Musk Sells Tesla Stock Once Again. It’s the Risk of Paying Up for Twitter.

Tesla CEO Elon Musk


ANGELA WEISS/AFP via Getty Images

The cost-of-living crisis appears to have reached the world’s richest man.

That’s one spin on Elon Musk’s fresh disposal of



Tesla

shares just in case he is forced to go ahead with his purchase of



Twitter
.

Having raised $6.9 billion this time, Musk said, “it is important to avoid an emergency sale of Tesla stock,” and he’s done with selling.

But he also drew a line in April, when he offloaded $8.5 billion of stock in the days after agreeing to buy Twitter for $44 billion.

Musk walked away from that deal last month and he won’t be compelled to complete it unless the trial, due to start in mid-October, comes out in favor of Twitter.

That threat seems some way off to prompt a sale right now, but with a possible $33 billion equity element to the transaction, it pays to get organized.

Despite hopes to the contrary, his actions suggest a fear that the Twitter purchase will go ahead—or else it is a good moment to sell shares regardless. Since polling his Twitter followers in November, Musk has realized more than $30 billion from Tesla stock.

However, he makes clear he will increase his 15% Tesla holding if the Twitter deal does not close.

Either way, it’s well-timed if today’s CPI inflation data blows some froth off the tech sector. Tesla has appreciated by over 20% in a month and the


Nasdaq Composite

by 10%, despite some warning signs.

Memory chip maker



Micron Technology

said sales for the current quarter will come in no better than at the low end of guidance, which was cut by almost $2 billion only at the end of June. Chip makers



Nvidia

and



Intel

also have signaled concerns.

It appears to be no bad time for investors to take some money off the table—for whatever the reason.

James Ashton

*** Join MarketWatch’s Alessandra Malito and Jody King, director of financial planning at



Fiduciary Trust

Company, today at noon as they discuss the best strategies for taking required minimum distributions in this economic environment. Sign up here.

***

Micron Also Warns on Outlook as Biden Signs Chip Law

Micron Technology became the second chip maker this week to warn about its sales outlook, cutting its fourth quarter guidance and saying it also expects substantial declines in first quarter revenue and margins. It expects to cut capital expenditures for fiscal 2023.

  • The warning, a day after



    Nvidia

    warned of a slowdown, came as President Joe Biden signed a $280 billion technology spending bill that includes $52.7 billion to expand chip-making and a 25% investment tax credit to spur additional private investment.

  • Micron is also promising to spend $40 billion on U.S. chip making, creating up to 40,000 jobs through the end of the decade. Micron said that will boost U.S. market share for memory chip production to 10% from less than 2% now.



  • Qualcomm

    and



    GlobalFoundries

    are spending another $4.2 billion to expand GlobalFoundries’ chip-making facility in upstate New York through 2028. The deal will help Qualcomm boost U.S. chip production as much as 50% over the next five years. GlobalFoundries’ second quarter surpassed expectations.

  • Total semiconductor industry capital spending is estimated to grow 24% this year, to $190 billion, according to IC Insights. Assuming some growth, the additional $52 billion in funding for the industry would be a modest increase over five years.

What’s Next: The White House said the CHIPS law had provisions to ensure companies that get the funding don’t build certain facilities in China or other countries of concern, or use taxpayer money to repurchase stock or issue shareholder dividends.

Janet H. Cho and Joe Woelfel

***

Coinbase Isn’t Seeing an Immediate Comeback in Crypto



Coinbase

isn’t seeing a comeback in crypto, at least not yet, after losing more than $1 billion in the second quarter. The crypto exchange operator said revenue fell 64% as investors fled the market, and retail transaction revenue fell 66%.

  • The company called the second quarter “a test of durability for crypto companies,” with dramatic market movements that forced users to shift their behavior. July trading volume showed a continuation of the trend, and third-quarter results could fall below the second quarter, it said.

  • Coinbase now expects seven million to nine million monthly transacting users, down from a range of five million to 15 million three months ago. Average transaction revenue per user is expected to be in the low $20 range, rather than pre-2021 levels.

  • The biggest cryptocurrency, Bitcoin, is a big part of what drew retail investors to trade on Coinbase and other exchanges. Bitcoin’s price is up 20% since June after a big fall earlier this year and the bankruptcy filings of Voyager Digital and Celsius Network.



  • Roblox
    ,

    a platform where people can build virtual worlds, added daily active users from last year but the pace slipped from the first quarter. Its bookings, a measure of revenue, slipped 4% year over year.

