s board of directors “to address some of these issues head-on in the near future.”
“This is a moment of truth for Musk and Tesla (and the board),” he wrote.
Despite Tesla’s difficult position, Ives remains bullish on the electric vehicle giant over the long term. He argues that once the Twitter “overhang” fades, Tesla’s long-term growth story will come into the focus of investors, allowing shares to rise.
Wedbush keeps a “outperform” rating on Tesla stock — which translates to a “buy” rating — and a 12-month price target of $250.
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