Tesla shares fell 12.2 percent overnight, knocking $126 billion off the company’s worth, as investors worried that CEO Elon Musk could sell his shares to raise cash for his $44 billion takeover of Twitter.
The decline in Tesla shares would imply a $21 billion loss in the value of Mr Musk’s ownership in the company, which is the same as the $21 billion in cash he has committed to contribute towards the Twitter transaction.
“If Tesla’s share price continues to decrease, that will jeopardise his finance,” OANDA senior market analyst Ed Moya cautioned.
Analysts are also concerned that Mr Musk, who also leads SpaceX, The Boring Startup, and computer-brain interface company Neuralink, may be distracted by the social media company and less engaged in operating Tesla.
“He’s going to be spending more time with another endeavour,” said Jeff Windau, senior equities analyst at Edward Jones.
“There may be a limit to how much bandwidth you may apply to each of these firms.”
Twitter’s stock fell 3.9 percent on Tuesday, closing at $49.68.
On Monday, Mr Musk agreed to acquire the firm for $54.20 per share in cash.
The disparity between his bid and Twitter’s real share price reflects investor fears that the decrease in Tesla shares, which account for the majority of Mr Musk’s riches, may cause him to reconsider buying Twitter.
Amazon founder Jeff Bezos has also questioned if Mr. Musk’s acquisition of Twitter will give China “a bit of control” over the platform, given Tesla’s large presence in Shanghai.
Earlier on Tuesday, Mr. Musk reacted to worries that his pledge to make Twitter a refuge for free expression may lead to a rise in the hatred and disinformation that the service has hitherto struggled to cope with.
On Tuesday night, he tweeted: “The excessive antibody response from people who are afraid of free speech tells it everything.
“By ‘free speech,’ I simply mean speech that is permissible under the law.
“I am opposed to censorship that goes above and beyond the law.”
If individuals desire less free speech, they will petition the government to create legislation to that effect.
“As a result, going beyond the law is against the will of the people.”
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