Tesla is not involved in the Twitter deal, yet its shares have been targeted by speculators after Musk declined to publicly disclose where his cash for the acquisition is coming from.
Tesla is not involved in the Twitter deal, yet its shares have been targeted by speculators after Musk declined to publicly disclose where his cash for the acquisition is coming from.
Tesla Inc lost $126 billion in value on Tuesday amid investor concerns that Chief Executive Elon Musk may have to sell shares to fund his $21 billion equity contribution Twitter Inc. $44 billion buyout of,
Tesla Twitter is not involved in the deal, yet its shares have been targeted by speculators after Musk declined to publicly disclose where his cash for the acquisition was coming from. Tesla shares fell 12.2% on Tuesday, the equivalent of a $21 billion drop in the value of their Tesla stake, equivalent to the $21 billion in cash they shelled out for the Twitter deal.
Wedbush Securities analyst Daniel Ives said concerns about an upcoming stock sale by Musk and the possibility that he is distracting from Twitter weighed on Tesla shares. “It (is) causing a bear festival in the name,” he said.
Tesla did not immediately respond to a request for comment.
To be sure, Tesla’s stock decline came against a challenging backdrop for many technology-related stocks. The Nasdaq closed at its lowest level since December 2020 on Tuesday, as investors worried about slowing global growth and more aggressive rate hikes from the US Federal Reserve.
Shares of Twitter also closed down 3.9% on Tuesday at $49.68, though Musk agreed to buy it on Monday for $54.20 a share in cash. The wide spread reflects investor concern that a sharp drop in Tesla shares, from which Musk receives most of his $239 billion, could prompt the world’s richest man to have second thoughts about the Twitter deal. .
“If Tesla’s stock price continues to be in freefall, it will put its financing 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 stock. It had already borrowed against about half of its Tesla shares.
University of Maryland professor David Kirsch, whose research focuses on innovation and entrepreneurship, said investors began to worry about a “cascade of margin calls” on Musk’s loans.