What’s Next: Some investors wonder if Bitcoin’s resurgence in recent weeks means it has found a bottom. Crypto investing firm



Galaxy Digital
’s

CEO Mike Novogratz doesn’t expect “another shoe to fall” in terms of bankruptcies, leaving investors looking for a new narrative to drive prices higher.

Liz Moyer

***

Berkshire Hathaway Builds Occidental Stake as Oil Prices Drop

Warren Buffett’s



Berkshire Hathaway

now owns 20.2% of



Occidental Petroleum

after buying another $400 million of shares in the energy company in recent days, according to a regulatory filing. The growing investment has prompted speculation that Berkshire may be interested in buying the rest of the company.

  • Berkshire has steadily built its stake in the domestic-focused oil and gas producer this year and now holds 188.4 million shares. Occidental’s earnings have surged this year with oil and gas prices. Berkshire had no immediate comment.

  • Oil companies have had record profit, but crude prices are falling. WTI is down about 27% from its multiyear peak in early March. GasBuddy said gasoline prices at the pump dropped below $4 a gallon nationwide, to an average $3.984 a gallon.

  • But investors are still flocking to oil stocks for the cash the companies return to shareholders in dividends and stock buybacks. Many oil companies can still return more than 10% of their market values in cash to equity holders.

  • A pipeline that carries Russian crude through Ukraine to refineries in Slovakia, Hungary, and the Czech Republic was stopped on Aug. 4 after a disagreement over payments from Russia’s state-owned Transneft pipeline operator amid Western sanctions, The Wall Street Journal reported.

What’s Next: Patrick De Haan, GasBuddy’s head of petroleum analysis, expects gas prices to keep dropping for another few weeks, with some parts of the West Coast soon dipping below $5 a gallon. He noted that tropical storms could raise the risk of disruptions.

Andrew Bary and Janet H. Cho

***

Norwegian Sees Q3 Loss Despite Rebound in Travel Demand



Norwegian Cruise Line Holdings

sees continued losses into the third quarter after second-quarter results lagged behind 2019 levels despite strong consumer demand. It cited a volatile macroeconomic environment, though occupancy is expected to rise to 80% from 65% in the second quarter.

  • The cruise operator said fuel costs could affect earnings per share in the third quarter, and revenue is forecast to be between $1.5 billion and $1.6 billion. An easing up of Covid-19 health protocols could aid recovery, it said.



  • Spirit Airlines

    reported a narrower loss and higher-than-expected revenue as leisure air travel bounced back. Fuel costs doubled to $4.30 a gallon, but are declining, MarketWatch reported.



  • Wynn Resorts

    reported revenue that fell short of expectations, attributing the shortfall to Macau operations in China, which were subject to shutdowns to control the spread of Covid-19.



  • Hyatt Hotels

    beat expectations, with revenue per available room up 82% worldwide and 85% in the U.S. Rivals



    Marriott International

    and



    Hilton Worldwide Holdings

    also offered upbeat outlooks.

What’s Next:



Hilton Worldwide

expects adjusted earnings per share to be between $4.21 and $4.46 for the full year, higher than analysts expected. Hilton’s management said it is confident about a continued recovery in 2022 travel.

Janet H. Cho

***

Dear Quentin,

My son is 27 years old. He’s very smart. He scored 32 on his ACT test without cracking the book. However, he can’t manage life.

He has been living with his father and stepmother for the last few years in a house that they own. He pays half of the bills in the house, despite six adults living there. His stepmom has access to his bank account. She was caught embezzling from a local club a couple years ago.

I have offered to be a payee or power of attorney. But he says he can handle it on his own. I even suggested a six-month trial with me or someone else helping him out. I still have a little money left over from what I saved for him to attend college.

Could I offer it to him as an incentive to take the steps to financial independence? I am at a loss on how to help him. I am worried about his stepmom cleaning his account out. Should I talk to his dad? Any other suggestions?

—Standing on the Sidelines

Read The Moneyist’s response here.

Quentin Fottrell

***

Coming in September: Hear from Mike Novogratz at the Best New Ideas in Money Festival on Sept. 21 and Sept. 22 in New York. The Galaxy Digital CEO has ideas about navigating the crypto winter. Sign up here.

***

—Newsletter edited by Liz Moyer, Rupert Steiner, Steve Goldstein, Stacy Ozol

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