Musk has sold 5.3 million shares of Tesla stock for an average price of $905.30, according to filings he filed with the Securities and Exchange Commission on Thursday. The sales represented just 3.1% of the Tesla stock he held at the start of Tuesday, and less than 2% of his total Tesla holdings if the stock options he controlled were included.
Insiders of a company, such as Musk, must report purchases or sales of their company’s stock to the SEC to let the broader investment community know their activity. But they have two days to file that recording and still comply with the rules.
Musk’s sales of Tesla stock were large enough to put downward pressure on the stock price. The number of shares sold represents 20% of the normal turnover in Tesla shares so far this year before Tuesday. Tesla shares lost 12.2% of their value during Tuesday’s trading session, which is the largest one-day decline in Tesla shares since September of 2020. The share’s decline led to a wave of selling by other investors, as 45 million shares were traded, nearly doubling. The trading volume of the previous day.
But there are limits to how much money he can raise simply by pledging his Tesla shares as collateral. He can raise more money simply by selling a portion of his Tesla stock. Tesla’s rules state that company officials and directors can only increase 25% of the value of shares pledged as security.
As of June 30, 2021, the company’s filings show that he had already pledged 88.3 million of his Tesla shares as security, but those shares were pledged years ago when Tesla shares were worth a small portion of their current value. He will probably be able to borrow more money even for some of these shares. And the 79 million unrelated shares he owns after Tuesday’s sales could be used to borrow $17 billion, even with the recent drop in Tesla’s share price.