It’s unclear how Tesla’s CEO will suspend trading or how serious the threat will be. Musk’s tendency to make brash comments on Twitter has drawn scrutiny from the Securities and Exchange Commission. The terms of the deal call for a $1 billion breakup fee.
Before the tweet, Musk was already seeking more investors for its $44 billion takeover of Twitter, as a market downturn weighed on his financing.
Tesla has lost $400 billion in market value since Musk’s interest in Twitter became public in early April, and his acquisition plans have faltered at a time when he has pledged a $21 billion fortune to finance it. Musk had planned to buy Twitter through loans and equity commitments, putting most of his stake in the world’s most valuable automaker — where most of his wealth comes from — into a new in the joint venture.
Musk’s net worth has fallen by about $50 billion in recent weeks, making him the world’s richest man, according to Forbes’ real-time wealth index. In the past month alone, Tesla’s stock has fallen nearly 30%.
Musk last week disclosed more than $7 billion in funding from investment firms, Oracle founder Larry Ellison, cryptocurrency exchange Binance, Qatar’s sovereign wealth fund and Saudi Prince Alwaleed bin Talal, among others.
Musk gets help from tech giant and Saudi prince in Twitter bid
Fueled by a sluggish economy and friction in Tesla’s share price, Musk is seeking additional investments beyond what he initially planned, according to people familiar with the matter.
“The market has shifted dramatically over the past 60 days, and I think it’s a dark cloud that Musk has underestimated Tesla stock,” said Wedbush Securities analyst Dan Ives. “I think the biggest miscalculation is that piece.”
Due in part to the downturn, Musk and the bankers involved in the deal have been under pressure to consolidate partners. That includes Yahoo owner Apollo Global Management, which is expected to raise more than $1 billion with a group of partners, one of the people said.
CNBC reported Thursday that start-up investor Jason Calacanis is arranging investors to take part in Musk’s ownership bid. Potential investors who spoke with The Washington Post said interest in Musk’s bid remained high because he believed he would make a fortune on the investment, despite Musk’s pledge that Twitter’s economics were not his concern.
Here’s what Musk had to say about buying Twitter
Musk did not immediately respond to a request for comment. In recent days, he has warned that he is not yet the owner of Twitter, even though he has made clear plans for the social media service — such as restoring the account of former President Donald Trump, who was banned after Jan. 1 . On June 6, 2021, the attack on the United States Capitol.
“If the Twitter acquisition goes through, the company will be super-focused on core software engineering, design, [information security] and server hardware,” he wrote in a tweet Last week, he added: “Furthermore, the work ethic expectations will be very high, but well below what I expect of myself.”
He told a summit with the Financial Times on Tuesday that the ban on Trump “was a morally wrong decision and, to be clear, extremely stupid”.
The transaction may also be affected by external factors, such as regulatory scrutiny by the Federal Trade Commission or the United States Securities and Exchange Commission. The Wall Street Journal reported Wednesday that the Securities and Exchange Commission is investigating Musk’s late notice to buy a 5% stake in Twitter.
The Washington Post previously reported that it may have made him $156 million.
Musk used most of his Tesla stock as collateral for loans, making the recent recession a particular issue for his bid. Tesla has warned of the risks it faces, as Musk has pledged large amounts of Tesla stock as collateral. Tesla shares traded below $730 on Thursday, well below the more than $1,100 mark since early April. Analysts said a further drop of several hundred dollars could trigger calls to force Musk to sell some of his stock.
Sometime last year, he had pledged more than half of his stock as collateral, according to financial filings. With Twitter’s bid only increasing that percentage, Musk is under pressure to reduce his equity commitment, according to people familiar with the matter who asked not to be named.
Elon Musk is worth $270 billion. He would buy Twitter with an IOU.
Tesla is open to potential risks in its annual filing.
“If Elon Musk were forced to sell our common stock that he had committed to guarantee certain personal loan obligations, such a sale could cause our stock price to fall,” the filing said.
“We are not a party to these loans,” the company wrote. Tesla wrote that if its stock price fell, Musk could be forced by banks to sell shares to meet his loan obligations.
That could further depress the stock price.
“It became a spiral,” Ives said.