Tesla stock drops more than 9% after Musk’s Twitter deal

A Tesla store is seen in Shanghai, China on February 1, 2022.

Cost photo | Edition of the future | Getty Images

Tesla stock was down more than 9% in the morning, as the tech-heavy Nasdaq Composite fell about 2.2%. Other mega-cap tech stocks like Apple, Amazon, Google and Meta were also down 2-4%.

The slide comes just a day after Twitter’s board approved Musk’s $44 billion acquisition of the company, showing that some of the stock’s decline may reflect concerns among investors. investors regarding the deal. Musk got $25.5 billion in fully committed debt, including $12.5 billion in loans against his Tesla stock. It also provides a capital commitment of approximately $21 billion.

Despite being the richest person in the world, much of Musk’s wealth is tied to Tesla stock, meaning he would likely have to borrow from his holdings to fund the deal.

Investors may also be concerned about Twitter distractions. Musk appeared to want to heavily influence the company’s operations, which could lead to a time crunch between all of his ventures. Assuming the deal closes and Musk takes over, that would leave him in charge of Tesla, Twitter and SpaceX. He also owns two small businesses, the Boring Company and Neuralink.

And Tesla said in its first-quarter 2022 earnings report on April 20 that while automotive revenue grew 87% from the same period last year to $16.86 billion , the company had lost about a month of “construction volume” in Shanghai due to Covid shutdowns. .

“Production is resuming at limited levels, and we are working to return to full production as quickly as possible,” Kirkhorn said during the company’s earnings call.

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