A Twitter conversation with Musk raises concerns about distractions and Tesla stock sales

A Twitter conversation with Musk raises concerns about distractions and Tesla stock sales ...

Elon Musk's purchase of Twitter sparked fears among Tesla investors and analysts that the electric carmaker might lose ground as the CEO becomes distracted by his takeover play and the possibility of selling Tesla shares to fund the transaction.

The billionaire entrepreneur, who leads rocket startup SpaceX, targeted Twitter Inc on Thursday with a $43 billion takeover offer.

Tesla experts are concerned about the idea that Musk is attempting to close a transaction, possibly by selling even more of his Tesla stake, and then overseeing another business.

Elon is defying. He's got a lot of things going on, according to Gene Munster, the managing partner of Loup Ventures, which owns Tesla. "This is a one to three months headwind to Tesla's stock."

Tesla, the world's most valuable automaker, was down more than 9% since he disclosed his more than 9% share in Twitter last Monday. On Thursday, Tesla's stock fell 3.7 percent.

Tesla faces its own challenges, according to analysts, despite Musk's talk about potential modifications he would expect from Twitter. Meanwhile, Tesla's Shanghai factory, the world's largest, has been stalled by the COVID-19 crackdown in China.

"Musk is Tesla, and investors don't want to see Tesla lose that leadership advantage," said Roth Capital Partners analyst Craig Irwin.

Investors have Musk's own words preceding this foray on which they base their worries. Last year, he said he worked seven days a week - "crazy hours" - split time between Tesla and SpaceX. He also leads brain-chip company Neuralink and tunneling venture the Boring Company.

Another issue is how Musk will finance a Twitter option, which includes stock sales and massive loans, according to analysts.

Musk, who owns over a 9% share in Twitter, will need $39 billion to complete the transaction, and the sale of more Tesla shares might pressure the stock further.

According to company guidelines, Tesla executives may disclose 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 more than half of his Tesla shares as collateral to secure personal debt.

Musk claimed on Thursday that he has the funds to purchase Twitter, but that he hasn't provided any information.

The world's richest person consists mainly of Tesla and Space X stocks. Last year, he sold more than $16 billion Tesla shares, one of which he said would be paid in taxes.

"He is likely to face a difficult task down the road," said Howard Fischer, a partner of law firm Moses & Singer and former senior trial counsel at the Securities and Exchange Commission.

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