On Tuesday, Tesla Inc lost $126 billion in value as investors are quite worried about the fact that CEO Elon Musk might sell stock to fund his $21 billion equity contribution to Twitter Inc’s $44 billion takeovers.
Reason
Tesla was not involved in the acquisition of Twitter, but people have badly targeted its stock after Musk refused to reveal publicly where he got the money for the deal. The 12.2 percent drop in Tesla shares on Tuesday amounted to a $21 billion loss in the value of his Tesla stake, which is the same amount he committed to the Twitter deal.
According to Wedbush Securities analyst Daniel Ives, Tesla shares were weighed down by worries about Musk’s upcoming stock sales. And the possibility that he is becoming distracted by Twitter. As a result, he explained, “It’s causing a bear festival on the name.”
To be sure, Tesla’s stock price fell against a difficult backdrop for many technology-related stocks. On Tuesday, the Nasdaq fell to its lowest level since December 2020. As investors are worried that the global economy is slowing. And the US Federal Reserve is raising interest rates more aggressively.
Despite Musk’s agreement to buy Twitter for $54.20 per share in cash on Monday. Twitter’s stock fell almost 4 percent (3.9%) to close at $49.68 on Tuesday. The widening spread reflects investor concern that the sharp drop in Tesla’s stock. Which accounts for most of Musk’s $239 billion fortune, m prompt the world’s richest man to reconsider the Twitter deal.
Conclusion
“If Tesla’s stock price continues to fall, his financing will be jeopardised,” said Ed Moya, senior market analyst at OANDA.
Musk also took out a $12.5 billion margin loan secured by his Tesla stock as part of the Tesla transaction. So he’d already borrowed money against about half of his Tesla stock.
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Sukhpreet Kaur
