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Elon Musk sells nearly $7 billion of Tesla stock ahead of Twitter deal ruling

As he continues battling Twitter in a lawsuit, Tesla CEO Elon Musk revealed he sold nearly 8 million Tesla shares worth $6.9 billion.

Video Transcript

[MUSIC PLAYING]

AKIKO FUJITA: Just about 20 minutes left in the trading day. We are seeing Tesla shares trading higher, up about 3 and 1/2%, after Elon Musk revealed he sold nearly 8 million Tesla shares, bringing in $6.9 billion. Yahoo Finance auto reporter Pras Subramanian here with me at the desk. Pras, all of this has to do with Twitter. Remember when Elon Musk said that he wouldn't sell just to buy Twitter? What happened?

PRAS SUBRAMANIAN: Well, he said that, and he also said he wouldn't be selling anymore planned share sales, but I guess those plans have changed. Last night, we were following these late night filings from selling on three different days 7.9 million shares, almost $7 billion in Tesla stock there.

As Elon said in a tweet later last night, in the event that Twitter forces this deal to come to a close and some equity partners don't come through, it is important to avoid an emergency sale of Tesla stock. So Elon was able to sell this stock at a newer kind of recent high for Tesla, around $900 a share. So he didn't sell it at the absolute low, so he did get some value there.

But it does kind of makes you question what's happening here. Does Elon think the case is actually going to go against him when it starts on October 17? Is Twitter going to be forcing him to buy the company at the end of this, or at least, pay a big settlement? I guess the concern here for Elon Musk and Tesla shareholders.

RACHELLE AKUFFO: So given this context, then, what should we make of this? Obviously, the trial itself doesn't even start until October. Between now and then, what are you keeping an eye on with Tesla?

PRAS SUBRAMANIAN: I think a lot of analysts and shareholders are just concerned about, is the overhang finally gone, or is it still going to remain? Is he going to have to sell again to raise more money to potentially pay for a possible Twitter buy? Apparently, he's-- since November, he sold around $30 to $40 billion in Tesla stock. It seems like that would be enough, but we're not sure yet.

So I think it's just more of a concern. Again, is it going to weigh on the stock? Is it going to weigh on management as more and more people like Larry Ellison, for instance, got drawn into a subpoena there. So the question is how much time and money does this waste for Elon Musk when he really needs to execute as the second half of 2020 rolls on.

AKIKO FUJITA: Well, on that front, we have seen investors express some concern, right? I mean, especially when all of this has been-- all as in Elon Musk and Twitter, this being aired out publicly, sort of investors wondering, well, is he actually distracted from the task at hand for Tesla? The share sell itself, how do you think Tesla investors look at it? And what are they ultimately watching as we go into that October date?

PRAS SUBRAMANIAN: Look at some of the commentary last night. Some-- it's between two camps, right? Oh, he's selling. He's finally done. The overhang is gone. The next level for Tesla is 1,000 bucks, let's say, or now it's going to split, right? The other side of it is the concern over whether the share sales are actually over. What's next? Are we going to see more downward pressure on the stock once that share-- that split happens again?

So I think that's-- you're seeing two camps there with Tesla investors. And this also a stock that's very heavy from a retail ownership point of view. It's about 40% retail stock ownership, so not so much heavily with the institution. So you have more of the kind of hot money coming in and out there with retail investors.

RACHELLE AKUFFO: And then, Pras, in terms of other headwinds, obviously, Tesla having a slowdown in China with its sales there. And also, we saw Elon Musk saying, look, if inflation starts to tick down, he'll bring down the price of Tesla's. How do you see that all playing out?

PRAS SUBRAMANIAN: He said in the past that he's actually embarrassed by the price increases they've had to actually impose because of the fact that these components prices were going up so much. But I think that looking forward, that China shutdown was a temporary thing in July in order to retool the factory to actually improve production.

So I think the second half of the year could be pretty good for them in terms of production because you have not only Shanghai more up to speed, but Berlin and also Giga Austin are probably going to improve or increase their production, too. So it's probably going to be a good production kind of second half for the year, all these distractions aside.