Tesla Inc (TSLA.O) lost $126 billion in value on Tuesday, as investors worried that Chief Executive Elon Musk would have to sell stock to fund his $21 billion equity contribution to Twitter Inc’s (TWTR.N) $44 billion acquisition.
Despite the fact that Tesla is not engaged in the Twitter deal, its stock has been targeted by speculators after Musk refused to reveal publicly where the money for the acquisition came from. The 12.2 percent decrease in Tesla’s stock on Tuesday equaled to a $21 billion drop in the value of his Tesla holding, which is the same as the $21 billion he put into the Twitter deal.
Concerns over Musk’s forthcoming stock sales, as well as the prospect that he is becoming distracted by Twitter, impacted on Tesla shares, according to Wedbush Securities analyst Daniel Ives. He said, “This is producing a bear festival on the name.”
To be clear, Tesla’s shares fell amid a difficult environment for many technology-related stocks. On Tuesday, the Nasdaq fell to its lowest level since December 2020, as investors feared a slowing global economy and more aggressive rate hikes from the US Federal Reserve.
Even though Musk agreed to buy Twitter for $54.20 per share in cash on Monday, Twitter’s stock fell 3.9 percent to settle at $49.68 on Tuesday.
The widening difference underscores investor anxiety that the sharp drop in Tesla’s stock, which accounts for the majority of Musk’s $239 billion fortune, may cause the world’s richest person to reconsider the Twitter acquisition.
“If Tesla’s stock price continues to plummet, his finance will be jeopardized,” said OANDA senior market analyst Ed Moya.
Musk also took out a $12.5 billion margin debt connected to his Tesla equity as part of the Tesla acquisition. He’d already taken out a loan against nearly half of his Tesla stock.
Investors became concerned about a “cascade of margin calls” on Musk’s loans, according to University of Maryland professor David Kirsch, whose research focuses on innovation and entrepreneurship.