Elon Musk appears to be hesitating over his $44 billion acquisition of Twitter as a key funding source, his ownership in Tesla, quickly loses value. Financial activities at his other company, SpaceX, however, suggest the billionaire may be considering cashing out some shares there to pay for Twitter.
Tesla’s share price has tumbled nearly 30 percent since Musk signed an agreement to buy Twitter on April 24. According to his financing plan, Musk will sell $21 billion worth of Tesla stock, about 20 million shares, and borrow the rest to fund the deal. However, with Tesla stock now in the deep of a bear market, selling millions of shares is equivalent to accepting a huge loss. Musk might be eager to find alternatives to cashing out Tesla stock at a deep discount.
Meanwhile, SpaceX’s value is soaring. The rocket company, which is privately held, is looking to raise more than $1 billion in fresh capital at a valuation of $125 billion while some existing shareholders plan to sell their equities via a private placement concurrently, Bloomberg reported on May 17. One of the sellers is Musk, according to The New York Post, citing people familiar with the matter.
Elon Musk’s SpaceX stake is worth $55 billion
SpaceX’s new valuation represents a nearly 70 percent jump in just over a year. It’s not uncommon for highly valued private companies to sell shares in the secondary market to allow early investors to cash out.
SpaceX did not immediately respond to a press inquiry about whether Musk is selling his SpaceX shares. It’s also unclear how many shares are available for sale.
Musk owns 47 percent of SpaceX, according to the company’s Federal Communications Commission disclosure, which SpaceX is required to file because it launches communications satellites. Under the $125 billion valuation, that stake is worth $55 billion, more than enough to pay for the Twitter acquisition.
However, SpaceX’s fundraising campaign is being met with “very tepid demand,” according to The New York Post, as investors carefully evaluate uncertain market conditions.
“No one is paying up for anything in this market,” one of the Post’s sources said.
On the business side, SpaceX’s launch demand is stronger than ever. In 2022 so far, the company has launched 19 crewed and cargo missions, including contracts with NASA and flights delivering its own Starlink satellites. Last year, SpaceX launched 31 mission in total.