Tesla’s stock (TSLA) plunged this afternoon after it was reported that Elon Musk agreed to finally go through with his deal to buy Twitter.
That means he won’t be buying back Tesla stocks.
After a bad day on the stock market yesterday following its Q3 delivery and production release and the market digesting its AI day, Tesla was up 5% today.
However, things turned south real quick this afternoon as Tesla’s stock erased almost all of its gains after it was reported that Elon Musk agreed to move forward with his deal to buy Twitter.
Bloomberg first reported:
Musk made the proposal in a letter to Twitter, according to people familiar with the matter, who asked not to be identified discussing confidential information. Shares in Twitter climbed as much as 18% on the news, and is now halted. Representatives for Musk and for San Francisco-based Twitter didn’t immediately respond to requests for comment.
The move is a 180-degree change for Musk who tried to cancel the deal himself after seeking a deal to buy the social media platform and bring it private.
Musk originally offered to buy the platform for $44 billion, and Twitter shareholders accepted the deal.
A few weeks later, Musk pulled back from the deal, claiming that Twitter was lying about the number of bots on its platforms. The company sued Musk for breach of contract and tried to force him to go through with the deal.
The case was going to trial this month, but now it appears that Musk prefers to go through with the original deal than go through a trial where a judge could force him to buy the company.
Why is the Twitter deal affecting Tesla’s stock?
There are a few ways that Musk’s deal to take Twitter private is affecting Tesla – and more specifically, its stock.
The obvious one is that Musk, who is CEO of Tesla and SpaceX and who leads several smaller companies like The Boring Company and Neuralink, is a fairly busy person, and spending time on Twitter will likely result in less time spent working on Tesla, which is not really what you want out of a CEO of a major company like Tesla.
The other major reason is that Musk had to sell about $20 billion worth of Tesla stocks over the last year – most of which was to secure the Twitter acquisition.
The impact of that was mostly already felt on Tesla’s stock, but in August, Musk sold approximately another $7 billion worth of stocks “in case the judge rules against him in the case” and said that he would buy back Tesla stocks if he doesn’t have to buy Twitter.
Now it sounds like he won’t be able to do that if he is moving forward with the deal.
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