Insider Weekends: Musk Sells $8.52 Billion Of Tesla To Fund Twitter Purchase

Summary

• Insiders purchased 11 times more stock last week than they purchased in the week prior.
• Musk sold $8.52 billion of Tesla to fund his acquisition of Twitter.
• Four different insiders of Warner Bros. Discovery purchased shares on the open market, including the CEO and CFO.
• Looking for more investing ideas like this one? Get them exclusively at Inside Arbitrage. Learn More »

Justin Sullivan/Getty Images News

In a month where we experienced the worst monthly drop in the Nasdaq since 2008 and where the big tech companies that were holding up the indexes also dropped, insiders stepped up as we expected to buy a significant amount of stock last week. Insiders purchased 11 times more stock last week than they purchased in the week prior. The $463 million of purchases were also significantly above the $6 million of purchases we saw during the same week in April 2021 and $15 million of purchases during the last week of April 2020.

The number is unusually high last week because the father-son duo Ernest Garcia II and Ernest Garcia III purchased shares of online car dealer Carvana (CVNA) in a secondary offering. They collectively purchased $364 million in a secondary offering but their purchases pale in comparison to the elder Garcia’s $1.15 billion of sales of Carvana in 2020 and $2.25 billion of sales in 2021 as you can see here. The stock has been under pressure lately as it launched a $1.25 billion secondary offering to sell class A shares and Apollo Global stepped in to pick up half of the $3.275 billion in debt it was trying to sell at a high yield of 10.25%. Carvana needed the capital to fund its $2.2 billion acquisition of KAR Global’s auction business. The stock is down more than 80% from a peak of over $370 last August.

The other big event last week was Elon Musk’s acquisition of Twitter (TWTR) in a deal financed through $13 billion in debt from banks, $12.5 billion through a margin loan on his Tesla (NASDAQ:TSLA) shares and an additional $21 billion in equity financing from him. Toward this end, he sold 9.645 million shares of Tesla generating $8.52 billion from the sales. We discussed his sales of Tesla late last year in an article titled The Pied Piper Is Heading Out Of Town.

Insider buying increased significantly last week with insiders purchasing $462.93 million of stock compared to $41.43 million in the week prior. Selling also increased significantly to $8.98 billion compared to $704.53 million in the week prior.

Sell/Buy Ratio:

The insider Sell/Buy ratio is calculated by dividing the total insider sales in a given week by total insider purchases that week. The adjusted ratio for last week went up to 19.39. In other words, insiders sold more than 19 times as much stock as they purchased. The Sell/Buy ratio this week was unfavorable compared to the prior week when the ratio stood at 17.

Notable Insider Buys:

1. The Charles Schwab Corporation (SCHW): $66.33

CEO Walter W. Bettinger acquired 140,000 shares of Charles Schwab, paying $68.10 per share for a total amount of $9.53 million. Mr. Bettinger increased his stake by 47.84% to 432,625 shares with this purchase.

P/E: 23.44	Forward P/E: 13.19	Industry P/E: 12.77
P/S: 6.79	Price/Book: 2.71	EV/EBITDA: N/A
Market Cap: $125.72B	Avg. Daily Volume: 8,680,220	52 Week Range: $65.73 – $96.24

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2. Warner Bros. Discovery, Inc. (WBD): $18.15

Shares of Warner Bros. Discovery were acquired by four insiders:

• Director Robert R. Bennett acquired 53,000 shares, paying $18.88 per share for a total amount of $1 million. Mr. Bennett increased his stake by 544.32% to 62,737 shares with this purchase.
• Chief Executive Officer & President David Zaslav acquired 50,200 shares, paying $19.93 per share for a total amount of $1 million. Mr. Zaslav increased his stake by 1.24% to 4,093,530 shares with this purchase.
• Chief Financial Officer Gunnar Wiedenfels acquired 25,000 shares, paying $19.95 per share for a total amount of $498,750. Mr. Wiedenfels increased his stake by 5.48% to 481,527 shares with this purchase.
• Chief Corp Affairs Officer David Leavy acquired 6,866 shares, paying $18.33 per share for a total amount of $125,854. Mr. Leavy increased his stake by 4.28% to 167,176 shares with this purchase.

P/E: 13.17	Forward P/E: 11.27	Industry P/E: 61.47
P/S: 3.61	Price/Book: 1.03	EV/EBITDA: 6.87
Market Cap: $44.05B	Avg. Daily Volume: 15,487,069	52 Week Range: $17.89 – $39.7

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3. Rocket Companies, Inc. (RKT): $8.85

Chief Executive Officer Jay Farner acquired 111,700 shares of this tech-driven real estate, mortgage, and e-Commerce company, paying $8.93 per share for a total amount of $998,019. Mr. Farner increased his stake by 6.17% to 1,922,407 shares with this purchase.

