- Wednesday’s SEC filings revealed Elon Musk sold an additional $3.6 billion in Tesla Share.
- Analysts speculate the proceeds will help cover Twitter’s shortfall, raising concerns.
- Dan Ives claims that Musk is “using Tesla as his own ATM” to fund Twitter.
The impact of Elon Musk’s purchase of Twitter on Tesla is becoming more frightening for investors. The third time, after saying in April that he had “no plans to sell TSLA anymore“, filings made on Wednesday revealed that Musk sold an additional 22 million shares of Tesla, worth about $3.6 billion. That brings the total number of Tesla shares Musk has sold this year to 23. billion USD.
Just a few days ago, Musk promised that in the long run, Tesla will benefit from its ownership of Twitter. But there is growing skepticism from analysts that that will happen. Dan Ives at Wedbush wrote in a report Thursday that Twitter remains a nightmare for investors because Musk has used “Tesla as his own ATM to further fund” the social network.
Tesla is in decline tram Sales as countries around the world face their own recession amid the ongoing pandemic need not come as a shock. But it poses a problem for Tesla and its owner, who continues to use his stake to fund his Twitter revamp for his ventures to build ‘apps. use everything’ which he called “X”.
Ultimately, Elon promised Tesla shareholders that they would benefit from Twitter. He also promised not to sell any more Tesla shares. It’s up to Tesla’s investors to decide whether or not he keeps his promise.
“Elon is Tesla’s brand. He needs to pull it together,” Loup Ventures’ Gene Munster told Insider earlier this week. Some, like Tesla’s major shareholder, KoGuan Leo, have gone so far as to suggest that Musk has “abandoned” his duties at the automaker, and call for a new CEO to replace him.
Meanwhile, Insider has reported on a range of issues for Twitter including: advertisers have suspended their activities on the platform; the the failure of Elon’s reimagined Twitter Blue; develop concerns surrounding the rise of bigotry on the platform; and Elon’s troubling political tweets that seems to be adding to the constant swirl of controversy surrounding the company.
In his note to customers, Ives maintained an outperform rating for Tesla, indicating that he expects Tesla’s profit margins to be better than those of its peers despite signs that it will not the best performing company in the group.
For his part, Munster further warned that Elon will cause lasting damage if he does nothing about the number of problems that have arisen from the billionaire’s purchase of Twitter.
The broader market is also worried. Shares of Tesla have fallen 31% since Musk acquired Twitter in late October. When you track how the stock has appreciated since Musk offered to buy back Twitter in mid-April, it’s down 52. %. It should be noted that tech stocks have lost trillions of dollars in value this year due to falling consumer demand, inflation, and a general market correction from astronomical multiples seen in 2016. before.
Tesla faces problems other than Musk’s Twitter problems. The company is no longer the mainstay tram block manufacturers in many countries. As the new entrants gained market share of their own and the traditional automakers successfully launched a series of crossbreed and their own electric models, Tesla has seen increased competition in the US, China and parts of Europe.
Just earlier this month, Bloomberg reported that Tesla is cutting some Manufacturing output in China increased by 20% up to 30%, an indication that the actual sales did not meet the expectations. It is also reported that the electric vehicle manufacturer has reduced the cost of its cars in the past year China in an attempt to boost sales. It worked, but in the end Tesla lost to its Chinese rival, BYD.
“More activity and growing investor frustration will force the Tesla Board to confront some of these issues head-on in the near-term. This is a moment of truth for Musk. and Tesla,” Ives wrote.
