tesla: Tesla loses $126 billion due to Musk Twitter deal funding issue

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NEW YORK: Tesla Inc lost $126 billion in value on Tuesday as investors fear Chief Executive Elon Musk may have to sell shares to fund his $21 billion contribution to his $44 billion takeover of Twitter Inc of dollars.
Tesla is not involved in the deal on Twitter, but its actions have been targeted by speculators after Musk refused to publicly disclose where his money for the acquisition came from. Tesla’s 12.2% drop on Tuesday equates to a $21 billion drop in the value of its Tesla stake, the same as the $21 billion in cash it committed to the Twitter agreement.
Wedbush Securities analyst Daniel Ives said concerns about Musk’s upcoming stock sales and the possibility of him being distracted by Twitter weighed on Tesla shares. “It (causes) a bear fest on the name,” he said.
Tesla did not immediately respond to a request for comment.
Admittedly, the fall in Tesla shares came in a difficult environment for many technology-related stocks. The Nasdaq closed Tuesday at its lowest level since December 2020 as investors worried about slowing global growth and more aggressive rate hikes from the U.S. Federal Reserve.
Shares of Twitter also slid on Tuesday, falling 3.9% to close at $49.68, even though Musk agreed to buy it on Monday for $54.20 a share in cash. The widening gap reflects investor concern that the precipitous drop in shares of Tesla, from which Musk derives the majority of his $239 billion fortune, could cause the world’s richest person to question the Twitter agreement.
“If Tesla’s stock price continues to fall, it will jeopardize its funding,” 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. He had already borrowed against about half of his Tesla shares.
David Kirsch, a University of Maryland professor whose research focuses on innovation and entrepreneurship, said investors were starting to worry about a ‘margin call cascade’ on loans from Musk .
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