P/E: 3.81	Forward P/E: 6.97	Industry P/E: 7.49
P/S: 1.33	Price/Book: 1.68	EV/EBITDA: 4.24
Market Cap: $17.59B	Avg. Daily Volume: 5,522,155	52 Week Range: $8.49 – $23.33

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4. Lam Research Corporation (LRCX): $465.76

Director Catherine P. Lego acquired 1,736 shares of this semiconductor equipment and materials company, paying $460.35 per share for a total amount of $799,168. Ms. Lego increased her stake by 3.60% to 49,991 shares with this purchase.

P/E: 14.52	Forward P/E: 12.25	Industry P/E: 23.39
P/S: 3.91	Price/Book: 10.09	EV/EBITDA: 12.14
Market Cap: $64.61B	Avg. Daily Volume: 1,404,279	52 Week Range: $449.5 – $731.85

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5. Lions Gate Entertainment Corp. (LGF.B): $12.57

Director Harry Sloan acquired 50,000 shares of this movies and TV shows production and distribution company, paying $12.72 per share for a total amount of $636,000.

P/E: N/A	Forward P/E: 17.36	Industry P/E: 61.47
P/S: 0.80	Price/Book: 1.05	EV/EBITDA: 3.60
Market Cap: $2.91B	Avg. Daily Volume: 644,506	52 Week Range: $10.53 – $18.77

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You can view the full list of purchases from this Insider Buying page.

Notable Insider Sales:

1. Tesla, Inc. (TSLA): $870.76

Shares of Tesla were sold by two insiders:

• CEO Elon Musk sold 9,645,000 shares for $883.09, generating $8.52 billion from the sale.
• SVP Powertrain and Energy Eng. Andrew D. Baglino sold 3,500 shares for $899.42, generating $3.15 million from the sale. These shares were sold as a result of exercising options immediately prior to the sale.

P/E: 177.67	Forward P/E: 54.76	Industry P/E: 20.97
P/S: 16.76	Price/Book: 29.8	EV/EBITDA: 96.38
Market Cap: $902.12B	Avg. Daily Volume: 25,105,831	52 Week Range: $546.98 – $1243.49

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2. Airbnb, Inc. (ABNB): $153.21

Shares of Airbnb were sold by three insiders:

• Chairman of Airbnb.org Joseph Gebbia sold 454,168 shares for $153.16, generating $69.56 million from the sale. 15,525 of these shares were sold as a result of exercisng options immediately prior to the sale.
• Director Belinda J. Johnson sold 20,000 shares for $168.98, generating $3.38 million from the sale.
• Director Jeffrey D. Jordan sold 12,000 shares for $156.69, generating $1.88 million from the sale. These shares were sold indirectly by a trust.

P/E: N/A	Forward P/E: 75.47	Industry P/E: 2,585.66
P/S: 16.51	Price/Book: 20.33	EV/EBITDA: 171.24
Market Cap: $98.92B	Avg. Daily Volume: 5,737,847	52 Week Range: $129.71 – $212.584

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3. Snap Inc. (SNAP): $28.46

Shares of camera company were sold by two insiders:

• Chief Technology Officer Robert C. Murphy sold 900,000 shares for $29.55, generating $26.59 million from the sale.
• Chief Executive Officer Evan Spiegel sold 250,000 shares for $29.25, generating $7.31 million from the sale. These shares were sold indirectly by a trust.

P/E: N/A	Forward P/E: 33.48	Industry P/E: 21.06
P/S: 11.31	Price/Book: 12.16	EV/EBITDA: -78.46
Market Cap: $46.57B	Avg. Daily Volume: 37,969,731	52 Week Range: $24.32 – $83.34

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4. Bentley Systems, Incorporated (BSY): $42.39

Director Raymond B. Bentley sold 631,387 shares of this infrastructure engineering software solutions provider for $42.23, generating $26.66 million from the sale.

P/E: 141.3	Forward P/E: 46.58	Industry P/E: 53.96
P/S: 12.64	Price/Book: 31.9	EV/EBITDA: 85.15
Market Cap: $12.2B	Avg. Daily Volume: 954,217	52 Week Range: $34.45 – $71.92

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5. American Express Company (AXP): $174.71

Chairman and CEO Stephen J. Squeri sold 48,160 shares of American Express for $178.38, generating $8.59 million from the sale.

P/E: 17.44	Forward P/E: 15.5	Industry P/E: 7.84
P/S: 3	Price/Book: 6	EV/EBITDA: N/A
Market Cap: $131.57B	Avg. Daily Volume: 4,025,590	52 Week Range: $149.89 – $199.55

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You can view the full list of sales from this Insider Sales page.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of RKT, LGF.A either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Disclaimer: I hold long positions in Rocket Companies (RKT) and Lions Gate Entertainment (LGF.A). Please do your own due diligence before buying or selling any securities mentioned in this article. We do not warrant the completeness or accuracy of the content or data provided in this article.

