Elon Musk on the Brink: Billions in Tesla Stock at Risk as X’s Financial Crisis Looms

Elon Musk is on the verge of selling billions in Tesla stock to rescue X, the struggling social media platform, as its financial woes deepen, threatening the electric carmaker's stock value.

X’s Revenue Plummets as Advertising Struggles Continue

The bad news for Tesla investors could be on the horizon if Elon Musk's financial woes at X start to catch up with him, according to Tesla bulls.

The revenue stream for the money-losing corporation formerly known as Twitter has been severely restricted due to Musk's constant attacks on advertising.

It hasn't helped that he just decided to sue them for following his own advice and not purchasing ads on the platform.

Elon Musk’s X Troubles Could Lead to Tesla Stock Sale

To save his $44 billion takeover, he will eventually need to inject more capital. To get the necessary funds, Musk may have to sell Tesla shares, which would be bad news for everyone who owns those shares, Fortune reports.

According to YouTube comments made by Halter Ferguson Financial's president and top investment officer Bradford Ferguson, "I would be expecting something between $1 and $2 billion in stock" on Wednesday. The stock's value could drop by 5–10% just because of this. "It’s a massive hole they need to plug."

Internal numbers for the second quarter, which the New York Times recently got, were the basis for Ferguson's evaluation. This article states that X's biggest market, the United States, generated $114 million in sales. This was a decrease of 25% from the previous quarter and a decrease of 53% from the same time last year.

Musk Faces Financial Pressure with X’s Revenue Decline

That isn't good to begin with. But things don't improve. Revenue was $661 million according to the most recent publicly available numbers from Q2 of 2022, which was before Musk's takeover. In today's dollars, revenue has really dropped by 84% if inflation is taken into consideration.

Per Yahoo Finance, the longevity of X is uncertain because the corporation refrains from disclosing its financial performance. However, Musk said in November that X might go bankrupt as a result of the advertiser boycott.

Ever since then, there has been zero discussion of making a profit or even breaking even in terms of cash flow. For Musk, who isn't afraid to announce goals so ambitious and unachievable that he consistently falls short of them, this is unprecedented.

Musk has a problem: even though he is the richest man alive, he cannot use his own fortune—estimated by Forbes at over $236 billion—to simply fill financial holes in X.

That's due to the fact that it is wholly associated with his diverse portfolio of businesses, which encompasses rocket manufacturer SpaceX, brain chip manufacturer Neuralink, and his most recent venture, xAI.

There is little to no liquidity in any of these investments. Just one business, Tesla, is listed on the stock market. The most convenient course of action for him would be to sell off some of his remaining 12% shares.

Tesla Investors Brace for Impact Amidst Musk’s Financial Woes at X

Ferguson is concerned that Musk may be planning to sell his Tesla shares soon, given the impending year of 2025 and the probable worsening of X's financial situation.

"He was probably a little more optimistic in December 2022 and didn’t anticipate it would get worse," Ferguson remarked.

X took on $13 billion of leveraged buyout (LBO) debt as part of the purchase, and the asset manager suggested that it may be necessary to ensure that the company meets the loan covenants for that deal. Banks may demand repayment or increase interest rates in the event of a violation.

Tesla Shareholders Watch Closely as X’s Financial Crisis Unfolds

Future Fund managing partner and cofounder Gary Black expressed agreement with the sentiment that share sale risks are on the rise.

"The bleeding of X will continue and at some point Elon will have to sell more Tesla shares to plug the $1–2 billion per year hole at X," said the seasoned Tesla bull in a social media post.