Elon Musk has sold $ 8.5bn (£ 6.8bn) worth of shares in Tesla as the world’s richest man raises cash after reaching a deal to buy Twitter.
The Tesla chief executive has committed $ 21bn of his own money to the funding package for acquiring the social media platform, which he agreed to buy for $ 44bn on Monday. Since then Musk has sold 9.6m Tesla shares, or about 5.6% of his stake in the business, according to filings with the US financial regulator.
Musk did not confirm the purpose of the sale but he took to his Twitter account late on Thursday to announce that he planned no further sales of shares in the electric carmaker “after today”. Tesla stock had fallen sharply on Tuesday – wiping $ 126bn off the value of the company – amid investor concern that the world’s richest man would offload stock in the company to help fund the all-cash deal for Twitter.
After the latest share sale, Musk’s Tesla stake is worth about $ 147bn and he remains the largest shareholder with a stake of about 15.6%.
Alongside $ 21bn of his own cash, Musk is borrowing $ 12.5bn to fund the takeover. A bank consortium led by Morgan Stanley is providing a further $ 13bn. It was not immediately clear how the billionaire would raise the remaining equity financing. Musk holds a 43.6% stake in unlisted rocket company SpaceX, which is reportedly valued at $ 100bn. Musk’s current wealth is about $ 250bn, according to the Bloomberg billionaires index.
The share sales were confirmed as it emerged that Elon Musk could charge websites a fee for quoting viral tweets from verified Twitter accounts if he completes the acquisition, according to a report.
The Tesla chief executive is also considering a crackdown on executive pay and has a new chief executive lined up to replace the incumbent Parag Agrawal.
In an effort to convince banks to part-fund the takeover, Musk said he planned to grow revenue by developing new features such as charging for embedding or quoting popular tweets, Reuters said. This would involve charging a fee when a third-party website wants to quote or embed a tweet from verified individuals or organizations.
Musk also told banks he could crack down on executive and board pay at the company, according to Reuters, as he sought to convince lenders that he could find the cash flow to service the debt underpinning the bid.
The report added that Musk does not have confidence in Agrawal and has an as-yet-unnamed candidate in mind to replace him. Agrawal replaced Jack Dorsey, Twitter’s co-founder, in November last year but is to leave when the sale completes. Other changes to Twitter flagged by Musk in recent weeks include removing advertising from its premium service, Blue.
Twitter makes 90% of its annual revenue of $ 5bn from advertising, although Blue is only available in a handful of countries including the US and Australia. The $ 13bn loan from banks is equivalent to seven times Twitter’s 2022 projected earnings before interest, taxes, depreciation and amortization.
The sale of 9.6m shares, made at prices ranging from $ 872 to $ 999 a share, were the first by Musk since a spree late last year that raised more than $ 16bn, which came after he asked his more than 80 million Twitter followers whether he should sell 10% of his stake in Tesla.