During the Musk-Twitter deal Tesla lost $126 billion due to a difficult atmosphere shared by many technology-related stocks.
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Tesla Inc lost $126 billion in value on Tuesday as investors feared that CEO Elon Musk would have to sell shares to fund his $21 billion equity contribution to Twitter Inc’s $44 billion takeover.
Despite the fact that Tesla is not engaged in the Twitter deal, its stock has been targeted by speculators after Musk refused to reveal publicly where the money for the acquisition came from. The 12.2 % fall in Tesla’s stock on Tuesday equaled to a $21 billion drop in the value of his Tesla holding, which is the same as the $21 billion he put into the Twitter deal.
Concerns over Musk’s forthcoming stock sales, as well as the prospect that he is becoming distracted by Twitter, impacted on Tesla shares, according to Wedbush Securities analyst Daniel Ives. He said, “This (is) causing a bear festival on the name.”
A request for comment from Tesla was not immediately answered.
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To be clear, Tesla’s shares fell amid a difficult atmosphere for many technology-related stocks. On Tuesday, the Nasdaq fell to its lowest level since December 2020, as investors feared a slowing global economy and more aggressive rate hikes from the US Federal Reserve.
Even though Musk agreed to buy Twitter for $54.20 per share in cash on Monday, Twitter’s stock fell 3.9 % to settle at $49.68 on Tuesday. The widening difference underscores investor anxiety that the sharp drop in Tesla’s stock, which accounts for the majority of Musk’s $239 billion fortune, may cause the world’s richest person to reconsider the Twitter acquisition.
“If Tesla’s share price continues to remain in freefall that will jeopardize his financing,” said OANDA senior market analyst Ed Moya.
Musk also took out a $12.5 billion margin loan connected to his Tesla stock as part of the Tesla deal. He’d already taken out a loan against nearly half of his Tesla stock.
Investors became concerned about a “cascade of margin calls” on Musk’s loans, according to University of Maryland professor David Kirsch, whose research focuses on innovation and entrepreneurship.