Tesla lost $126 billion in a single day after Musk’s Twitter deal

It's not loss of money that scares investors, but the amount of time Musk will dedicate to Twitter.
Ameya Paleja
Alamy

Elon Musk's electric vehicle company Tesla lost as much as $126 billion in value in a single day. Its stock continues to drop after its CEO declared his intent to acquire the social media platform Twitter, Bloomberg reported

Last year, the rise in Tesla stock prices saw Musk's fortune soar and enabled him to leapfrog others to reach the top of the list of the world's richest people. The company continues to do well, with record revenues and margins reported during the first quarter of 2022. Yet, its stock prices have been on a downward slide since the beginning of this month. 

Musk's interest in Twitter spooking investors

The slide began after Musk declared that he had acquired a major stake in Twitter earlier this month. According to Bloomberg's report, the decline has shaved off $275 billion, which is a steep drop of 23 percent out of Tesla's valuation prior to this month. 

Tesla is not directly involved in the acquisition of Twitter, but the financial plan laid out by Musk for the buyout includes $21 billion in cash, which analysts think is likely to be secured with the sale of Tesla stock. Interestingly, the 12 percent drop in Tesla stock on Tuesday wiped off $21 billion of Musk's Tesla stake too, Reuters reported

However, it is not the loss of Musk's money that is spooking Tesla investors. It is the amount of time Musk will probably dedicate to Twitter that is pushing investors away. 

Drop in other tech stocks

It would be unfair to single out Musk's decision to buy out his favorite past-time for the drop in Tesla stock. Reuters reported that Nasdaq closed at its lowest level since December 2020, which saw other technology companies also taking a hit. Microsoft and Apple were among the other technology companies that saw their valuations fall, but not by 12 percent. 

A hike in U.S. Federal Reserve rates and slowing global growth are thought to be the factors in this drop. However, if Tesla stock continues to free-fall like this over the next few days, it could jeopardize the Twitter deal's financing, market analysts told Reuters. 

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