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Bradford Ferguson
Aug 143 min read

Is Elon Musk About to Sell More Tesla Shares? Here’s Why It’s a Possibility

Updated: Aug 15



In recent years, Elon Musk's sales of Tesla shares have sent shockwaves through the market, with the most notable instance being the nearly $40 billion worth of stock he sold, causing Tesla’s stock to plummet. As we approach late 2024, the question on everyone’s mind is: could we be in for a repeat?


The Looming Threat of More Stock Sales


A few years ago, before Elon Musk’s first major series of Tesla stock sales, Bradford made a prescient prediction on Dave Lee’s channel, accurately forecasting that Musk would need to sell shares for tax purposes related to expiring stock options. Fast forward to today, and Bradford is once again ringing the alarm bells—this time, the potential catalyst for Musk’s sales could be X (formerly Twitter).


Why X Might Need More Funding


X has been struggling financially since Musk acquired it, with revenue plummeting significantly. The New York Times reported that in Q2 2024, X earned $114 million in the U.S., a staggering 83% decrease from the $671.5 million it reported in Q1 2022, before Musk’s acquisition. Advertisers are boycotting X, largely due to Musk's outspoken political views and the company’s ongoing legal battles against these advertisers. This boycott has exacerbated X's financial woes, leading to a potential need for Musk to inject more capital into the platform.


Linda Yaccarino, CEO of X, recently announced an antitrust lawsuit against the Global Alliance for Responsible Media (GARM) and several major advertisers, which could further strain X's relationships with its advertising base. While usage of X has hit new highs, the financial reality is grim. Despite cutting costs significantly, X is losing money, and Musk might need to sell Tesla shares to cover the shortfall.


The Impact on Tesla Shareholders


If Musk decides to sell more Tesla shares to fund X, it could spell trouble for Tesla shareholders. Typically, Musk's stock sales are conducted in the open market rather than dark pools, which tends to drive down the share price by 5-10%, depending on the volume of sales. The problem is compounded by the fact that these shares are moving from Musk’s "diamond hands" to other investors who might not have the same level of conviction in Tesla, potentially leading to further sales and additional pressure on the stock.


The good news for Tesla shareholders is that Musk’s cost basis for these shares is around $300 or higher, meaning he won’t owe any additional taxes when selling them. However, the bad news is that even a relatively small sale of $1-2 billion in Tesla stock could have a noticeable impact on the share price.


What’s Next?


While it’s difficult to predict exactly how much Musk will need to sell, Bradford estimates that it could be between $1-2 billion. This amount would help shore up X's finances in the short term but might not be enough to completely stabilize the company, leading to the possibility of further sales down the line.


As Tesla investors, it’s crucial to be prepared for the potential volatility that could arise from these sales. While the magnitude might be less than the $40 billion sold previously, the psychological impact on the market could still be significant.


Conclusion


At Rebellionaire, we understand the challenges that come with holding a concentrated position in stocks like Tesla. That’s why we offer strategies like covered calls and selective trimming during emotional highs, giving you the flexibility to navigate these turbulent waters.


For more insights, including Bradford’s earlier prediction about Musk’s stock sales, check out our video with Dave Lee from 2021. Stay informed, stay prepared, and as always, invest smartly.


Full disclosure: Rebellionaire does some advertising on X and participates in its creator revenue share program.


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