Elon Musk sold 7.92 million shares of Tesla worth around $6.88 billion between August 5 and 9, according to SEC filings, in a move believed to be geared towards funding his controversial Twitter deal.
The Tesla CEO has got himself entangled in a $44 billion Twitter acquisition deal that started in April. The deal became subject to litigation after Twitter sued Musk for attempting to back out of their purchase agreement over claims that a large section of Twitter is made up of bot accounts.
“Mr. Musk is terminating the Merger Agreement because Twitter is in material breach of multiple provisions of that Agreement, appears to have made false and misleading representations upon which Mr. Musk relied when entering into the Merger Agreement, and is likely to suffer a Company Material Adverse Effect,” Musk’s lawyers wrote in a letter to Twitter’s Chief Legal Officer Vijaya Gadde.
Twitter Chief Executive Parag Agrawal made some tweets in response to Musk’s criticisms, explaining that internal estimates of spam accounts on the social media platform for the last four quarters were “well under 5%.” The social media platform had provided Musk with “firehose”, a repository of raw data on hundreds of millions of daily tweets.
Musk was not satisfied with the answer provided by Twitter. But under the merger agreement, Musk must pay a $1 billion breakup fee, if he decides to back out of the deal, even though he claimed that Twitter’s unwillingness to provide him with the data gives him the right to walk away from the deal without having to pay the penalty.
Earlier this year, Musk said on social media that he had “no further TSLA sales planned” after April 28. The $6.88 billion shares sale suggests that the Twitter deal is likely to go through as Musk has seen that there is a high chance that the court will rule in Twitter’s favor.
Musk on Tuesday, after the latest stock sales were revealed, told Tesla fans and promoters who asked if he was done selling shares in the electric vehicle business, and if he might buy shares back in the future, yes.
“Yes. In the (hopefully unlikely) event that Twitter forces this deal to close and some equity partners don’t come through, it is important to avoid an emergency sale of Tesla stock.”
In the (hopefully unlikely) event that Twitter forces this deal to close *and* some equity partners don’t come through, it is important to avoid an emergency sale of Tesla stock.
— Elon Musk (@elonmusk) August 10, 2022
He said he would buy back the shares if the Twitter deal fails but did not specify which equity partners may likely back out of the plan to finance the deal.
As part of his efforts to rack up funding for the deal, Musk had in early May, listed up equity financing from 19 different partners including Saudi Arabia’s Prince Alwaleed Bin Talal Bin Abdulaziz Alsaud, Qatari Holding, venture firms Sequoia, DFJ growth fund, Vy Capital, and the cryptocurrency exchange Binance.
It is too early to know if the court will rule in favor of Twitter. However, Musk is preparing for a potential loss. He said if the Twitter deal doesn’t happen, he will consider creating his own social platform, X.com.