Elon Musk recently cashed another $3.6 Billion in Tesla Stock as he battles mounting Twitter interest payments and a looming economic recession

Elon Musk.Susan Walsh/AP
According to SEC filings, Elon Musk sold $3.6 billion worth of Tesla stock this week.

Elon Musk has cashed in $3.6 billion more of Tesla stock as he faces increasing interest payments and the possibility of a severe recession.

According to a Securities and Exchange Commission filing, the CEO of Twitter, SpaceX and Tesla sold 22 million shares in the first three days. The prices ranged from $155-$177. His Tesla stake was reduced to 424million shares, or 13.4% of the electric vehicle company.

Tesla’s stock price soared during the pandemic, to more than $400 by November 2021. However, it has now fallen to $157 at Wednesday’s close. Its market capitalization dropped from $1.2 trillion at its peak, to below $500Billion today.

Partially, the selloff is due to investor concerns over Musk’s takeover of Twitter for $44 billion. Some investors consider this a costly distraction.

Musk sold over $15 billion worth of Tesla shares in the spring to finance the deal. He also disposed of $4 billion more stock in November. He also borrowed billions of dollars from banks, which are now on Twitter’s balance sheets and require interest payments.

Musk’s automaker was also affected by a wider sale of growth stocks to make way for less risky assets. The tech-heavy Nasdaq equity Index has fallen 29% this year. This is more than the 17% decline of the benchmark S&P 500 over the same time period.

In the face of rising interest rates and historic inflation, investors have turned their backs on tech stocks.

The Federal Reserve raised rates from essentially zero to over 4 percent to try to cool the economy. This was in an effort to slow price rises and to reduce inflation. The painful combination of rising costs and high borrowing costs is pushing consumers and businesses to the brink of collapse and could lead to the US economy going into recession.

Tesla and other high-flying stock have been particularly hard hit by rising rates and inflation. Their value is largely based on the future cash flows. These cash flows are less attractive when prices rise and investors can get higher, more risk-free returns with Treasury bonds, savings accounts and other safe assets.

Musk, who has been asking the Fed to reverse its hikes in order to avoid a painful depression, highlighted the dangers of owing when rates rise and the economy is worsening via a tweet this week.

He said, “At the risk of being obvious, beware debt in turbulent macroeconomic circumstances, especially when Fed keeps increasing rates.”

Business Insider has the original article.
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By: tmohamed@businessinsider.com (Theron Mohamed)
Title: Elon Musk just cashed in another $3.6 billion of Tesla stock as he wrestles with mounting interest payments at Twitter and a looming recession
Sourced From: markets.businessinsider.com/news/stocks/elon-musk-tesla-stock-sales-twitter-debt-inflation-recession-fed-2022-12
Published Date: Thu, 15 Dec 2022 09:39:40 +0000