New Delhi: Investors’ sentiment dampened and Tesla Inc lost $126 billion in value on Tuesday.
According to a report by the Reuters, Tesla investors were under the notion that Elon Musk may have to offload shares to fund his $21 billion equity contribution for $44 billion Twitter buyout.
Tesla is not involved in the Twitter buyout deal. Though the shares of the electric automaker have been targeted by speculators after its Chief Executive Officer (CEO) Elon Musk declined to disclose publicly where the cash for the Twitter acquisition is coming from.
Tesla's shares tanked 12.2 per cent on Tuesday, which equated to a $21 billion drop in the value of his Tesla stake. The amount is equivalent to the $21 billion in cash he committed to the Twitter deal.
Daniel Ives, an analyst with Wedbush Securities, 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.
Reuters tried to reach Tesla for comments, however, the company did not immediately respond to a request.
According to the report, not only Tesla, stocks of many technology related firms took a sharp dip against a challenging backdrop.
On Tuesday, the Nasdaq closed at its lowest level since December 2020. Investors are worried about the slowdown in global growth and sharper rate hikes from the US Federal Reserve.
Apart from Tesla, shares of Twitter also sank on Tuesday. The stocks declined 3.9 per cent to close at $49.68 even though Musk agreed to buy it on Monday for $54.20 per share in cash.
Ed Moya, a senior market analyst with OANDA, said, “If Tesla's share price continues to remain in freefall that will jeopardize his financing.”
The reason is that Musk also took a loan of $12.5 billion margin tied to his Tesla stock. This he had already borrowed against about half of his Tesla shares.