We already have the first loser of the purchase of Twitter by Elon Musk: Tesla shares.
Last Monday, April 25, Elon Musk officially announced that he was buying Twitter. A $44 billion deal that is among the most expensive acquisitions in history. Since then, Tesla shares have suffered a significant drop. But the loss of value had already started before.
Long before. On April 25, Tesla shares slightly exceeded 1,000 euros in value. At the moment, a percentage of Tesla stands at $876. A fall has a lot to do with the announcement that Elon Musk will buy Twitter. But the fall began much earlier.
On April 4, each Tesla share was valued at $1,145, one of the highest. That same day, Musk announced that he would become the largest shareholder of Twitter, with an investment of 2.89 billion dollars and the purchase of 9.2% of shares in the social network. Although the most significant blow to the stock market was given to him on Tuesday, Tesla has not stopped losing money since its CEO announced his intention to monopolize more and more power on Twitter.
Concern. One of the reasons for Tesla's stock market crash is investor concern about what Elon Musk can do with his shares in the company. To finance the purchase of Twitter, Musk would have requested a credit of 12,500 million dollars in which his Tesla shares have served as collateral.
Despite everything, it is estimated that the company's CEO owns 21.6 billion dollars in Tesla shares, so he could sell part of them to finance the purchase of Twitter with cash if necessary. This uncertainty would have altered the market and caused Tesla to lose 126,000 million dollars in its stock market valuation only last Tuesday.
Smart person. The volatility of Tesla stock gives how personal the company can be. The fear that Elon Musk could lose power within the company scares off investors. But just as it goes down, the price of Tesla goes up. It is something that has been going on for years.
In just one year, Tesla shares were worth just over $300 to over $900 in 2020. Then, the movement was described as a bubble and even "a messianic situation" with "minority investors who are like lapdogs According to CNBC's Jim Cramer.
The value of his shares in Tesla is significant in explaining Musk's fortune. "He is taking a big risk by using Tesla stock as collateral. If the electric carmaker's shares were to drop unexpectedly, that could create a lot of discomforts," AJ Bell's Russ Mold told Bloomberg.
In the best moment. The fall in the company's valuation contrasts with the objective data on it. As it had published this month (3,318 million net dollars), Tesla had obtained record profits and has made its vehicles one more pillar of them, leaving behind the time when regulatory credits supported the company.
In addition, its announcements related to autonomous driving, especially with a future robot-taxi and, to a lesser extent, the advancement of its Autopilot, had boosted the company's prospects. So much so that some experts already pointed out, just a few days ago, that Tesla shares would multiply their value by four in 2026. And all even though the company is once again being investigated by the NHTSA, precisely, for its semi-autonomous driving systems.