Elon Musk could be obliged to liquidate $5 billion to $10 billion in Tesla stock next week in order to close a $44 billion buyout of Twitter, Wedbush analyst Dan Ives said in a Friday note.
Musk currently owns $12.5 billion lined up in debt financing, but he’s counting on outside investors to come in and help add the other $32 billion left to finalize the deal. The currently sluggish stock market environment forces Musk’s sell to investors about the potential for Twitter that much harder.
“It’s pretty simple, the more investors that bail on this deal is the more money that Musk needs to contribute and therefore sell more Tesla stock,” Ives said. The deal has a completion deadline of October 28, which means Musk is facing a make or break week ahead and any selling of Tesla shares is likely to happen next week.
Ives described the situation as “brutal” for Tesla investors, as they will ultimately have to “bear the burden” of Musk’s potential stock sales.
The stock sales by Musk would come at a time when the electric vehicle company is considering its first ever stock buyback of between $5 billion and $10 billion, as mentioned on Wednesday’s third-quarter earnings call.