Elain Brown Tech 08.10.2022 03:Aug AM EDT

Elon Musk Sells $6.9 Billion Worth of Tesla Shares To Avoid an Emergency Stock Sale

Elon Musk confirms selling billions worth of Tesla shares.

This comes as a surprise since just a couple of months ago, on April 29, Musk went to Twitter to respond to a user stating that there were no further plans to sell another set of Tesla stocks.

The Tesla co-founder stated, "No further TSLA sales planned after today."

No further TSLA sales planned after today
— Elon Musk (@elonmusk) April 29, 2022

A filing from the Securities and Exchange Commission in April revealed that Musk had sold $8.4 billion worth of Tesla stocks. However, despite the confirmation coming from himself, it looks like the decision was changed to address a looming trial he has with Twitter.

Elon Musk Is Preparing Cash To Acquire Twitter

Elon Musk's sudden sale of Tesla stock was announced by another Tesla investor named, Sawyer Merritt. Merritt published Musk's activities during August 5, 8, and 9 showing that the Tesla co-founder had sold 7,924,107 shares at an average price of $869.09, worth about $6.9 billion. Merritt then tweeted Musk asking if he was done selling. Musk replied by saying "yes."

Musk stated the looming trial against Twitter as an explanation for the new plan. The Tesla co-founder sold $6.9 billion of Tesla stock to help himself by allowing that amount to cushion the blow when, in an unfortunate case, Twitter forces him to close the deal and some equity partners would opt not to continue with the deal.

Yes.

In the (hopefully unlikely) event that Twitter forces this deal to close *and* some equity partners don’t come through, it is important to avoid an emergency sale of Tesla stock.
— Elon Musk (@elonmusk) August 10, 2022

Musk sold those shares earlier this year to help finance the acquisition of Twitter, and now that he's trying to exit the arrangement, they're going to battle it out in a Delaware courtroom.

However, it is also speculated that the act of Musk selling billions of Tesla shares to prepare himself to buy Twitter shows his interest in genuinely continuing through the deal.

According to The Verge, analyst Dan Ives of Wedbush stated that, "Musk selling TSLA stock after he said no more sales will lead the Street to focus on chances of Twitter deal happening and Musk preparing cash portion, this stock sale will raise a lot of conversation on Street for bulls/bears in the morning."

Elon Musk and the Twitter Trial

The Elon Musk vs. Twitter trial now has a confirmed schedule in the Delaware Court of Chancery. This trial will tackle the legal responsibilities of Musk as he attempts to exit the acquisition deal wherein he persuades the company to sell him the remaining stocks, only to back out at the last minute.

The Twitter acquisition deal is worth $44 billion and is included in the contract of both parties. Musk is obliged to pay a certain amount of money in the event that he decides to discontinue his deal.

While the attorneys for each side initially fought over potential dates for the case, Twitter's attorneys wanted the trial to begin in September, while Musk's attorneys wanted it to begin in 2023.

It is clear that sooner is preferable to later for Twitter, given that the company has already placed blame on Musk for creating uncertainty and contributing to earnings results for the second quarter of 2022 that were lower than those of the previous year.

However, the legal team for Musk proposed the trial to be on October 17, which Twitter's team agreed to under the condition that the trial would only last for five days. The Verge reports that Judge Kathaleen McCormick decided that the trial would begin on October 17 and continue until October 21.