Shares of Tesla fell as much as 10 percent Tuesday, as investors in the electric carmaker began to digest the prospect of CEO Elon Musk using his shares to pay for his acquisition of Twitter.
Tesla was trading at about $900 per share around 12:40 p.m. ET Tuesday. That’s also down more than 20 percent since April 4, when Musk first revealed he had become Twitter’s largest individual shareholder.
On Monday, Twitter and Musk announced the tech titan had purchased the social media platform. To finance the cost of his $44 billion acquisition, Musk has pledged Tesla shares as collateral against a $12.5 billion loan he is receiving from a group of banks led by Morgan Stanley.
Investors are also speculating that Musk may have to sell Tesla shares outright to help come up with the $21 billion in cash he has promised as part of his Twitter bid.
Some analysts also believe Tesla could suffer fallout from a future dispute over Musk’s Twitter ownership, thanks to the significance of both companies in China.
To date, Twitter has been proactive in removing China-backed accounts attempting to subvert protests in Hong Kong. But Tesla produces half its vehicles in Shanghai, and questions are being raised about whether China could use Tesla as a pressure point on Musk to get him to reconsider Twitter’s current posture. Among those asking is Amazon founder and executive chairman Jeff Bezos.
In total, Tuesday’s decline represents nearly $100 billion in losses for Tesla. Still, the company remains one of the most valuable in the world.
Source: | This article originally belongs to Nbcnews.com
