After Billionaire Elon Musk bought the microblogging site, it is reported that his car company Tesla wiped roughly $126 billion off its valuation, according to Bloomberg. The steep decrease in the stock value according to the reports is found to be because of the share of Musk’s $44billion into the Twitter purchase.
According to the Washington DC post, Tesla’s stock dropped more than 12 percent, bringing its market capitalization down to $906 billion — compared with more than $1 trillion previously. Tesla has gone down more than $275 billion since April 4, when Musk disclosed that he increased his Twitter stake.
If Tesla’s value falls, Musk may have to give up some of Musk’s shares to pay off his debt, which could lead to a decline in his assets. Although at this moment it is unpredictable how much Musk would invest to uplift the electric car maker company and how much he would actually take to the Twitter shares.
Experts said Tesla, and thus Musk’s net worth, will be affected by two factors: the amount Musk has committed to the Twitter purchase, and fears that he will deviate from the role of Tesla’s chief executive. However, the carmaker’s stock had recently surged on a strong earnings report after Tesla reported a $3.3 billion profit and more than 300,000 quarterly deliveries despite supply chain challenges.
Tesla stock dropped precipitously last year when Musk sold around 10 percent of his shares, including $5 billion in the span of days, to cover a tax bill. The risks to Tesla’s stock price remain as the uncertainty surrounding the shares continues.