Musk Hasn't Sold More Tesla Shares To Fund $44B Twitter Deal: Could Overhang Be Gone?

The long-awaited, $44 billion deal between Twitter Inc. TWTR and Tesla Inc TSLA CEO Elon Musk is expected to close this week.

In addition to ending a dramatic back-and-forth between both parties, the announcement is expected to lift an overhang on Tesla shares.

Several analysts have pointed to the potential negative impact on Tesla shares since the original Twitter deal was announced back in April 2022.

See Also: Musk Says Twitter Deal Isn't For The Money - 'I Did It To Help Humanity'

Gary Black, managing partner at The Future Fund, is one of the most notable voices discussing the overhang.

With no filings from Tesla on sales by Musk coming in on Monday, Black believes the overhang could be gone.

“Most important takeaway from non-filing of any Form 4s last night: TWTR deal should close tomorrow, overhang lifting quickly, and combo of strong fundamentals, cheap valuation and robust catalyst list likely to drive TSLA going forward,” Black tweeted Wednesday.

Musk was not allowed to sell shares between the quiet period after the last fiscal quarter ended and when earnings were reported. With the company’s earnings reported, many believed Musk would sell additional Tesla shares to help fund the deal (he sold shares of Tesla in August to avoid an emergency sale of Tesla stock related to the Twitter deal).

There will likely be no sale of additional Tesla shares by Musk. Investors can track Musk's trades on the Insider Trades page for Tesla (he currently has 465,117,432 shares of Tesla after a three-for-one split in August).

Black noted that Musk's entering Twitter headquarters carrying a sink meant funding is secured.

 

Entering Twitter HQ – let that sink in! pic.twitter.com/D68z4K2wq7

— Elon Musk (@elonmusk) October 26, 2022

 

“We continue to believe Twitter overhang depressing Tesla shares lifts once Elon closes the deal and announces he’s done selling Tesla shares,” Black tweeted recently.

Catalysts for Tesla after the Twitter overhang include FSD Beta wide release, more electric vehicle credits, a potential share buyback, the Cybertruck launch and a $30,000 vehicle, according to Black.

Black has a price target of $550 on Tesla shares over the next six months to twelve months.

Separately, Black is selling Twitter Overhang merchandise via an online store, offering t-shirts ($30), hoodies ($60) and hats ($35) with a logo of a blue bird and some wine.

“Get the only official Twitter Overhang merchandise. These will be true collectors’ items once the Twitter deal closes and the overhang lifts,” the website reads.

It's worth noting that Musk could have sold shares on Tuesday or Wednesday, and still has time to report them with a two-business day deadline up until 10 p.m. EST.

“We expect Musk and Twitter to officially close the deal by Friday morning with Cinderella finally getting the glass slipper that fits,” Wedbush analyst Daniel Ives said.

But closing the deal is the easy part. According to Ives, the hard part is fixing the social media company, which he likened to an “Everest like uphill battle.”

“The $44 billion price tag for Twitter will go down as one of the most overpaid tech acquisitions in the history of M&A deals on the Street in our opinion.”

Ives has a Neutral rating and $54.20 price target on Twitter, in line with the official buyout price. Ives has an Outperform rating on Tesla and a price target of $300.

“We also believe the overhang on Tesla is now removed with Musk having likely sold stock this week to fund the rest of the Twitter deal.”

Related Link: How Can I See How Much Tesla Stock Elon Musk Has Sold 

TSLA Price Action: Shares of Tesla traded between $327.40 to $337.57 on April 14, when the original Twitter acquisition was announced. Tesla shares are now trading flat to $224.56 on Thursday versus a 52-week trading range of $198.59 to $414.50.