Here’s What’s Next for Elon Musk and Twitter: Live Updates


Credit…A Rong Xu for The New York Times

When Elon Musk revealed the financing of his bid to buy Twitter, Promised to put $21 billion in cash.

Even for Mr. Musk, who is worth over $200 billion, that’s a lot of money. Most of his wealth is tied to Tesla stock, and one of the most obvious ways to raise money would be to sell some of those shares.

Given Tesla’s massive market cap and inclusion in major stock indexes, almost anyone with a 401(k) probably owns some Tesla stock. The potential for Mr. Musk to sell some of his holdings and spend less time on Tesla as he shifts his focus to Twitter has raised questions about the outlook for Tesla’s share price. The stock fell 12.2 percent on Tuesday, while the S&P 500 index fell 2.8 percent.

Tesla’s shares have lost nearly 20 percent of their value since Mr. Musk first announced on Twitter that he had bought a large stake, sparking takeover speculation. Jim Cramer, crazy host of CNBC’s “Mad Money” blamed Tesla “damaging this market pretty badly”

Did Musk sell his shares to fund his Twitter bid?

It’s too early to know. Such sales must be reported to the Securities and Exchange Commission, but these reports are not instantaneous. It may take several days for sales to go public.

What effect will Musk’s sales have on Tesla’s share price?

Even the sale of a large portion of Mr. Musk’s Tesla stock will not affect Tesla’s share price for very long.

Mr. Musk is Tesla’s largest shareholder, owning about 17 percent of the company’s stock (about 175 million shares in total).

To raise $21 billion in cash, it will need to sell about 24 million shares at Tuesday’s price. That’s about an average daily trading volume for Tesla stock – a lot, but not enough to overwhelm the market. About 45 million shares were bought and sold on Tuesday.

Mr. Musk’s funding package for Twitter also includes: $12.5 billion loan Tesla uses its shares as collateral. If Tesla’s stock falls enough, lenders will ask Musk to add collateral to back up the loans, potentially forcing him to sell more shares to find cash.

Mr. Musk had previously sold large slices of Tesla’s stock. Last year, it sold 15 million shares worth more than $16 billion in two months. These sales did not measurably lower Tesla’s price, but it is unknown whether the price would have risen if it hadn’t.

What happens to the rest of the market when Tesla’s stock drops?

Tesla is a component in both the S&P 500 and the Nasdaq composite index. As well as being a barometer of how stocks in the United States are performing, both indices are mirrored by a large number of widely invested mutual funds.

S&P 500, which is accepted as the benchmark US index, weights companies according to their market values. With a value of approximately $900 billion, Tesla is one of the most influential stocks in the index.

For every dollar that Tesla stock fell on Tuesday, the S&P 500 lost 0.099 points, according to Howard Silverblatt, a senior index analyst at S&P Dow Jones Indices. That means the drop in Tesla’s shares accounted for about a tenth of the S&P 500’s drop on Tuesday.

“So it’s had a huge impact,” said Mr. Silverblatt, “but not the greatest.” With nearly three times the valuation of Tesla, Apple has much more influence. The stock’s 3.7 percent plunge on Tuesday further contributed to the overall index’s decline.

So why did Tesla’s stock fall?

tesla is a famous volatile stock. Tuesday’s 12.2 percent drop was the worst daily drop since September 8, 2020, when it lost nearly 21 percent of its value. But Tesla shares have dropped nearly 12 percent twice in the past six months. November 9 and January 27.

Some – including Mr. Musk, sometimes – They suggested that Tesla was overvalued. Among those who believe in Tesla’s value, which is much higher than rival automakers for the size of its operations, most of the arguments depend on Mr. Musk’s management. Even Tesla admits it, citing it as a risk. in its most recent quarterly report“We are heavily dependent on Tesla’s techno king Elon Musk and our CEO. While Mr. Musk has spent a significant amount of time with Tesla and is very active in our management, he does not devote all his time and attention to Tesla.”

Not much is known about Mr Musk’s plan to buy Twitter, including how involved he will be. “Tesla investors are concerned that Musk will spend too much time solving the social media giant’s problems, and this will remove its laser-like focus,” said Edward Moya, a senior market analyst at OANDA.

Or as Mr. Silverblatt puts it: “It is the expectation of something that has not yet happened. It will take some time before we learn anything.”


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