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Tesla share prices plummet dramatically after Elon Musk’s $44bn Twitter deal

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Since the beginning of April 2022, Elon Musk has been making the headlines after he became the majority shareholder of Twitter. A series of events followed, which eventually culminated in the eccentric billionaire offering to buy the social media company for a staggering $44 billion.

Less than two weeks later, Twitter announced it had accepted Musk’s offer. The world’s richest man now has complete control of a network that has tremendous sociopolitical influence. The deal has also proven to have economic consequences.

On Tuesday, April 26, Musk’s electric car company Tesla reported a staggering 12.2% loss in shares. This represents $125 billion in market value. The drop occurred as Wall Street pondered how the Twitter deal could impact Tesla’s worth.

While Musk will cover half of the purchase with $21 billion of his own money, banks will finance the remainder. The question, however, is where will Musk’s half come from? It is unclear if the amount will come from his share of Tesla, borrowing against the shares, finding additional investors, or a blend of all three sources.

Two-thirds of Musk’s $257 billion net worth is in Tesla stock. If he uses these shares to finance the Twitter purchase, it could cause the price to drop even further. The company itself has confirmed this in Tesla’s latest annual report. Ironically, Tuesday’s loss immediately follows Tesla reporting record earnings during the first quarter of 2022. This was accompanied by an impressive production forecast that Wall Street heralded before the buzz took a turn in the opposite direction a mere week later.

One of Musk’s primary objectives for taking Twitter private is to offer a haven of free speech. This puts him in direct conflict with one of Tesla’s biggest markets and production centers: China. This global economic powerhouse has a slightly different stance on freedom of speech, setting Musk up for a potential showdown with its government. There are also concerns that the Twitter acquisition could be a distraction for Musk. Already the CEO of Tesla and SpaceX, he is involved with other innovative businesses, including Neuralink and The Boring Company.

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