Tesla is not involved in the Twitter deal, yet its shares
have been targeted by speculators after Musk declined to disclose publicly
where his cash for the acquisition is coming from. The 12.2 percent drop in
Tesla's shares on Tuesday equated to a $21 billion drop in the value of his
Tesla stake, the same as the $21 billion in cash he committed to the Twitter
deal.
Wedbush Securities analyst Daniel Ives said that worries
about upcoming stock sales by Musk and the possibility that he is becoming
distracted by Twitter weighed on Tesla shares. "This (is) causing a bear
festival on the name," he said.
Tesla did not immediately respond to a request for comment.
To be sure, Tesla's share plunge came against a challenging
backdrop for many technology-related stocks. The Nasdaq closed at its lowest
level since December 2020 on Tuesday, as investors worried about slowing global
growth and more aggressive rate hikes from the US Federal Reserve.
Twitter's shares also slid on Tuesday, falling 3.9 percent
to close at $49.68 even though Musk agreed to buy it on Monday for $54.20 per
share in cash. The widening spread reflects investor concern that the
precipitous decline in Tesla's shares, from which Musk derives the majority of
his $239 billion fortune, could lead the world's richest person to have second
thoughts about the Twitter deal.
"If Tesla's share price continues to remain in freefall
that will jeopardize his financing," said OANDA senior market analyst Ed
Moya.
As part of the Tesla deal, Musk also took out a $12.5
billion margin loan tied to his Tesla stock. He had already borrowed against
about half of his Tesla shares.
University of Maryland professor David Kirsch, whose
research focuses on innovation and entrepreneurship, said investors started to
worry about a "cascade of margin calls" on Musk's loans. © Reuters