Only one day after Twitter announced it has entered into a 'definitive agreement' to be bought by Elon Musk for $44 billion (£33.3bn), Telsa's share price has collapsed.
Shares for Musk's car company have plummeted a whopping 12.2 per cent - which slashes $125 billion off the electric vehicle maker's market value, according to NPR.
This is the latest hit for Tesla, adding to already massive losses sparked by looming interest rate hikes from the Federal Reserve.
Investors are now likely quaking in their boots after the massive drop in value, which analysts believe will be impacted by two factors: the amount Musk is paying to purchase the social media platform, and fears the tech billionaire will become distracted from other ventures due to his shiny new toy.
Well…twice what @elonmusk paid for Twitter wiped off the Tesla share price pic.twitter.com/4WCtDwdhHr
— Rory Cellan-Jones (@ruskin147) April 26, 2022
Daniel Ives, an analyst at Wedbush Securities, explained to The Washington Post why investors have a right to be concerned about Musk's recent purchase.
“Now the fears around Musk selling a slug of Tesla stock to pay for Twitter becomes an overhang for Tesla,” he said.
“The easy part for Musk was winning Twitter.
"The hard part is going to be fixing it and dealing with the ripple effects on the golden child Tesla.”
Oanda analyst Edward Moya echoed this, telling Forbes that shareholders are likely less than impressed with the billionaire's latest acquisition stealing the spotlight from Tesla.
"Tesla shareholders can’t be happy that Musk will have to divert even more attention away from winning the electric-vehicle race," he said in e-mailed comments to the news outlet.
Now, what is yet to be seen, is how Musk will actually pay for Twitter.
Last week, the tech billionaire announced he had secured money for the Twitter transaction, revealing in filings that he will provide $21 billion in equity financing, with Morgan Stanley bank loans making up the other half of the cost.
This means he will likely need to offload some Tesla shares as collateral to make the Twitter deal work.
Ives, the Wedbush analyst, did advise Forbes that the Twitter purchase may not signal a major offload in Musk's Tesla shares, postulating the shares would instead be pledged for loans.
"We do not believe this Twitter bid will result in a major sale of Musk's Tesla shares," Ives told Forbes.
"We see no risk from this Twitter situation impacting shares of Tesla or Musk's focus."
So it looks like investors (who are likely holding their breath right now) will just have to wait and see.
Featured Image Credit: Sueddeutsche Zeitung Photo / Alamy Stock Photo. Filip Radwanski / Alamy Stock Photo.
Topics: Elon Musk, Tesla, Technology, News
