Elon Musk is facing serious financial problems with X, formerly known as Twitter. Since he bought the platform, its revenue has dropped by an incredible 84%, creating a huge financial gap that Musk might have to fill by selling more of his Tesla stock. This has some Tesla investors worried, as selling more stock could cause Tesla's value to drop, hurting everyone who owns shares in the company.
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Twitter's Revenue Takes a Huge Hit
Musk bought Twitter for $44 billion, but turning the company around has been a big challenge. The New York Times recently reported that X made only $114 million in revenue in the U.S. during the second quarter of 2024, according to the documents they obtained. This is a massive drop compared to $661 million in the same quarter in 2022 before Musk took over. When we account for inflation, that’s a drop of a whopping 84%.
The main reason for this decline is that advertisers have pulled out, largely because of Musk's controversial statements and actions. To make matters worse, X has sued some of these advertisers, which could scare off even more business.
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As Bradford Ferguson, president and chief investment officer of asset manager Halter Ferguson Financial, said in a recent YouTube video, “Suing your customers might be a little challenging for your revenues.” It's clear that X is in a tough spot financially, and something drastic may need to be done to keep the company afloat.
The Fear of More Tesla Stock Sales
Musk might need to sell some of his Tesla shares to deal with X’s financial problems. This is making Tesla investors nervous, as they remember what happened the last time Musk sold a large amount of Tesla stock. A few years ago, he sold about $40 billion worth of Tesla shares, which caused the stock price to drop significantly.
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In the same YouTube video, equity analyst Matt Smith mentioned that Musk might need to sell between $1 and $2 billion worth of Tesla stock in succession to help X. Ferguson warned that this could cause Tesla's stock price to drop by 5% to 10%.
Will Musk Break His Promise?
No further TSLA sales planned after today
— Elon Musk (@elonmusk) April 29, 2022
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Musk had previously promised not to sell more Tesla shares until 2025, but with X's finances in such bad shape, he might have to back off that promise sooner than expected. In December 2022, Musk hinted that if things got worse, he might need to sell more Tesla stock around late 2024 or early 2025.
It wouldn’t be the first time he broke such a promise, either, because he famously tweeted in April 2022, “No further TSLA sales planned after today," but then sold billions of dollars worth of Tesla stocks.
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This article As Twitter's Revenue Collapses By 84%, Tesla Bulls Fear Elon Musk Will Liquidate More Tesla Stock, Bringing Its Value Down For Everyone originally appeared on Benzinga.com
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