With Elon Musk reviving the abandoned Twitter Inc. TWTR deal and giving a deadline of Oct. 28 for the closure, the chatter regarding financing is back.
What Happened: Musk could sell about $5 billion of his Tesla Inc. TSLA shares to close the Twitter deal by Oct. 28, Gary Black, managing partner at Future Fund, said.
The Tesla trading window for insiders reopens on Friday following the company’s earnings release, he noted.
Once the Twitter overhang lifts, the fund manager expects Tesla’s shares to rally by 5-10%.
“But once the TWTR overhang lifts Friday, TSLA should recover nicely as hedge funds trading in front of Elon Musk’s potential sales close positions and we move onto epic 4Q,” he added.
Musk is trying to raise equity financing for the Twitter deal so that he doesn’t have to sell Tesla shares at such depressed levels, Black said.
Even if Musk is not able to round up the required financing, a $5 billion stock sale would represent just 1% of the float, added Black.
Why It’s Important: Tesla shares have been under tremendous selling pressure amid macroeconomic and geopolitical uncertainties. The third-quarter earnings released on Wednesday did little to lift the stock, which, in fact, was recovering in the run-up to the earnings release.
Musk previously offloaded Tesla shares twice after he announced his intention to buy Twitter — once in late April and the second time in August. Musk had ruled out further sales after his initial disposal in April, and when he went back on his words and offloaded shares yet again, he reasoned that it was to avert a fire sale if the equity partners do not come through.
Price Action: Tesla shares fell 6.65% to $207.28 on Thursday, according to Benzinga Pro data.
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