Elon Musk’s financial struggles with X, formerly Twitter, are causing concern among investors and analysts. The company’s revenue has plummeted by 84% since 2022, according to the New York Times. This decline is attributed to advertiser boycotts following Musk’s outbursts against them.
Musk may need to inject fresh capital into X, which could result in him selling Tesla stock, potentially hurting investors. Bradford Ferguson, president and chief investment officer of Halter Ferguson Financial, estimates that a sale of $1-2 billion in stock could cause the value of Tesla shares to drop by 5-10%.
The situation is precarious, as X’s financial reports are not publicly available, making it difficult to assess the company’s financial health. In November, Musk acknowledged that X could face bankruptcy due to the advertiser boycott.
Musk cannot rely on his personal wealth, estimated at over $236 billion, to plug the financial holes in X. His wealth is largely tied up in corporate holdings, including SpaceX and Neuralink.
The easiest solution for Musk would be to liquidate some of his remaining 12% stake in Tesla. This could result in a significant drop in the stock’s value. In December 2022, Musk promised not to sell any more stock until at least 2025 or possibly 2026. However, with X’s finances likely worsening, Ferguson fears that Musk may need to offload Tesla shares sooner rather than later.
The clock is ticking, as Musk’s pledge not to sell shares until 2025 will soon expire. Investors are on high alert, waiting to see what move Musk will make next to address the financial struggles of X and its potential impact on Tesla.
Source: https://fortune.com/2024/08/15/elon-musk-tesla-stock-sale-twitter-x-advertiser-boycott-finances-bradford-ferguson/