Tesla shares dipped 2 percent today (April 25) after its CEO Elon Musk’s $44 billion acquisition of Twitter became official. If Tesla stock price continues to fall, it will make the takeover a lot more costly for Musk.
Tesla fell from $1003 to $984 following Twitter’s announcement it had agreed to be bought by Elon Musk for $54.20 per share, with the electric carmaker’s investors selling in anticipation that Musk will sell a large chunk of his Tesla stake to fund the deal.
Musk has said he will contribute $21 billion in cash and borrow the rest from investment banks to pay for the acquisition. Assuming the Tesla CEO has no other quick source of cash, he will have to sell about 21.34 million Tesla shares—or 340,000 shares more than before the deal was announced. He currently owns a total of 172 million shares, or 17 percent of the electric vehicle company. Cashing out $21 billion would leave him with around 150 million shares, or 15 percent of the company.
Musk, the world’s richest man valued at $265 billion, famously keeps very little cash on hand. His most recent withdrawal took place in December after selling 10 percent of his Tesla stake as part of exercising a huge block of soon-to-expire stock options.
He then spent $2.6 billion buying 9.2 percent of Twitter between January and March. As of April 14, the day he declared his bid to buy the rest of Twitter, he had $3 billion in cash or other liquid assets, according to Bloomberg’s calculations. That means he still needs to find $18 billion by selling Tesla shares or other assets.
One-time large transactions of a certain stock usually trigger swings in its share price. When Musk initiated his 10 percent Tesla sell-off in November 2021, Tesla stock fell 2 percent the same day he unloaded $1 billion worth of shares.
Tesla share price recovered slightly in afternoon sessions today and closed at $998 per share. The stock is down 16.8 percent this year so far.
Source : https://observer.com/2022/04/tesla-stock-fall-elon-musk-twitter-acquisition/
