Musk's Twitter showdown raises questions about distraction and Tesla's stock sales

Musk's Twitter showdown raises questions about distraction and Tesla's stock sales ...

Elon Musk's offer to purchase Twitter sparked concern among Tesla investors and analysts that the electric carmaker might be dissatisfied with his takeover play and the possibility of selling Tesla shares to fund the transaction.

The billionaire businessman, who founded SpaceX, was targeted on Thursday with a $43 billion takeover offer.

Tesla observers are concerned about the idea that Musk would slash the deal, possibly by selling even more of his Tesla interest.

Elon is tasked with doing a variety of things, according to Gene Munster, a managing partner at Loup Ventures, which owns Tesla shares. "This is a one to three-month headwind to Tesla's stock."

Tesla, the world's most powerful automaker, fell by more than 9% as he disclosed his more than 9% share on Twitter last Monday. Tesla's stock dropped 3.7 percent on Thursday.

Tesla faces its own challenges, including the need to improve manufacturing at new industrial facilities in Berlin and Texas, according to analysts. Meanwhile, Tesla's Shanghai facility - its largest - has been hacked by the COVID-19 crackdown in China.

Tesla's main focus is Tesla, and investors don't want Tesla to lose that leadership advantage, according to Roth Capital Partners analyst Craig Irwin.

Musk's own words have been made before this foray on which they focus their worries. Last year, he said he worked seven days a week, splitting time between Tesla and SpaceX. He also leads brain-chip startup Neuralink and tunneling venture the Boring Company.

One issue is how Musk might finance a potential deal for Twitter, which includes stock sales and massive loans, according to analysts.

Colin Langan, a Wells Fargo analyst, said Musk, who holds over a 9% share in Twitter, would need $39 billion to complete the transaction, and that further sale of Tesla shares might supplant the stock.

According to company policy, Tesla executives may provide their company stock as collateral for loans, but the maximum loan does not exceed 25% of the total value of the pledged stock.

According to a Tesla filing last year, he might borrow $42.5 billion by pledging all of his shares worth $170 billion. However, he already pledged half of his Tesla shares as collateral to secure certain personal debt.

Musk said on Thursday that he would purchase Twitter, but that he has not provided any details.

The world's richest man consists mostly of Tesla and Space X stocks. Last year, he sold over $16 billion Tesla shares, claiming to be worth $11 billion a year as tax credits.

"He is likely to set himself up for a big liability down the road," said Howard Fischer, a partner at law firm Moses & Singer and former senior trial counsel at the Securities and Exchange Commission.

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