Elon Musk cashed in another $3.6 billion of Tesla stock

Elon Musk.
Susan Walsh/AP

Elon Musk has sold about $3.6 billion of Tesla stock this week, SEC filings show.
The Tesla, SpaceX, and Twitter CEO sold around 22 million shares in three days.
Musk is dealing with mounting interest payments at Twitter, and a gloomy economic outlook.

Elon Musk has cashed in another $3.6 billion of  Tesla stock, as the billionaire technology executive faces mounting interest payments and the prospect of a painful recession.

The Tesla, SpaceX, and Twitter CEO sold about 22 million shares over the first three days of this week, at prices ranging from $155 to $177, a Securities and Exchange Commission filing revealed Wednesday. The disposals reduced his Tesla stake to 424 million shares, or about 13.4% of the electric-vehicle company.

Tesla’s stock price skyrocketed during the pandemic to over $400 by November 2021, but has more than halved since then to around $157 as of Wednesday’s close. Its market capitalization has dropped from $1.2 trillion at its peak to below $500 billion today.

The selloff partly reflects concerns about Musk’s $44 billion takeover of Twitter, which some investors view as a costly distraction.

Musk sold more than $15 billion of Tesla shares earlier this year to help finance the deal, and disposed of a further $4 billion of stock in November. He also took out billions of dollars’ worth of bank loans, which now sit on Twitter’s balance sheet and require interest payments.

Moreover, Musk’s automaker has been caught up in a wider sell-off of growth stocks in favor of less risky assets. The tech-heavy Nasdaq equity index has plunged 29% this year, outpacing the benchmark S&P 500’s 17% decline over the same period.

Investors have soured on tech stocks in the face of historic inflation and rising interest rates.

Inflation has surged to 40-year highs this year, spurring the Federal Reserve to hike rates from virtually zero to over 4%, in a bid to cool the economy and curb the pace of price increases. However, the painful combination of rising prices and borrowing costs is squeezing consumers and businesses, and threatening to plunge the US economy into recession.

Tesla and other high-flying stocks have been hit especially hard by inflation and rising rates, as they’re largely valued based on their prospective cash flows in the years to come. However, those cash flows have become relatively less appealing when prices are soaring and investors can earn larger, risk-free returns from Treasury bonds, savings accounts, and other safe assets.

Musk, who has been urging the Fed to reverse its hikes to avoid a painful recession, underscored the dangers of owing money when rates are climbing and the economy is worsening in a tweet this week.

“At risk of stating obvious, beware of debt in turbulent macroeconomic conditions, especially when Fed keeps raising rates,” he said.