Comments

[EliasMouawad]

Nice article. I still believe SNAP is a great buy. Just seven months ago, it was trading as high as $83

[Doc 224899]

It's good to be King.

Musk is King.

[Tdot]

Emperor with no clothes.

Musk gets high one day and "rage buys" Twitter out of anger over "censorship" claiming "free speech" is needed. Suddenly comes off the high and realizes he has no money to buy Twitter, sells all the Tesla shares he legally can in order to raise some seed cash, leverages all of his remaining shares to raise more cash (and those shares against potential margin calls if Tesla shares fall), still doesn't have enough cash, and thus reaches out to other rich friends and investors to help him raise billions more in cash. Still billions short on cash. Decides it was all a huge massive drunken mistake, and announces that he will take Twitter public again as an IPO after he finishes taking it private.

That's the Musky way.

[Real007]

They're barely monetizing today and with that massive DEBT BOMB coming how on earth do they ever plan to make payments on it ??

Not happening.

[Asif Suria]

@Real007 Are you referring to Warner Bros. Discovery?

[Doc 224899]

@Asif Suria @Real007
....and Disney?

[Real007]

@Asif Suria Musk/TWTR -- they can't service the new debt post takeover.

[Jwjrwjr]

First paragraph, first sentence, first word, was the word meant to be ‘Investors’ rather than ‘Insiders?’ My sense is the former would be preferable. I’m not being a smart a**, I’d sincerely like to know. Please explain. Btw, a fascinating article. Thanks.

[Asif Suria]

@Jwjrwjr It was actually insiders. Significantly stepped up their purchases. The pace so far this week is also high.

[Jwjrwjr]

@Asif Suria that makes sense. Thanks.

[gekko69]

Some people in the US say CEOs should stay out of politics but those same people cheer Musk making political statements and posting opinions on Twitter?

Just slightly hypocritical

[eugene_]

@gekko69
they don't see it. Their nose is buried too far up Elon's ass.

[nuttyoptometrist]

I still think Musk is not buying Twitter. Lots of people believe he made himself an excuse to sell * billion of Tesla at a high price and is willing to pay capital gains and the billion dollar penalty if he doesn't acquire Twitter to do so. Why would anybody want Twitter anyway.

[vvatcher]

@nuttyoptometrist he could have sold the stock without putting a bid on Twitter and saved the Billion dollar penalty.
That's just silly wasting such a large chunk of the sale, when you could have sold them anyway.

[Asif Suria]

@nuttyoptometrist He does not strike me like a person willing to give up $1 billion on a termination fee just because he needed an excuse to sell stock. He already sold a lot late last year and most founders/CEOs sell a lot on a consistent basis to diversify.

[eugene_]

@vvatcher
No he couldn't. At least and not lose millions of followers. He has said many times, he wasn't selling TSLA, and now it is a simple exercise to part with billions. He already lied about the tax sales, because he also "donated" $6 billion to charity, but no one knows where it went, which reduced his tax liability tremendously, but the followers are so blind, they said, look he is donating billions, but it was stock, and most likely went to himself or a charity that he controls.

The naivete of Tesla fans is strong.

[cdgingrich]

Thank you, Asif.

[Asif Suria]

@cdgingrich You are welcome. Thank you as always for reading.

[Bright spot]

Watch Twitter become the Tesla standard for communications. All while attached to the SpaceX internet satellites. Could be a smart thing with subscriptions to follow.

[eugene_]

@Bright spot
why would an app or website be tied specifically to SpaceX? What does that even mean?

[Maxed Out Mama]

@eugene_ That someone has no understanding of how the internet works.

[eugene_]

@Maxed Out Mama
It must be on some right wing weirdo page. I have seen other people claiming the same exact thing. Maybe, @Bright spot is a bot just like the others who post the same weird statement.

[eeeW]

musk is over his head on his whim to spend $44B on an app

[FilterB]

@eeeW Musk has a good track with making and the selling "apps" since when he was in his 20s. I would take his side on anything in the software business.

[EV_supporter]

@FilterB

I agree. If he can do well with car business and rocket business, watch out when he gets into software business, especially platform software. I think Twitter will become a trillion dollar company before SpaceX and Boring.

[dinoperson]

Musk’s sales were smart business. Trading in high flying Tesla for broken Twitter is smart.
Twitter will be fixed and brought back to the public in 2-3 years.

[EV_supporter]

@dinoperson

It must be painful to sell TSLA at this price. I'm pretty sure Elon understands TSLA is very likely to get another 10~20X.

[Asif Suria]

@EV_supporter He was also a big seller late last year along with his brother. At some point if you have so much of your net worth in one position, it makes sense to diversify. seekingalpha.com/...

[EV_supporter]

@Asif Suria

Last year Elon sold stocks to pay tax - exercising stock options.

[Gordonr]

And Tesla went up!