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Elon Musk and his company Tesla (NYSE: TSLA ), has drawn attention in recent months, especially since he took Twitter private in a $44 billion acquisition.
Since first announcing the site’s acquisition, Musk has sold $22.9 billion worth of Tesla stock. A large amount of that stock was sold this week, including 22 million shares sold on Thursday alone.
Why Musk is selling shares remains a mystery, but here are a few theories.
Funding for the Twitter acquisition
The most obvious reason floating around social media lately is that he wants to finance the acquisition of Twitter. More specifically, it seems plausible that he uses the proceeds of the sale to replace his investment. Musk reportedly borrowed $13 billion to finance the Twitter deal through bank loans. Rising interest rates coupled with the platform’s loss-making prospects could plug some of Twitter’s loopholes to buy runway to turn the platform into a profitable venture.
To support this theory, Musk gave us a cryptic hint in the form of a tweet on December 14:
“At the risk of stating the obvious, be cautious about debt in turbulent macroeconomic conditions, especially when the Fed raises rates.”
This goes hand-in-hand with Musk’s previous bullish statements about the economy in general. So he believes Tesla stock will be trading at a premium for six or more months now.
The musk is short-lived and rough
In June, Musk said he had a “very bad feeling about the economy,” which led to orders for Tesla to suspend all hiring and cut 10% of its workforce in an email to Tesla executives. Since those comments were released, the Federal Reserve has continued historic interest rate hikes that have pushed the U.S. to the brink of further recession.
Later on Twitter, when asked if he believed a recession was imminent, he replied:
“Yeah, but it’s actually a good thing. It’s been raining money on idiots for too long. Some bankruptcies have to happen.”
So Musk certainly believes the economy, as well as the stock market and by extension, Tesla stock has plenty of room to go down in the near future. This is Although the company lost 60.58% of its value Year-to-date and trading at its 52-week low.
On the other hand
Musk’s belief that he can buy Tesla shares at a discount in the future means he plans to buy them back at a lower price, increasing his net ownership in the company.
Tesla’s board agreed to make a “meaningful divestment” in 2023 as part of its Q3 earnings call, so it’s not unusual to believe Musk plans to do the same with his personal fortune.
And in a separate case, attributed to his Twitter management of the billionaire, some Tesla investors felt he was distracted by the new venture.
Musk is also in the process of finding a new CEO for the platform, which will free up some of his bandwidth. Historically, his executive appointments have led to success within other companies he controls, such as Space X and Tesla.
So Musk’s decision to sell his shares may come with an obvious silver lining for investors as the predicted recession unfolds.
Millions of Americans have “cut the cord.” However, the consumer’s entertainment experience ends up being a bundle of one or more services, like cable or satellite without the wires.
That’s because the streaming model and what consumers want are at odds. Streaming services aim to capture as many eyeballs as possible with as much content as possible. However, many streaming consumers only want a portion of that content. When you consider that consumers have to buy content from multiple streaming services, you can see how consumers wonder if they will actually save money.
Consumers don’t want to go back to the way things were. There is evidence that streaming companies can stand out in a sea of homogeneity. In this special presentation, we give you our thoughts on seven streaming stocks that offer long-term opportunities for investors.
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