Elon Musk’s financial woes at X have Tesla bulls fearing he will liquidate more stock

Elon Musk’s financial headaches at X may be catching up to him—and Tesla bulls are worrying that could spell bad news for the carmaker’s investors.

Musk's repeated outbursts against advertisers have dried up the main source of revenue for the loss-making company formerly known as Twitter. A recent decision to sue them for heeding his own advice to not buy ads on the platform hasn't helped. At some point, he will have to provide a fresh infusion of cash to salvage his $44 billion takeover. And that might mean Musk sells Tesla stock to raise the money—hurting anyone who holds the carmaker's shares.

“I would be expecting something between $1 and $2 billion in stock,” said Bradford Ferguson, president and chief investment officer of asset manager Halter Ferguson Financial, in comments posted to YouTube on Wednesday. This alone could cause the stock to lose between 5% and 10% of its value. “It’s a massive hole they need to plug.”

Elon Musk could not be reached by Fortune for a comment.

Ferguson based his assessment on internal second-quarter figures recently obtained by the New York Times . According to this report, X booked $114 million worth of revenue in the U.S., its largest market by far. This represented a 25% drop over the preceding three months and a 53% drop over the year-ago period.

That already sounds bad. But it gets worse. The last publicly available figures prior to Musk’s acquisition, from Q2 of 2022, had revenue at $661 million. After you account for inflation, revenue has actually collapsed by 84%, in today’s dollars.

No one knows how much longer X can survive, since the company doesn’t release financial results. But in November, Musk himself admitted X could face bankruptcy due to the advertiser boycott.

Since then all talk about reaching cash flow breakeven , let alone turning an actual profit , has ceased. In and of itself this is unusual for someone like Musk, who is comfortable announcing targets so aggressive and unrealistic that he repeatedly fails to meet them.

Pledge not to sell shares until 2025 will soon expire

The problem for Musk is that while he may be the wealthiest man alive, he cannot simply plug financial holes in X using his own personal fortune, estimated at over $236 billion by Forbes.

That’s because it is almost exclusively tied up in his various corporate holdings that include everything from rocket builder SpaceX and brain chip company Neuralink to his latest startup, xAI.

None of these investments are easily fungible. Only Tesla is a publicly traded company. So the easiest solution at his fingertips is to liquidate a portion of his remaining 12% stake.

Continually dumping Tesla shares onto an unsuspecting market , resulting in the stock plumbing two-year lows, is after all how Musk financed the bulk of Twitter’s $44 billion price tag in the first place.

In December 2022 , Musk promised during a Twitter Spaces discussion not to burn investors by selling any more stock to fund the troubled platform for at least another 18 to 24 months . “Definitely not next year under any circumstances. Probably not the year after either,” he said . “You can count on me, no stock sales until 2025 or something.”

While this helped put a floor underneath Tesla's price, some may have forgotten his implicit warning that the time may yet come when he needs to offload stock once more.

With 2025 now rapidly approaching and X’s finances likely more dire than ever, Ferguson fears Musk could be looking to cash in on his Tesla shares sooner rather than later.

“He was probably a little more optimistic in December 2022 and didn’t anticipate it would get worse,” Ferguson said.

The asset manager argued there may be, for example, a need to ensure X meets the loan covenants for the $13 billion in leveraged buyout (LBO) debt it assumed as part of the deal. A breach might mean higher interest rates or even banks demanding repayment.

Gary Black, managing partner and cofounder of the Future Fund, said he agreed with the view that the risks of a share sale are rising.

“The bleeding of X will continue and at some point Elon will have to sell more Tesla shares to plug the $1–2 billion per year hole at X,” the longtime Tesla bull argued in a social media post.

This story was originally featured on Fortune.com