Tesla Stock Plummets Over 10%... Aftermath of Twitter Acquisition?

by Cho Seulkina

Published 27 Apr.2022 04:47(KST)

[Image source=Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] The stock price of electric vehicle company Tesla is experiencing a double-digit plunge. This is the aftermath of news about CEO Elon Musk's acquisition of Twitter.

According to Bloomberg News, as of 3:38 PM local time on the 26th, Tesla's stock price on the New York Stock Exchange is trading at $891.46, down 10.68% from the previous close. During the session, it had fallen as low as $882.55.

This decline is due to concerns that Musk may sell Tesla shares to finance the Twitter acquisition. Bloomberg reported, "Since Musk announced securing Twitter shares on April 4, Tesla's market capitalization has decreased by nearly $250 billion," adding, "This represents a reduction of about 23%." Additionally, the market is worried that Musk might reduce his relative focus on Tesla management to prioritize the Twitter acquisition.

The day before, Musk agreed to acquire Twitter at $54.20 per share, totaling $44 billion, and to take the company private. Prior to this, on the 21st, he disclosed plans through the U.S. Securities and Exchange Commission (SEC) to raise a total of $46.5 billion via debt and equity financing. Since about half of this amount is planned to be raised in cash, it is anticipated that Musk will have to sell Tesla shares.

Recently, Tesla's stock price has been under downward pressure due to inflation and recession concerns. The Federal Reserve's (Fed) announcement of interest rate hikes is also negatively impacting technology stocks.

The stock price of Twitter, which Musk plans to acquire, is also showing a downward trend. Ahead of the New York market close on the same day, Twitter's stock price was down 3.61% at $49.84, significantly below the acquisition price.