Elon Musk sells $4.8 billion worth of Tesla shares

Elon Musk, the CEO of Tesla, sold $4.8 billion worth of the electric automaker's stock on Tuesday, a day after the Twitter board decided to sell the social media platform to him in a deal valued at $44 billion.

According to filings with the Securities and Exchange Commission, Musk sold 5.3 million shares of Tesla stock for an average price of $905.30. The sales account for barely 3.1 percent of the Tesla shares he owned outright at the start of Tuesday's trading session, and less than 2% of his overall Tesla holdings when stock options he owns are factored in.

The purpose for the transaction is not disclosed in the documents, but it appears to be to generate funds for his planned acquisition of Twitter and takeover of the firm. Musk responded to an inquiry regarding the stock sale in a tweet later Thursday evening, saying, "No additional TSLA sales planned after today." But it wasn't obvious whether it meant there would be no more sales after the ones he disclosed on Tuesday, or whether there were additional purchases on Wednesday and Thursday that he hadn't reported.

The purpose for the transaction is not disclosed in the documents, but it appears to be to generate funds for his planned acquisition of Twitter and takeover of the firm. Musk responded to an inquiry regarding the stock sale in a tweet later Thursday evening, saying, "No additional TSLA sales planned after today." But it wasn't obvious whether it meant there would be no more sales after the ones he disclosed on Tuesday, or whether there were additional purchases on Wednesday and Thursday that he hadn't reported.

Tesla stock may have been sold this week by investors concerned that Musk would not be able to devote as much time and attention to Tesla, which has ambitious development goals and is facing increased competition from traditional automakers investing billions in their own electric vehicle offers.

Musk is anticipated to utilize his vast Tesla assets, which have made him the world's richest person, to fund his purchase of Twitter, but that doesn't imply he'll have to sell all of them to cover the entire purchase price. Instead, he can borrow money by using the shares as collateral.

However, the amount of money he can raise solely by putting his Tesla shares as collateral is limited. He can raise additional funds by selling a portion of his Tesla stock. Tesla's corporate laws stipulate those officers and director can only borrow up to 25% of the value of the stock offered as collateral.

According to corporate documents, he had already committed 88.3 million of his Tesla shares as collateral as of June 30, 2021, but those shares were pledged years ago when Tesla shares were valued a fraction of what they are now. He'd most likely be able to borrow more money using some of those shares as collateral. Even with the recent drop in Tesla share price, the estimated 79 million unpledged shares he owns following Tuesday's sales might be utilized to borrow $17 billion.