Over $100bn was wiped off the value of Tesla after its boss Elon Musk struck a deal to buy Twitter. Amid mounting fears the audacious takeover of the social media platform would prove a distraction for the 50-year-old tycoon, the electric car maker’s shares tumbled 12 per cent in New York.
It also reduced the value of Musk’s 16.7 per cent stake by $21bn – though it was still worth $150bn.
The slump came as the $44bn takeover of Twitter continued to send shockwaves through Wall Street and Silicon Valley and attracted the attention of global regulators.
Musk, who is said to have a fortune of around $250bn – already runs Tesla as well as rocket company Space X.
He also founded and is heavily involved in brain-chip start-up Neuralink and tunnelling venture the Boring Company.
Analysts warned the takeover could be damaging for Tesla shareholders as Musk implements his plan to unlock Twitter’s “tremendous potential”.
There are also concerns that Musk is part-funding the takeover with a loan secured against $15bn of his shares in the electric car maker.
Edward Moya, an analyst at investment platform Oanda, said: “Tesla shareholders can’t be happy that Musk will have to divert even more attention away from winning the electric vehicle race”.
A fund manager with a significant holding in Tesla, who asked not to be identified, told Reuters: “I fear this is going to be a distraction. He’s juggling supply chains and factory delays and the expansion of the energy storage business and this doesn’t fit at all”.
Twitter founder Jack Dorsey is in line to pocket nearly $1billion from the sale of the social media site to Elon Musk. The 45-year-old will receive a $978mn pay out after Musk agreed to buy the site Dorsey created in a $44bn deal.
Dorsey owns 18m shares which is equivalent to 2.4 per cent of the company – which Musk will buy for $54.20 each. Dorsey, who sits on the board, has long declined a salary from Twitter – instead taking the minimum allowed of $1.40 a year.
Others in line to make a fortune include chief executive Parag Agrawal, who has only been boss for five months. Agrawal has history with Musk and many believe he will not survive under the new owner.
Tesla has lost more than a fifth of its value since Musk first disclosed his over 9 per cent stake in Twitter in early April. His move to buy Twitter has raised concerns about the depth of executive talent at Tesla.
Tesla feels very much like a start-up despite it being a trillion dollar company, said Tesla investor Ross Gerber, chief executive of wealth management firm Gerber Kawasaki. It’s as big or bigger than the biggest companies in the world, but it doesn’t have the management infrastructure like other companies.
Tesla is racing to boost production at new plants in Texas and Berlin amid supply-chain snarls and higher raw materials costs, as well as get work at its biggest factory in Shanghai back on track during a spike in Covid-19 cases there.
Despite those problems, Tesla last week posted record quarterly results as demand for its electric cars boomed.
The company reported revenues of £14.3billion for the first three months of 2022 – up 81 per cent on a year earlier – while profits rose 147 per cent to £4.2billion.