© Reuters. Tesla Loses Billions in Value Following Musk’s Twitter Deal
Tesla’s (NASDAQ:) stock took a $126 billion hit on Tuesday as investors show concern about Elon Musk’s deal to buy social media giant, Twitter (NYSE:). The 12% drop followed the announcement that Musk’s bid to buy Twitter was accepted.
Wedbush Securities analyst Daniel Ives said that worries about upcoming stock sales by Musk and the possibility that he is becoming distracted by Twitter weighed on Tesla shares. “This (is) causing a bear festival on the name,” he said.
Twitter’s shares also slid on Tuesday, falling 3.9% to close at $49.68 even though Musk agreed to buy it on Monday for $54.20 per share in cash. The fall shows investor concerns that a decline in Tesla’s shares may affect Musk’s fortune and lead the tech giant to reconsider his deal with Twitter.
“If Tesla’s share price continues to remain in freefall that will jeopardize his financing,” said OANDA senior market analyst Ed Moya.
As Bloomberg points out, the value of Musk’s 17% stake in Tesla has shrunk by more than $40 billion since April 4, almost double the equity portion he pledged in the Twitter transaction.
As part of the Twitter deal, Musk took out a $12.5 billion margin loan tied to his Tesla stock; before that, he had already borrowed against about half of his Tesla shares.
By Michael Elkins
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