Tesla loses $126 billion amid fears of funding for Musk’s Twitter deal

Tesla did not immediately respond to a request for comment. Reuters

Tesla Inc lost $126 billion in value Tuesday amid investor concerns that CEO Elon Musk may have to sell shares to fund his $21 billion contribution to his $44 billion purchase of Twitter Inc.

Tesla is not involved in the Twitter deal, however its shares have been targeted by speculators after Musk refused to publicly disclose the source of his funds for the acquisition. The 12.2% drop in Tesla shares on Tuesday equaled a $21 billion drop in the value of his Tesla stake, the same $21 billion in cash he committed for the Twitter deal.

Wedbush Securities analyst Daniel Ives said concerns about upcoming stock sales by Musk and the potential for a Twitter distraction have weighed on Tesla shares. “This (cause) a bear festival in the name,” he said.

Tesla did not immediately respond to a request for comment.

The drop in Tesla’s share certainly came against a challenging backdrop for many tech-related stocks. The Nasdaq closed at its lowest level since December 2020 on Tuesday, as investors were concerned about slowing global growth and more sharp interest rate increases from the US Federal Reserve.

Twitter shares also fell on Tuesday, falling 3.9% to close at $49.68 despite Musk agreeing to buy it on Monday for $54.20 a share in cash. The wide spread reflects investor concerns that a sharp drop in Tesla shares, from which Musk derives the majority of his $239 billion fortune, could lead the world’s richest person to consider a Twitter deal.

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“If Tesla’s stock price continues to fall, it will put its funding at risk,” said Ed Moya, chief market analyst at OANDA.

As part of the Tesla deal, Musk also took out a $12.5 billion marginal loan tied to his stock in Tesla. He has already borrowed about half of his Tesla stock.

University of Maryland professor David Kirsch, whose research focuses on innovation and entrepreneurship, said investors were beginning to worry about a “chain of margin calls” on Musk’s loans.

(This story has not been edited by the NDTV crew and is automatically generated from a shared feed.)

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