Elon Musk bid to buy Twitter has Tesla investors mighty worried. Here's why
Elon Musk has been very active for Twitter for several years now and has used the micro-blogging website to connect with his fans and fans of Tesla the world over. But while he may have been active on Twitter, he hasn't always had a kind opinion about the social-media platform and after having taken a 9.1% stake in the company, has now offered to buy Twitter entirely at around $54.20 per share, or for $43 billion. But even the world's wealthiest person would need to properly allocate his resources in order to go through with the offer and it is this that has had Tesla investors quite worried. Will Musk sell Tesla shares to fund the Twitter deal?
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Musk has made a $43 billion takeover offer to own Twitter Inc, a move that has been widely reported on the world over. The Tesla CEO and founder of SpaceX says he wants to Twitter to be ‘an arena for free speech.’ But is he himself getting distracted? Some analysts believe he is. “Elon is distracted. He's got a lot of things going on. He's involved in a lot of endeavors," Gene Munster, managing partner at venture capital firm Loup Ventures, was quoted as saying by Reuters. “This is a one to three months headwind to Tesla stock." Loup Ventures owns Tesla shares.
Tesla shares have had it rough this month, having fallen by around nine per cent since last Monday when it was revealed Musk has taken a stake in Twitter. On Thursday, Tesla share price fell by another 3.7%.
The growing concern is two-fold - how will Musk fund the deal if he does go through with it, and what about the current crop of challenges Tesla is facing. For one, Musk will have to sell stocks and take loans. Then there are big questions arising from production challenges for Tesla with its facility in Shanghai under a pause owing to rising Covid-19 cases in the Chinese city. Tesla will also have to bolster production at its newly-opened facilities in Berlin and Texas.
In a rather precarious time then, Musk's power play for Twitter is sending alarm bells ringing loud and clear for Tesla investors.