For Tesla Investors, the Nightmare of Musk’s Stock Sales Won’t Stop

Musk has tweeted about declining ad revenue on at his social media platform that he bought in late October. The sales might be intended to shore up finances at Twitter which weren’t great even before he took over.

Musk and Tesla didn’t immediately comment on the reason for recent sales.

Musk sold about 22 million shares in 29 separate transactions this week worth roughly $3.6 billion, bringing the total amount of Tesla stock sales to roughly $19 billion in 2022. Musk still owns about 424 million shares of Tesla, excluding his management stock options.

Investors don’t like management stock sales because sales can signal weakness ahead for any stock. That isn’t always the case with Tesla shares. Musk still owns a lot of stock and sells for idiosyncratic reasons. Still, his sales generate stock volatility and investors don’t like volatility. What’s more, investors never know exactly what his plans for sales are, creating discomfort for even long-term Tesla shareholders.

Coming into Thursday trading, Tesla stock was down more than 12% for the week. Musk’s selling could have added to the weakness that, before sales were disclosed, was being blamed on everything from Twitter to supply/demand problems in the electric vehicle market.

Shares might rise Thursday on the revelation that Musk himself was responsible for the weekly weakness. Still, it looks like investors will have to learn to live with the Musk-Twitter-Tesla overhang for some time. Tesla stock was up 0.1% in after-hours trading Wednesday night.

Coming into Thursday trading, Tesla stock is down about 55% year to date. The stock has dropped about 30% since Musk took over Twitter and underperformed the

Nasdaq Composite
by about 33% over that span.

Tesla stock closed down 2.6% Wednesday, closing at a new 52-week low of $156.80. The

S&P 500
and

Dow Jones Industrial Average
finished down 0.6% and 0.4%, respectively.

Write to Al Root at allen.root@dowjones.com