Tesla shares fell more than 10 percent on Tuesday, wiping out about $ 99 billion from an electric car maker’s estimate a day after Elon Musk’s chief executive and largest shareholder struck a deal to buy Twitter.
Musk financed the $ 44 billion takeover with $ 13 billion in debt from Wall Street’s largest creditors, as well as a $ 12.5 billion loan secured against his stake in Tesla. The billionaire has not yet said how he will finance the remaining $ 21 billion in cash, which he promised, which increases the possibility of having to sell billions of dollars worth of shares in the carmaker.
This prospect has increased pressure on Tesla shares. The group is among the world’s most valuable publicly traded companies, worth $ 942 billion on Tuesday, and its shares are trading at a rate almost unmatched in US markets.
A significant drop in Tesla’s value would also create problems for Musk, whose margin loan is secured against his stake in the electric car maker.
In Tuesday morning’s trading, more than 18 million shares of Tesla changed hands worth at least $ 16 billion. That was more than four times the level of the next highest-traded stock in value, Apple maker Apple.
Musk and his bankers at Morgan Stanley have been looking for other investors who may want to invest in private Twitter with him, which would reduce the size of the check, which he would eventually have to write himself, informed people said.
Shares of Twitter traded around $ 50 on Tuesday, about 8% below the $ 54.20 price that Musk agreed to make the company private. The difference between the current price of the social media platform and the price of taking private funds implies concern among investors that the deal may not take place.
The deal, if completed, will mark one of the largest leverage purchases in history. However, it could still fall apart if Musk did not increase its share of equity or if the transaction was blocked by regulators.
On Tuesday, the EU warned Musk to follow the bloc’s rules on moderating harmful content. The billionaire, who has previously criticized Twitter, linked his acquisition to freedom of speech, which he described as “the foundation of a functioning democracy”.
Shares of Tesla have fallen 22 percent since Musk became the largest shareholder on Twitter more than three weeks ago.
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