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Elon Musk’s Twitter posts about his deal to buy the social media company are also hurting Tesla’s stock.
Tesla investors, however, don’t anticipate the scenario too much.
Elon Musk’s Twitter posts about his deal to buy the social media company are also hurting Tesla’s stock.
Tesla investors, however, don’t anticipate the scenario too much.
Twitter investors are reacting with anguish. Twitter shares fell more than 12% in premarket trading to $39. 50. A drop in the deal is likely to see Twitter shares return to around $39, the point at which they were trading just before Musk’s initial stake in the company was revealed.
Tesla investors, on the other hand, are reacting with relief. Shares of the electric vehicle company rose 6. 5% to $775. 69. For them, Musk’s acquisition of Twitter represented a distraction and, at worst, anything that could damage the Tesla brand.
Twitter “is the least bad public square, a forum for exchanging ideas,” Musk said Tuesday at the Financial Times’ Car of the Future conference. “It may be much better. . . to be better, you have to get rid of bots and scams, scammers. Anyone looking to create a false influence on the site.
Musk doesn’t seem concerned about possible damage to Tesla’s logo from its involvement in Twitter. tesla
Advances in Tesla’s percentage value on Friday suggest investors may disagree with his statement. This is one of the reasons why Tesla’s percentages are higher on the news that the deal is pending.
Another issue, beyond branding and perceptions, has also been a problem for Tesla investors. Musk plans to commit a portion of his Tesla shares as collateral for a loan to buy Twitter. This created the threat of a margin call and a Tesla stock sale. whether stocks fell significantly. Investors don’t like to see giant blocks of shares sold through management. Musk’s lending and leverage had taken on “a life of its own,” according to Wedbush analyst Dan Ives.
Ives doesn’t cover Twitter, but rates Tesla on Buy. Its price target is $1,400 per share, all the way to the stock’s end of $728 on Thursday.
Before Musk said he was still committed to the purchase, Ives called Musk’s first Twitter post on Friday rare and said he will “send this circus show on Twitter in a horror show on Friday the 13th. “He said two things are imaginable now: either the deal falls via or it will be renegotiated.
It’s not easy to figure out what Musk will do or what it means for Tesla stock. What is transparent is that Musk’s decisions will be investors in Tesla and Twitter.
Write to Al Root to allen. root@dowjones. com