A Tesla store is seen in Shanghai, China, February 1, 2022.
Cost photo | Future Publishing | Getty pictures
Tesla shares fell more than 9% in the afternoon when the technology-heavy Nasdaq Composite fell around 2.5%. Other technology stocks with mega-capital such as Apple, Amazon, Google and Facebook parent Meta also fell between 2% and 4%.
The declines come just a day after Twitter̵[ads1]7;s board approved Musk’s $ 44 billion acquisition of the company, indicating that some of the decline may be a reflection of investors’ concerns about the deal. Musk has secured $ 25.5 billion in fully committed debt, including $ 12.5 billion in loans against his Tesla stock. The deal also includes $ 21 billion in equity.
Despite being the richest person in the world, much of Musk’s wealth is tied up in Tesla shares, which means he will likely have to borrow against his holdings to finance the deal.
Telsa investors may also be concerned about possible distractions that may come from owning a platform such as Twitter. Musk has seemed to want to strongly influence the company’s operations, which could lead to a time constraint for him. Provided that the agreement is terminated, Musk will be responsible for Tesla, Twitter and SpaceX. He also owns two smaller businesses, Boring Company and Neuralink.
And Tesla said in its earnings report for the first quarter of 2022 on April 20 that while car revenues increased by 87% from the same period last year to $ 16.86 billion, the company lost about a month of “building volume” in Shanghai due to Covid shutdowns. .
“Production is resumed at limited levels, and we are working to return to full production as soon as possible,” said CFO Zach Kirkhorn in the company’s earnings report.