Tesla shares fall more than 9% after Musk’s Twitter deal
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 morning when the technology-heavy Nasdaq Composite fell around 2.2%. Other technology stocks with mega capital such as Apple, Amazon, Google and Meta also fell between 2-4%.
The announcement comes just a day after Twitter̵[ads1]7;s board approved Musk’s $ 44 billion acquisition of the company, indicating that some of the stock 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. He also has an equity obligation of approximately $ 21 billion.
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 the stake to finance the deal.
Investors may also be concerned about distractions from Twitter. Musk has seemed to want to strongly influence the company’s operations, which can lead to time constraints between all his companies. Provided that the agreement is terminated and Musk takes over, it will give him responsibility 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,” Kirkhorn said in the company’s earnings report.