Why did Elon Musk sell $6.88 billion in Tesla shares ahead of the Twitter trial?

Elon Musk dumped almost $7 billion in Tesla shares, leaving some investors wondering why. While it’s tough to say exactly why Musk does anything, the billionaire entrepreneur seems to know what he’s doing and it’s worth inspecting why he let go of these shares when he did.

Musk sold $6.88 billion in Tesla shares earlier this month, accounting for around 7.92 million shares total, reports Forbes. The information was released in regulatory filings with the Securities and Exchange Commission (SEC) and comes ahead of Musk’s trial with Twitter in October.

The sale was made between August 5 and 9, as shown in the filings. Additionally, Tesla held its annual stockholder’s meeting on August 4.

The SEC has tight regulations on when influential people at a company can sell stock and how they should disclose their sale of any shares. These regulations usually include positions like the CEO, CFO and members of the board of directors and are meant to minimize insider trading for individuals with advanced knowledge of upcoming affairs. This may have played a role in why Musk chose to sell his shares at this time.

It also may have related to Musk heading to trial in October. Musk may be subject to a $1 billion termination fee, at least, or to following through with the original terms of the purchase. However, his attempts to countersue over bot data could potentially help him avoid the merger and retain his $44 billion — and maybe even his termination fee.

Musk has liquidated more than $15 billion in Tesla stock this year, comparable to the amounts he has sold in recent years. Last year, Musk sold roughly $16 billion in Tesla shares after tweeting a poll to see if followers thought he should sell the stock to pay more in taxes. 

Much is made lately of unrealized gains being a means of tax avoidance, so I propose selling 10% of my Tesla stock.

Do you support this?

— Elon Musk (@elonmusk) November 6, 2021

In the past 12 months, Musk has sold $32 billion total in Tesla shares, and he still holds roughly 15 percent of the company’s stock. Musk’s most recent sale before this one saw him offloading $8.4 billion in Tesla shares in April. Musk later followed the disclosure up on Twitter, saying “No further TSLA sales planned after today.”

No further TSLA sales planned after today

— Elon Musk (@elonmusk) April 29, 2022

This month’s selloff from Musk may not have exactly been planned, at least according to his words in April. At the time, Tesla had just begun considering an upcoming stock split. Musk had also just announced plans to acquire Twitter at $54.20 per share, effectively creating the $44 billion acquisition he’s now hoping to walk away from.

Above: Elon Musk sells Tesla shares worth $6.9 billion. Video: CNBC / YouTube

It’s once again difficult to say exactly why Musk does what he does, but his positions, wealth and overall leadership speak for themselves. And ahead of his trial with Twitter, Tesla investors seem thankful enough that Musk may have more time to focus on the automaker in the years to come.

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Source: Forbes