Tesla Investors are Bracing for a Massive Stock Dump Following Elon Musk's $97 Billion Bid to Buy OpenAI. TSLA Shares Down 4% Following the News

Yesterday, Elon Musk officially placed a bid to buy OpenAI, the company behind ChatGPT, for an eye-watering $97 billion.

This has sparked concerns among Tesla investors that Elon Musk will have to sell a significant portion of his Tesla shares to raise the money necessary for the deal.

But before we proceed I want to put things in a bigger picture for you as Tesla just made a very big move in China with a second Megafactory, aiming to change the game from a different angle. Look also this video report from the Torque News Youtube channel.

[embedded content]

Yes, Elon Musk is the richest person in the world, worth over $400 billion. However, most of his net worth is tied up in his shares in Tesla, SpaceX, Twitter, and other ventures.

And, what makes Tesla unique among Elon Musk’s companies is that it is the only publicly traded company in Musk’s portfolio.

This means if Musk needs quick cash, he will most likely get it by selling his Tesla shares.

Currently, Musk owns 412 million Tesla shares worth $150 billion. As of writing, this amounts to a little over 13 percent of the company.

However, before his bid to buy Twitter in 2022, Musk owned close to 17% of Tesla. At that time, to fund his Twitter deal, pay the associated tax for selling his shares, and so on, Musk ended up selling around $29 billion worth of Tesla shares.

For those who closely followed Musk’s 2022 Tesla stock dumps, there were bizarre trading days where Tesla stock tumbled by as much as 18% in a couple of days without any news.

The giant swings in Tesla shares were hard to explain, but only a few days later, it was revealed that the massive 10% plus slide in Tesla stock occurred because Musk was selling his shares.

Even worse, Musk sold billions of dollars worth of Tesla shares in the open market, causing massive downward pressure on the stock price.

This does not seem ideal for Tesla shareholders. However, even for the most ardent Musk fans, who believe this is just short-term stock fluctuation and that in the long term, all this doesn’t matter, they should keep one thing in mind.

By selling a significant portion of his Tesla shares on the open market, Musk is permanently increasing the number of shares available for traders.

Previously, Elon Musk’s Tesla shares were theoretically available, but Musk did not touch them, and they did not change hands. This limited the number of available Tesla shares and increased demand.

However, during his Twitter deal, Elon Musk increased the number of liquid shares by over a hundred million, or 3% of the total outstanding shares.

This is why even ardent Tesla fans and investors should, and some were expressing their fears about the OpenAI deal.

However, even more important than the feelings of ardent Musk fans, Tesla shares fell from an intraday high of $360 to around $347 as news of the OpenAI deal spread.

Another interesting point is that Elon Musk’s brother, Kimbal Musk, a member of the Tesla board, also sold 75,000 TSLA shares worth $27 million only a day before the OpenAI news came out.

Given that Kimbal still owns 1.4 million Tesla shares worth over $500 million, this might not seem like a big deal.

However, Kimbal has a history of selling Tesla shares at the top. And if this wasn’t enough of a concern, other high-ranking Tesla executives, including the chairwoman and the chief financial officer, have also sold Tesla shares worth tens of millions of dollars over the past week.

You might not make too much of a deal out of these transactions; however, you should know that Musk’s brother and closest confidant, Kimbal Musk, is privy to what Elon is planning to do before the public.

Kimbal most likely knew Elon was going to buy Twitter before the public did. In this instance, Kimbal also likely knew about and was most likely involved in the $97 billion deal to purchase OpenAI.

Additionally, Musk and his brother are not alone in the bid to acquire OpenAI.

Musk has amassed a group of yet-to-be-announced investors to join him in the OpenAI deal. These include banks, venture capital firms, sovereign wealth funds, billionaire friends like Larry Ellison, and others.

This means that by the time the public and retail Tesla investors hear about Elon Musk’s substantial $97 billion OpenAI deal, hundreds, if not thousands, of individuals in the financial world will already be aware of it.

These include everyone from the CEOs and major deal makers to the employees at the banks setting up the details of this deal, as well as the lawyers, the employees at the venture funds, sovereign wealth funds, individual asset managers, and so on.

And you can rest assured that some of these individuals are using their knowledge about the OpenAI deal to inform their Tesla investment decisions.

Tesla stock has been inexplicably falling since December 5, when TSLA reached a peak of $470 a share.

This has frustrated many retail investors, who find it difficult to explain why Tesla shares are declining.

However, given the enormous OpenAI deal Musk announced, some were likely front-running this news by decreasing their exposure to Tesla.

Having said that, it’s still too early to say how harmful Elon Musk’s OpenAI deal will be to Tesla shareholders. However, please let me know what you think in the comments. Share your ideas by clicking the “Add new comment” button below. Also, visit our site, torquenews.com/Tesla, regularly for the latest updates.

For more information, check out: Owner of a Golden Tesla Cybertruck Says He Can No Longer Handle the Constant Harassment. He Adds, “I Tried to Trade in the Cybertruck, but Tesla Won’t Accept It”

Tinsae Aregay has been following Tesla and the evolution of the EV space daily for several years. He covers everything about Tesla, from the cars to Elon Musk, the energy business, and autonomy. Follow Tinsae on Twitter at @TinsaeAregay for daily Tesla news.