This is not a paywall.

Register for free to continue reading.

The news sucks. But your reading experience doesn't have to. Help us improve that for you by registering for free.

Please create a password or click to receive a login link.

Please enter your password or get a login link if you’ve forgotten

Open Sesame! Thanks for registering.

First Thing, Daily Maverick's flagship newsletter

Join the 230 000 South Africans who read First Thing newsletter.

We write for you

It’s a public service and we refuse to erect a paywall and force you to pay for truth. Instead, we ask (nicely and often) that those of you who can afford to, become a Maverick Insider and help with whatever you can. In order for truth not to become a thing of the past, we need to keep going.

Currently, 18,000 (or less than 0.3%) of our brave and generous readers are members; which says a lot about their characters and commitment to our country. These people are paying for a free service in order to keep it free for everyone.

They are the true South AfriCANs.(Sorry, we couldn’t help ourselves.)

Support Daily Maverick→
Payment options

Tesla Drops on Concern Twitter Would Divide Musk’s At...

Business Maverick

Business Maverick

Tesla Drops on Concern Twitter Would Divide Musk’s Attention

(Photo: Michael Nagle / Bloomberg)
By Bloomberg
14 Apr 2022 0

Tesla Inc. shares slipped as investors absorbed the prospect of a new distraction for Chief Executive Officer Elon Musk.

Musk’s unsolicited $43 billion takeover bid to take Twitter Inc. private is the first time he has attempted to buy a fully formed company of that size. His previous enterprises, which also include SpaceX and the Boring Co., have largely been built from the ground up in his image.

Tesla fell 3.8% at 10:53 a.m. Thursday in New York. Through Wednesday, the stock had dropped about 5.7% since Musk revealed a stake in Twitter last week, more than double the decline in the broader S&P 500 Index over that time.

Tesla shares are down since Musk first disclosed his Twitter stake

“As the CEO of a trillion-dollar company, Elon Musk should focus on Tesla and not waste time attempting to acquire and manage a $43 billion company,” said David Trainer, CEO of investment-research firm New Constructs, in an email.

Tesla faces “significant competition” as major automakers are catching up on innovation in electric vehicles, Trainer said. Shareholders may be worried that Musk — the world’s richest person, according to the Bloomberg Wealth Index — would be pulled away from operations if his Twitter bid is accepted. Musk controls product decisions at Tesla and plans to start production of the Cybertruck, Semi and next-generation Roadster next year.

At the same time, Musk has a strong hand in SpaceX, which launched the first space flight with private astronauts last week. The company is a major contractor for NASA and plans the delayed Crew-4 launch to the International Space Station as soon as April 23.

Even if he has executives to help run his different enterprises, Musk is anything but a delegator. He has described himself as a “nano-manager” and handles almost all major decisions at his companies. When Tesla was having trouble getting the Model 3 production line going, he famously slept at the factory to oversee assembly.

Musk said Thursday that he doesn’t have confidence in Twitter’s current management, suggesting he isn’t likely to be hands-off if he succeeds in buying the company.

Another risk for Tesla shareholders is that Musk could sell some of his stake in the automaker to pay for the Twitter deal, according to Wells Fargo analyst Colin Langan. Musk owns about 17% of Tesla shares, valued at about $170 billion, and Langan said in a research note that offloading some of them to pay for the takeover may put pressure on the stock price.

Musk’s offer for Twitter is conditional upon “completion of anticipated financing,” which Langan said implies that at least some portion of the purchase price will come from outside sources.

(Updates with financing concerns in ninth and 10th paragraphs.)

–With assistance from Katrina Lewis and Ed Ludlow.


Comments - share your knowledge and experience

Please note you must be a Maverick Insider to comment. Sign up here or sign in if you are already an Insider.

Everybody has an opinion but not everyone has the knowledge and the experience to contribute meaningfully to a discussion. That’s what we want from our members. Help us learn with your expertise and insights on articles that we publish. We encourage different, respectful viewpoints to further our understanding of the world. View our comments policy here.

No Comments, yet

Please peer review 3 community comments before your comment can be posted