Elon Musk sells TSLA to buy Twitter – Good or bad investment? (Ep. 593)

We learn exactly how much Tesla stock Elon Musk sold this past week to money his acquisition of Twitter, and what the implications are.

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Elon Musk sells TSLA to buy Twitter – Good or bad investment? (Ep. 593)

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  1. Elon has been very good with his money and investment even though I hate the short term fluctuations. The man has to do whatever it takes for the cause.

    1. @Jonathan Root “It’s actually a great investment. Control the minds so he doesn’t get his taxes raised.”

      No. He just wants to protect free speech.

  2. As an investment then the answer is No. For Elon personally, holding his own Tesla shares vs selling them to buy Twitter is not even close for projected growth.

    For a Tesla investor, the answer is no too. I’d want Elon to focus and not get distracted/tired from dealing with twitter and the political hell that’s about to ensue.

    1. Totally agree. I admire what he’s done, but spending the money on a new training college would have been a better investment than a platform that allows anyone to voice opinions that are, for the most part, of low value and little real importance in the great scheme of things.

  3. I have the feeling TWTR will expand its scope. There are a lot of social media platforms that have abandoned an equal playing field and free speech, including the social media site we are currently on.

  4. Thanks. I appreciate your views. Question though. Doesn’t Elon have a lot of cash from his stock sales in 2021 to add to the roughly $6 billion he just made?

    1. Vast majority of that went to taxes, roughly $11B tax and around $2B leftover. (if memory serves)

  5. I also think because everyone time Tesla hits these different performance levels he gets more bonuses to purchase millions of shares for so cheap that this is almost a no brainer. He doesn’t actually “lose” stock

  6. This week’s stock price was less that what he executed the 2012 options at, no taxes if those are sold. Can blend lots to achieve zero gain/ loss and net the full 8 Billion.
    His current stake in TWTR will be worth about $4B at sale; together, this is $12B of the $21B needed. Combined with the $12.5B margin loan, it gives him >50% ownership.

  7. Dave, your last point where Elon will unlock the potential of TWTR is the most significant as it is his driving motivation for the acquisition.

  8. Twitter is Tesla’s free PR and advertising platform. I believe Twitter will be used for these purposes alongside his personal ambition of encouraging free speech.

    1. I hope not. That is not very ethical if an owner uses a free speech platform for his own advertising. Plus Tesla doesn’t advertise. 😀

    2. @Mimmi Kylemark i dont mean in an official capacity with ads and an offical PR account, but a lot of attention, press, feedback, etc for Tesla naturally takes place on Twitter. So when looking at it from that perspective, Twitter might have been a good investment.

  9. Thanks Dave, that was a super clear and concise breakdown of how he’s funding it. How concerned are you about the debt he took on? Some factors at play whirling in my head:
    – 1+ billion dollars of interest per year from the loans
    – Twitter has historically lost money
    + Reuters article, if accurate, says Elon plans to remove the fat board compensation (millions in value) and slim down the employee count dramatically so that might put Twitter’s net income in the positive
    – Moving from advertising to a subscription based model is unproven for a service like Twitter. Demand for other monetization features in the Reuter article also unproven
    – Macro environment suggests recession is incoming, with supply chain challenges, China’s covid zero policy, etc
    – A harsh drop in TSLA stock in such a macro environment could cause Elon’s loan against TSLA to get margin called, triggering a cascade downwards when he’s forced to sell
    – Exposing the powerful left’s blatant corruption is painting more targets on Elon’s back
    – In their attempt to preserve their power over narrative control, governments accelerating social media regulation via “The Ministry of Truth” could destroy Twitter as a platform
    – Apple & AWS are still heavily left leaning and could be pressured to block Twitter over trivialities

  10. I guessed this was the reason for the stock drop these few days. My question still though is how this affects his ownership/control of Tesla?

  11. Let’s not forget that Elon likely wants a tax footprint for 2022 to appease Government and reduce accusations of “not paying tax”

  12. One potential downside of Elon’s ownership of Twitter is that he has painted a target on Tesla for those who don’t agree with the Twitter purchase. As Michael Jordan famously said when asked why he doesn’t express political opinions, “Republicans buy sneakers too.” If a substantial portion of the Tesla market turns away from the brand to protest the Twitter purchase, then Tesla’s massive backlog could evaporate.

  13. I have some options strategies in my portfolio that require margin buying power. These strategies do not use margin, but they require margin in the account to execute, and thus no interest is being charged and no margin is actually being used. However, the only times I got margin called were when Elon sold shares. Elon managed to tank TSLA stock so badly that my multimillion dollar portfolio got margin called on small options positions.

  14. The biggest mistake you can make when investing is thinking that you are smarter than the market. It is almost impossible to constantly time the market, you will miss out on great opportunities if you do. Simply DCA in high-conviction stocks and let your position grow.

    1. I have set aside a lump sum of money to invest in great quality companies that have good market caps both the fear of constant fluctuations won’t let me be.

  15. Doesn’t Elon have a couple of billions in cash from his previous sale to pay taxes?
    It will be exciting to see what happens with Twitter. Right now I am sceptical, but Elon rarely does something bad in business.

  16. Thanks Dave always explain things with the basic principles in mind so everyone can understand! Keep them coming!

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