Tesla isn’t involved in the Twitter deal, but its shares have been targeted by speculators after Musk refused to publicly disclose where his money for the acquisition came from.
Tesla isn’t involved in the Twitter deal, but its shares have been targeted by speculators after Musk refused to publicly disclose where his money for the acquisition came from.
Tesla Inc tumbled $126 billion on Tuesday amid concerns that CEO Elon Musk may have to sell shares to fund its $21 billion equity investment in its $44 billion buyout of Twitter Inc finance.
Tesla isn’t involved in the Twitter deal, but its shares have been targeted by speculators after Musk refused to publicly disclose where his money for the acquisition came from. Tuesday’s 12.2% drop in Tesla stock represented a $21 billion loss in the value of his Tesla holdings, along with the $21 billion in cash he pledged for the Twitter deal.
Wedbush Securities analyst Daniel Ives said worries about Musk’s upcoming stock sales and the possibility that he might be distracted by Twitter weighed on Tesla shares. “That’s causing a bear-fest for the name,” he said.
Tesla did not immediately respond to a request for comment.
Certainly, Tesla’s plunge came against a challenging backdrop for many tech-related stocks. The Nasdaq closed Tuesday at its lowest level since December 2020 as investors worried about slowing global growth and more aggressive Federal Reserve rate hikes.
Shares of Twitter also slid on Tuesday, falling 3.9% to close at $49.68, although Musk agreed to buy it for $54.20 a share in cash on Monday. The widening range reflects investor concerns that the precipitous fall in Tesla shares, from which Musk derives the bulk of his $239 billion fortune, could make the world’s richest man consider the Twitter deal .
“If Tesla’s stock price continues to free fall, it will put its funding at risk,” said Ed Moya, senior market analyst at OANDA.
As part of the Tesla deal, Musk also took out a $12.5 billion margin loan tied to his Tesla shares. He had already borrowed against about half of his Tesla stock.
University of Maryland professor David Kirsch, whose research focuses on innovation and entrepreneurship, said investors were worried about a “cascade of margin calls” on Musk’s loans.
