Get Tesla Inc Reportshares surged higher Friday as investors alerted that their iconic CEO might be prepared to abandon his $44 billion pursuit of Twitter and focus on the company''s numerous challenges prior to the second half of the year.
Elon Musk, who has pledged $62.5 billion in Tesla shares in order to receive several levels of financing for his ''best and last'' offer of $54.20 for the micro-blogging website, said Friday that questions related to the group''s accounting of spam accounts have put the deal "on hold," although he says he''s still committed to the purchase.
Tesla shares have dropped by 33.5 percent since Musk took a 9.1% share in Twitter on April 4 as investors have calculated the cost of both Musk''s margin loans, his sale of $9 billion in Tesla shares, and the billionaire''s growing leadership portfolio, which includes space exploration business SpaceX, The Boring Company construction company, and neurotechnology specialists Neuralink Corp.
Tesla, which has valued over $450 billion this year, is also generating problems due to rising input costs, a global shortage in semiconductors, supply chain disruption, and China''s ongoing ''zero Covid'' crackdown, which has shutting production at its key Shanghai factory.
According to data from the China Passenger Car Association (CPAC), Tesla made just 10,757 automobiles in the world''s largest market last month, selling just over 1,500 and exporting none, owing to a 22-day closure of its Shanghai facility during the city''s lockdown.
The April tally is the lowest in two years and compares to a sales total of 65,814 in March. Global car sales in China fell 37.5 percent from last year in April, the CPCA said, the highest single-month decline since the March 2020 epidemic.
The Musk-Twitter saga is a warning sign for Tesla shareholders. It''s obvious that Musk is being distracted right now, according to David Trainer, the CEO of New Constructs, a Nashville-based investment research firm. "Testiaching to acquire Twitter when Tesla''s competition is more fierce than ever is unquestionably concern even for avid Musk fans."
Elon Musk Has Good News for Tesla Investors
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Elon Musk announces a $44 billion purchase on Hold, but is still ''Committed''.Twitter''s stock plummets, but it''s unclear how well it will be handled.
"It''s possible that Musk will pay a lower price," he said. "Tesla is an overvalued stock and should be avoided, and Twitter''s stock has arguably no upside catalysts, and it should be avoided, as well."
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Tesla shares were seen 6% higher in early Friday trading to switch hands at $770.95 each, a move that would leave the stock with a year-to-date decline of around 36%.
The clean-energy automobile manufacturer is also considering a multi-million impairment charge related to its $1.5 billion investment in bitcoin, which it purchased last year under the direction of Musk, and his view that the cryptocurrency is "really on the verge of getting widespread acceptance" by mainstream investors and the larger business community.
Tesla''s bitcoin carrying costs vary, but the timing of the purchase suggests a level of $32,600. This value, of course, slowed in the latter half of 2021, when bitcoin reached an all-time high of $67,000, but now looks much less risky after briefly breaking the $25 level earlier this week.
According to Tesla''s first quarter earnings, digital assets are considered indefinite-lived intangible assets under applicable accounting rules. "Any decrease in their fair values following their acquisition will require us to recognize impairment charges, whereas we may make no upward adjustments until a sale."
Bitcoin prices were last seen trading 6.5 percent higher on the session, with $30,834.60 each, a move that leaves the world''s largest cryptocurrency down 32.3% for the quarter.