BusinessScience & Tech

$126 Billion Wiped Off Tesla Value, As Musk Acquires Twitter

Following CEO Elon Musk’s proposal to buy Twitter, Tesla’s stock has lost $126 billion in value.

Musk agreed to pay $44 billion for the social media site, with a portion of the money coming from a $12.5 billion loan secured against his Tesla stock. He has gotten $13 billion in additional loans from Wall Street lenders, but Tesla stock has fallen as investors fear he would have to sell more stock to cover the $18.5 billion difference. He has not yet stated how he intends to pay this portion of the bill.

Tesla’s stock has declined 12.2 percent in value, to $906 billion from just over $1 trillion, and Musk’s ownership in the company has dropped by around $21 billion as a result of the drop in valuation, nearly half of the sum he agreed to pay for Twitter. Because the loan is related to his investment in the company, if the stock falls too far, it might generate problems for the world’s richest man.

“If Tesla’s share price continues to remain in freefall that will jeopardise his financing,” Oanda senior market analyst Ed Moya told the BBC. Musk has gone on record saying that his purchase of Twitter is “not a way to make money”, adding “I don’t care about the economics at all”. The main appeal of purchasing the site, according to Musk’s own statements, is to provide a “free speech” platform for debate.

“Free speech is the bedrock of a functioning democracy, and Twitter is the digital town square where matters vital to the future of humanity are debated,” Musk said in a statement on Twitter, right after Twitter announced they had accepted Musk’s offer, adding “I also want to make Twitter better than ever by enhancing the product with new features, making the algorithms open source to increase trust, defeating the spam bots, and authenticating all humans. Twitter has tremendous potential – I look forward to working with the company and the community of users to unlock it.”

Tesla stock prices may be falling as a result of investor concerns that Musk’s focus will be diverted by the acquisition. Running a social media company isn’t a part-time job, and it’s fraught with difficulties, including EU and other online restrictions.

Back to top button