Tesla Inc. lost $ 126 billion on Tuesday amid investor fears that Elon Musk’s executive chief might have to sell shares to fund an equity contribution of $ 21 billion for a purchase of $ 44 billion from Twitter Inc.
Tesla was not involved in the Twitter agreement, but her shares had been targeted by speculators after Musk refused to reveal publicly from where the cash for the acquisition came from. The 12.2% decrease in Tesla’s stock on Tuesday was equated with a decline in $ 21 billion in the value of his Tesla shares, the same as the $ 21 billion cash that he did for the Twitter agreement.
Wedbush Securities Analyst Daniel Ives said that concerns about the sale of shares that were coming by Musk and the possibility that he became disturbed by Twitter burdening Tesla shares. “This causes the bear festival in its name,” he said.
Tesla did not immediately respond to a comment request.
To be sure, plunging to share Tesla came with a challenging background for many stocks related to technology. Nasdaq was closed at the lowest level since December 2020 on Tuesday, because investors were worried about slowing global growth and an increase in interest rates that were more aggressive than the US federal reserve.
Twitter shares also launched on Tuesday, falling 3.9% to close at $ 49.68 even though Musk agreed to buy it on Monday for $ 54.20 per share in cash. The widening reflects the concern of investors that the sharp decline in Tesla shares, from which the Musk gained most of his $ 239 billion wealth, could make the richest person in the world had a second thought about Twitter agreements.
“If Tesla’s stock price continues freely which will endanger the financing,” said senior market analyst Oanda Ed Moya.
As part of Tesla’s agreement, Musk also took a $ 12.5 billion margin loan associated with his Tesla stock. He has borrowed about half of his Tesla shares.
Professor of University of Maryland David Kirsch, whose research focused on innovation and entrepreneurship, said investors began to worry about “Kaskade Call Margin” on Musk loans.