Shares of Tesla dropped more than 11% Tuesday (April 26) — taking more than $100 billion in valuation with them — following CEO Elon Musk’s deal to buy Twitter.
As the Financial Times (FT) reported, Musk plans to purchase the social media platform for $44 billion, using $13 billion from lenders along with a $12.5 billion loan secured against his stake in Tesla, where he is the largest shareholder.
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Musk, the world’s richest person, has not revealed where the remaining $21 billion will come from, which — as FT noted — raises the possibility that he’ll need to sell off billions of dollars in shares in his electric car company.
But the idea of that happening has put pressure on Tesla’s stock. Were the stock to fall too far, it could pose a problem for Musk, as his loan is secured against his stake in the company.
Musk and his bankers at Morgan Stanley have been talking to other investors who may want to invest in Twitter with him, thus lowering the amount of money Musk would have to come up with himself, FT reported, citing unnamed sources.
Twitter stock, meanwhile, was trading at $50 Tuesday afternoon, around 8% less than the $54.20 price at which Musk has agreed to take the company private. This difference in price could suggest there is concern among investors that the deal may not come to pass, according to the report.
In an earnings call last week — at a point when the Twitter deal seemed as though it was off the table — Musk told investors that the Tesla of today is a small fraction of what it will become.
See more: Musk Says Tesla at Only 5% of Potential
“We’re really at the early stage of our journey,” he said before referencing the company reaching a 1 million annual production rate last fall. “We aspire to hit 20 million units here, so we’re basically 5% along the way towards our goal.”
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