Tesla Stock Loses $126 Billion after Twitter Deal

Elon Musk will have to pay a $1 billion charge to Twitter Inc (TWTR.N) as part of the twitter deal if he cancels his $44 billion cash purchase for the social media business, according to a report on Tuesday.

Tesla stock closes down after Twitter deal

According to the document, one of the requirements for Musk’s payment is if the purchase falls through due to a lack of stock, debt, or margin loan financing.

Musk has obtained $25.5 billion in debt and margin loan funding, as well as a $21 billion equity commitment, according to Twitter.

According to the lawsuit, Twitter, which is subjected to “no-shop” limitations, will be required to pay the same termination fee in certain cases.

The deal could be dissolved if it is not completed by October 24th, according to the document. To achieve certain closing criteria, such as antitrust and foreign investment approvals, the deadline could be extended for another six months.

On Monday, Musk entered into an agreement to purchase Twitter, shifting leadership of the social media platform used by millions of people and political figures to the world’s richest person.

Tesla loses $126 billion in value

Tesla Inc (TSLA.O) dropped $126 billion in value on Tuesday, as investors worried that Chief Executive Elon Musk would have to sell stock to fund his $21 billion equity contribution to Twitter Inc’s $44 billion acquisition.

Even though Tesla is not engaged in the Twitter deal, its stock has been targeted by speculators after Musk refused to reveal publicly where the money for the acquisition came from. The 12.2 percent reduction in Tesla’s shares on Tuesday corresponded to a $21 billion loss in the value of his Tesla ownership, which is the same amount he invested in the Twitter transaction.

To be clear, Tesla’s shares fell amid a difficult environment for many technology-based companies. The Nasdaq plummeted to its lowest point since December 2020 on Tuesday, as traders worried about a global economic slowdown and more aggressive Fed rate increases.

Following Musk’s Monday statement on twitter deal, that he will purchase Twitter for $54.20 per share in real money, Twitter’s stock fell 3.9 percent to $49.58 on Tuesday. The widening difference underscores investor anxiety that the sharp drop in Tesla’s stock, which accounts for the majority of Musk’s $239 billion fortune, may cause the world’s richest person to reconsider the Twitter acquisition.

As component of the Tesla transaction, Musk also took out a $12.5 billion margin loan secured by his Tesla stock which he’d previously borrowed against over half of his Tesla stock.

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