Tesla loses $125 bn in market value as Musk buys Twitter
San Francisco, April 27, 2022
With Elon Musk acquiring Twitter for $44 billion, the stock of his electric car company Tesla tanked, and at least $125 billion were wiped out from its market value over some obvious risks.
According to media reports, Musk could face conflict with China over free speech, which is a key market for Tesla as it produces vehicles at the Shanghai Gigafactory.
There is another risk that "Musk could become distracted by his latest acquisition," reports NPR.
Tesla shares sank 12.2 per cent after the Twitter acquisition news broke.
The world's richest man has a net worth of $257 billion but two-thirds of his wealth is in Tesla stock.
"If Musk does offload some of those holdings, it could drive Tesla's share price down further," the report said late on Tuesday.
The company warned investors about the same in its latest annual report filed with the US Securities and Exchange Commission.
"If Elon Musk were forced to sell shares of our common stock that he has pledged to secure certain personal loan obligations, such shares could cause our stock price to decline," the company said.
Another worry for Musk is Twitter itself. Advertisers are having nightmares as free speech can kill their prospects on the platform as their brand's name may appear alongside hate speech and abusive or dangerous content without moderation.
If Twitter under Musk "tweaks or revamps its moderation policies, reinstate banned users, or allows hate speech and other dangerous and abusive content to return, then advertisers may leave", according to TechCrunch.