Tesla’s Elon Musk sold stock to fund Twitter deal. Here’s how much.

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Now investors know one reason:

Tesla

the stock has fallen – CEO Elon Musk had a lot of stock to sell.

Musk announced Tesla’s (ticker: TSLA) stock sale Thursday evening on Form 4s filed with the Securities and Exchange Commission.

A Form 4 is used to disclose sales by company management and other company insiders.

Musk sold 4.4 million shares of Tesla stock worth about $4 billion, presumably to fund part of his purchase of

Twitter

(TWTR). Musk sold his shares on April 26 and 27, according to Form 4, which is typically filed within days of the sale.

Musk’s $54.20 bid for Twitter was accepted by the board of the social media platform earlier this week. The entity created by Musk to buy Twitter is funded with approximately $25 billion in debt and $21 billion in equity. How Musk would fund the equity portion has been hotly debated by analysts and investors.

It turns out that part of that amount was financed through the sale of Musk’s Tesla stock.

He said on Twitter Thursday evening that he no longer has plans to sell shares.

That could be a relief for Tesla investors. Potential Musk sales were a surplus for Tesla stock, according to Wedbush analyst Dan Ives. Tesla shares have fallen about 12% since Musk’s offer was accepted. The

S&P 500
and

Nasdaq composite
have fallen by about 0.2% and 1% over the same period.

The $4 billion is far less than the total equity of $21 billion listed in the Twitter merger documents. That could mean some other sources will be involved in the deal to raise the rest of the $21 billion in equity needed for the purchase. The rest of the money could come from a combination of Musk’s out-of-pocket cash — from cryptocurrency profits or something else — existing Twitter shareholders who stay with Musk, or partners who want to invest alongside Musk.

Tesla shares fell 0.5% on Thursday, closing at $877.51 after a low of $821.70. The stock fell 2.6% in after-hours trading at $854.50.

Musk still owns approximately 168 million shares of Tesla, not counting the more than 100 million stock options granted as part of his 2018 compensation package.

Musk does not like to use brokers to organize secondary sales. He sold his shares in about 140 separate, smaller transactions. That’s not the way large blocks of stock are typically sold, but it’s how Musk sold stock in 2021. Those sales were related to the exercise of options and the acceleration of tax payments on unrealized capital gains.

Write to Al Root at [email protected]