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Tesla Investors Send a Serious Warning to Elon Musk

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Elon Musk is everywhere. 

The billionaire has almost stolen the bill from all the rest of the business world since the beginning of April. 

We began to talk about him, and his offer to acquire the social network Twitter  (TWTR) – Get Twitter, Inc. Report, on April 4 after he revealed a substantial stake. A fast-moving saga with many twists and turns followed. Eventually, on April 14, Musk made an offer at $54.20 per Twitter share to buy the entire company. The transaction is valued at $44 billion. After hesitating, the board of directors finally agreed on April 25 to accept the billionaire’s proposal. 

But despite this agreement in principle, Musk does not stop trolling Twitter with posts on the platform of which he is one of the biggest influencers with more than 86.6 million followers. 

Not a day goes by that Musk doesn’t communicate about Twitter. When it is not to deplore the alleged lack of free speech of the social network, it is to evoke the changes which he foresees. Twitter now occupies the bulk of the public communication of the serial entrepreneur, relegating Tesla  (TSLA) – Get Tesla Inc Report clearly to the background.

Britta Pedersen-Pool/Getty Images/TS

Loss of $100 Billion in 2 Weeks

It makes you wonder if Tesla, at the center of his Master Plan to save the planet, is still his priority. The vehicle manufacturer has achieved a strong performance in the first quarter despite all the challenges it faces, giving Musk a huge opportunity to push Tesla’s advantage against legacy carmakers who want to steal its throne.

In a sign that fans and investors in Tesla do not appreciate this possible distraction that is Twitter, the carmaker’s stock has suffered a lot in recent days. On April 13, the day before Musk announced Twitter’s takeover bid, Tesla shares closed the session at $1,022.37 for a market capitalization of more than $1.05 trillion.

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On April 14, the day the offer was announced, Tesla stock ended down at $985, losing almost 4%. The decline in shares continued and even grew once Musk announced the structuring of the financing for this operation. Tesla shares closed on April 27 at $881.51 for a market value of $911 billion. Basically, the electric vehicle manufacturer lost $100 billion of value in two weeks.

“Tesla shareholders are voicing concern over Elon [Musk] doing too many things at once,” Scott Sheridan, market expert, and CEO of niche investment brokerage firm Tastyworks. “And shareholders may also be worrying that depending on what he does with Twitter, he may turn off potential car buyers.”

Musk is involved with several companies, which rely on him to establish themselves in their respective sectors. Besides Tesla, he is the CEO of SpaceX, at the helm at Neuralink and The Boring Company.

Will Musk Sell Tesla Stock?

But Tesla is Musk’s favorite. The tech tycoon is the architect of the success of the group which was still on the verge of bankruptcy in 2019 when it had difficulty ensuring the production ramp-up of the Model 3, the entry-level vehicle.

The automaker currently faces a cocktail of negative factors like the entire automotive sector: supply chains are disrupted by the pandemic, the chip shortage continues, and soaring prices of raw materials, such as nickel — important for batteries — are not going anywhere. China, for example, has imposed the lockdown on Shanghai since the end of March. Tesla’s factory in Shanghai serves the local market, Asia and Europe as well.

In addition, Tesla has also promised that its vehicles will be able to drive themselves by the end of the year. The production of the highly anticipated Cybertruck is scheduled for 2023. As you can see, the carmaker has a lot in its plate and therefore does not need distractions.

Tesla investors and fans also have their eyes on how Musk intends to finance the Twitter leveraged buyout deal. Musk has managed to secure $25.5 billion of debt and margin loan financing and is providing a $21 billion equity commitment. This latest part of the transaction that he’s personally guaranteed suggests that he may sell Tesla shares, which constitute a large part of his huge fortune estimated at $253 billion as of April 27, according to Bloomberg Billionaires Index.

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