Updated at 11:09 am EST
Tesla (TSLA) – Get Free Report shares edged higher Thursday even as Elon Musk unveiled yet another multi-billion share sale amid the biggest peak-to-trough decline on record for the world’s biggest carmaker.
Musk sold another 22 million shares this week, Securities and Exchange Commission filings indicated Thursday, raising around $3.6 billion and lifting his year-to-date sale total to around $40 billion.
Earlier this summer, Musk sold 7.92 million shares between August 5 and August 9, netting a total of around $6.9 billion, taking advantage of a 47% rally in Tesla shares from late May to August 5, when the first sale was made. He sold another $8.5 billion in April. Musk now holds a 13.4% stake in Tesla, down from around 17% this time last year.
Musk told investors, though his verified Twitter account, that he would
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“The Twitter nightmare continues as Musk uses Tesla as his own ATM machine to keep funding the red ink at Twitter which gets worse by the day as more advertisers flee the platform with controversy increasing driven by Musk,” said Wedbush analyst Dan Ives. “When does it end?
“This remains the worry on the Tesla story as Musk has managed to change the narrative of Tesla from the fundamental EV transformation story to a ‘source of funds’ funding the Twitter turnaround which we believe will go down as the most overpaid tech acquisition in the history of M&A and remains a train wreck situation,” he added.
Tesla shares were marked 0.45% higher in early Thursday trading to change hands at $157.50 each, still near the lowest level in more than two years and a move that trims the stock’s year-to-date decline to around 60%.
Short interest in Tesla shares remains elevated, as well, with bets around the group pegged at around $11.9 billion, according to recent data from S3 Partners, a figure that represents around 2.65% of the group’s outstanding shares.
Musk’s efforts to stamp his authority on Twitter, the social media group he purchased in October for around $44 billion, has come at a significant cost to Tesla investors: shares in the carmaker are down more than 60% since Musk made his intention to buy the group public in early April.
Bloomberg reported earlier this month that Musk may need to provide margin loans to a group of bankers lead by Morgan Stanley as a way to replace the existing high-rate paper he arranged to fund the purchase earlier this year, given that debt servicing costs forecast for 2023 are likely to be much higher than the social media platform’s projected earnings.
Musk borrowed around $13 billion from the banking group that included a $3 billion chunk of unsecured debt that carries and annual interest rate of 11.75%, Bloomberg reported. The rest of the debt package is comprised of $6.5 billion in term loans and $3 billion in secured bonds.
Beyond Musk’s Twitter distractions, Tesla also faces headwinds from weakening demand in China, where the economy continues to suffer from its ongoing Covid crisis.
China’s recent loosening of Covid restrictions is expected to boost growth in 2023, but the damage from its draconian policies has left a lasting scar on the world’s second-largest economy, with data today indicating a second consecutive contraction in factory gate prices over the month of November, following on from the biggest year-on-year decline in exports in nearly three years.
Reuters reported last week that Tesla will suspend China-based production of its Model Y sedan over the final week of the year, beginning on December 25, in a move that will ultimately reduce output of the sedan by around 30% from November levels.
The report follows shortly on the heels of a move by Tesla to offer further discounts to China-based buyers of its Model 3 and Model Y sedans, provided the purchase is completed by the end of the year, adding to price cuts unveiled in October.