In the years since Tesla’s IPO, the electric car company has plunged more than 50% in value amid production difficulties and ballooning costs for research and development, Model 3 productions delays and what many analysts agree is a questionable valuation.
What Elon Musk is doing
Elon Musk plans to sell $10 million of Tesla stock next week, as part of a previously announced plan to diversify his portfolio.
The move comes as Tesla stock has surged in recent months, making Musk one of the world’s richest people.
Musk has said that he plans to sell about 2% of his shares each year, and that the money will go into a fund to help him pay for his other companies, including SpaceX.
The sale is expected to happen on Tuesday or Wednesday, and it will be the first time Musk has sold Tesla stock since March of this year.
Reason behind his decision to make the announcement
On Tuesday, Elon Musk announced that he would be selling up to $10 million worth of Tesla stock next week. This decision was likely made in order to take advantage of the recent run-up in Tesla’s stock price.
Tesla’s stock price has more than doubled since the beginning of 2021, and is now trading at around $700 per share. At this level, Musk is sitting on a paper profit of over $50 billion.
While it’s impossible to know exactly what prompted Musk to sell now, it’s likely that he believes Tesla’s stock is due for a correction and wants to lock in some of his gains. It’s also possible that he needs the cash for personal reasons.
Whatever the reason, Musk will be selling a lot of Tesla stock next week. And with the stock price at such high levels, even a small dip could cause panic among investors.
Why he needs to sell a lot of stock
Elon Musk needs to sell a lot of Tesla stock next week for two reasons. First, he needs to exercise some options that are about to expire. Second, he needs to raise cash to fund his other companies.
Exercising options is how Musk makes money. He has a lot of them, and they’re about to expire. If he doesn’t sell enough stock to cover the cost of exercising the options, he’ll have to borrow money or sell other assets.
Secondly, Musk needs cash to fund his other companies. He’s invested heavily in SpaceX and The Boring Company, and both companies are burning through cash. Selling Tesla stock will give him the liquidity he needs to keep funding these companies.
This is why Elon Musk needs to sell a lot of Tesla stock next week. If he doesn’t, he’ll miss out on exercisng his options and will be short on cash to fund his other businesses.
In order to continue funding his many businesses, Elon Musk will need to sell a lot of Tesla stock next week. This move could help him raise the billions of dollars he needs to keep his companies afloat, but it could also send Tesla’s stock price tumbling if investors think he’s selling because he’s worried about the company’s future prospects. Only time will tell how this plays out, but one thing is for sure: Elon Musk is never afraid to take risks.