Elon Musk is cashing in on Tesla stock again

The histrionic Elon Musk continues his work of increasing his cash and does so at a time when Tesla shares are not enjoying the best of health amid harsh criticism from majority shareholders.

Elon Musk and the sale of Tesla stock

The CEO of Tesla has sold yet another installment of shares in his portfolio valued at an estimated $3.38 billion. 

Despite the fact that the shares of the world’s largest automaker have not been enjoying good health for more than a year now (-47% in 2022 to date) and despite being at their lowest peak since 18 November 2020, Musk decided to cash out and for the peace of mind of major shareholders, the stock gains 0.51%. 

Among the major shareholders, KoGuan Leo, who ranks third in terms of the number of shares in his portfolio, was tense by posing a rhetorical question on Twitter wondering whether or not Musk considers the shareholders his bagholders. 

The stock, ever since Musk also acquired Twitter, has underperformed the automotive biggies and also most technology companies. 

The stock sale is a 2022 major theme for the CEO, who in total has grossed a whopping US$40 billion from sales proceeds. 

The transaction came at the same time as the news that Tesla’s market capitalization fell below 500 billion US dollars resulting in Elon Musk overtaking the Frenchman Arnaud in the title of the world’s richest man. 

The most maligned say that now that Musk has reclaimed the throne as the richest man he will leave the stock alone but the Canadian entrepreneur has given other reasons for the stock sale. 

“At the risk of stating the obvious, beware of debt in turbulent macroeconomic conditions, especially as the Fed continues to hike rates.”

The latest interest rate hike by the Federal Reserve raised the bar by 50 basis points proving less hawkish than in the past but confirming the trend. 

Jerome Powell, Fed Chairman, had already communicated that there would be one last rate hike and it was already discounted by the market.

What is happening in the US is the biggest economic tightening in 30 years, and Fed executives are aware of this, as Powell’s statement on the sidelines of the announcement shows:

“the lags with which monetary policy affects economic activity are slow.”

Tesla’s CEO resumed selling shares in the company soon after the Twitter deal that had involved a $44 billion outlay.

In November, shares worth $3.95 billion were sold, but the underlying motivation starts way back, to be precise in April, when 9.6 million shares later joined by 7.9 million in August exited the portfolio. 

The entrepreneur had hoped not to resort to selling shares if any of the financing partners for the Twitter operation backed out or failed to fully contribute but things turned out otherwise and putting his hand to his wallet was inevitable. 

“In the (hopefully unlikely) event that Twitter forces out of this deal and some equity partners don’t show up, it’s important to avoid a crash sale of Tesla stock.”