Elon Musk is facing serious financial problems at X, formerly known as Twitter. Since he bought the platform, the platform’s revenue has fallen by a whopping 84%, creating a huge cash shortfall. Musk may have to make up the shortfall by selling Tesla shares. This worries some Tesla investors, as selling Tesla shares could lower the company’s value and hurt everyone who holds shares in the company.
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Twitter’s revenue takes a big hit
Musk bought Twitter for $44 billion, but turning it around is a big challenge. The New York Times recently reported that documents obtained by the company showed that Twitter’s U.S. revenue for the second quarter of 2024 was just $114 million. That’s a huge drop from the $661 million it made in the same quarter in 2022, before Musk bought the company. When adjusted for inflation, it’s a whopping 84% drop.
The main reason for this decline is that advertisers have pulled out, mainly due to Musk’s controversial comments and actions. To make matters worse, X is suing some of these advertisers, which could drive away even more business.
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“Suing customers might be a little tough on the bottom line,” Bradford Ferguson, president and chief investment officer of asset management firm Halter Ferguson Financial, said in a recent YouTube video. It’s clear that X is in financial difficulty and may need to take drastic measures to stay afloat.
More worries about Tesla stock selling
Musk may need to sell some of his Tesla shares to address the financial problems of Company X. Tesla investors are nervous, remembering what happened the last time Musk sold a lot of Tesla stock: A few years ago, he sold about $40 billion worth of Tesla stock, causing the stock price to fall sharply.
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In the same YouTube video, stock analyst Matt Smith said Musk may have to sell $1 billion to $2 billion worth of Tesla stock in a series of moves to support X. Ferguson warned that this could cause Tesla’s stock price to fall by 5% to 10%.
Will Musk renege on his promise?
No more TSLA sales scheduled after today
— Elon Musk (@elonmusk) April 29, 2022
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Musk had previously promised not to sell any Tesla shares until 2025, but he may have to back out of that promise sooner than expected because the company’s financial situation is so bad. In December 2022, Musk suggested he might have to sell more Tesla shares in late 2024 or early 2025 if things get worse.
This isn’t the first time he’s broken such a promise, as he tweeted in April 2022 that he had “no plans to sell Tesla shares after today,” but has since sold billions of dollars worth of Tesla stock.
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