Elon Musk's Brother Sells $27 Million Worth of Tesla Stock
Elon Musk’s brother Kimball Musk has sold $27 million worth of Tesla stock as the electric vehicle company faces financial turbulence.
The Tesla CEO’s sibling still owns a substantial amount of stock in the company.
Why It Matters
Tesla’s stock value has dropped 50 percent since December, causing the company to plummet $800 billion in its market cap and slashing roughly $100 million from Elon Musk‘s net worth. Tesla continues to face reduced demand and backlash following Musk’s involvement in President Donald Trump‘s administration.
While Musk is leading the newly formed Department of Government Efficiency, Tesla has tumbled, with short sellers making over $16 billion from the stock in the last three months, according to a S3 Partners analysis.
A Tesla is pictured charging in the Silicon Valley town of Mountain View, California, on August 24, 2016.
Smith Collection/Gado/Getty Images
What To Know
Kimball Musk, who co-owns The Kitchen Restaurant Group, has long been among the most noteworthy stock owners for Tesla, owning 0.05 percent of its common stock as of December, equating to 1,538,220 shares.
As of February, he had sold roughly 75,000 of those shares, or around 5 percent of his holdings.
According to other filings with the U.S. Securities and Exchange Commission, the four top officers at Tesla have sold more than $100 million in shares since early February.
Tesla’s stock value has been on a downward trajectory since Trump entered office and Musk took over the president’s newly formed DOGE, which is looking to make substantial cuts to federal agencies that oversee benefits like Social Security and student loans.
As of Tuesday, Tesla’s stock was valued at $228.33 per share, a loss of 35.63 percent since last month.
What People Are Saying
Kevin Thompson, finance expert and founder of 9i Capital Group, told Newsweek: “Tesla has been taking a hit in the U.S., partly due to Elon’s involvement with the Trump administration, which isn’t sitting well with the company’s largely liberal customer base. Expect continued declines in the American market as some consumers move away from the brand. That said, China remains a key market that could help offset weaker U.S. demand. But the real game-changer? If Elon lands a government contract to license autonomous vehicle technology, that could be a massive win for Tesla’s long-term future.”
Michael Ryan, finance expert and founder of MichaelRyanMoney.com, told Newsweek: “It isn’t necessarily a red flag for the company’s future, but more a reflection of smart portfolio management. I’ve seen this countless times with executives who maintain significant company stakes but need to diversify their risk exposure.”
Alex Beene, financial literacy instructor for the University of Tennessee at Martin, told Newsweek: “When it comes to large-scale stock owners, it’s always difficult to say the exact reason for selling. It could be based on projections for future performance, or it could be for personal reasons, like a major purchase or for tax purposes. Regardless, a sale of this size garnering headlines certainly does Tesla no favors, as the stock continues to descend from the incredible highs it reached following last year’s election. The company is dealing with a trifecta of challenges, as domestic sales have slowed, international sales are down, and there’s a feeling Musk’s heavy involvement with the new administration will cause revenues to sink further.”
What Happens Next
Ryan said that Kimball Musk’s stock sale is a “standard move” for wealth preservation, and that he still owns roughly 1.5 million shares worth more than $500 million.
“The timing is interesting, though. Tesla has had quite the rollercoaster ride lately. Down nearly 50 percent from its December peak but still up 54 percent year-over-year,” Ryan said. “When I managed high-net-worth portfolios, we’d often look for these kinds of windows to rebalance without creating market panic.”
As a company, Tesla continues to lose its market share in Europe and Asia, where competitors like BYD are gaining ground.
“Tesla’s transition from primarily an automaker to an AI and robotics company represents both opportunity and risk,” Ryan said. It reminds me of when Apple pivoted from computers to mobile devices; transformative but not without growing pains.”