Elon Musk’s Twitter takeover campaign is throwing a huge shadow over his far larger responsibility — Tesla. This week, market analysts chimed in on how Musk’s shaky bid to buy the social media platform wreaks havoc on the EV firm’s stock values.
According to Wedbush Securities analyst Dan Ives, Elon Musk’s “bizarre” tweet delaying his $44 billion Twitter takeover has turned the deal into a “circus show” while seeing multiple possible outcomes to the drama.
Musk’s controversial statement saying the transaction was on hold owing to concerns about the number of fake accounts on Twitter prompted Ives’ comments. Following the tweet, shares of the social media company fell as much as 25% in pre-market trading but have since rebounded to trade at $40.91.
Ives went on to say that Wall Street will interpret the consequences of Musk’s statement as either the transaction falling apart, Musk negotiating for a lower purchase price, or Musk walking away with a $1 billion breakup fee.
“The nature of Musk creating so much uncertainty in a tweet (and not a filing) is very troubling to the Street and us and now sends this whole deal into a circus show with many questions and no concrete answers as to the path of this deal going forward,” Ives wrote.
“Tesla investor patience is wearing very thin. This [takeover] circus show has been a major overhang on Tesla’s stock and has been a black eye for Musk so far,” said Ives.
Last week, Tesla’s stock fell 7%, marking a nearly 49 percent decrease since November 2021. Tesla’s market value has dropped by $30 billion ever since.
Despite analysts’ expectations that the market will be volatile, Tesla deals with COVID-19 lockdowns in Shanghai, making employees stay at old Chinese military camps.
Investors are justified to be sceptical that Musk’s amateurish acquisition of Twitter may negatively affect his auto business. So let’s see if he can reassure investors and weather this storm.