The Elon Musk-Twitter Deal is Already Bearing Adverse Effects For All Involved
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Elon Musk’s looming purchase of Twitter is already showing adverse effects on the social media platform and beyond just two days removed from Twitter’s board of directors unanimously agreeing to the deal.
The fallout from Monday’s announcement saw Tesla lose upward of $125 billion in market value after the stock price tanked by more than $100 a share. The drop materializes worries about multiple ways Musk’s push to purchase Twitter could affect Tesla shareholders that emerged as the ordeal unfolded over the past few weeks.
Some showed concern that operating Twitter would provide another distraction for the Tesla CEO, who already balances time between the electric automaker, SpaceX, Neuralink and The Boring Company. Others pointed to how Musk’s continued promotion of his Twitter acquisition as a free speech preservation tactic could adversely affect Tesla’s relationship with the Chinese government, where a large amount of Tesla production and purchases occur.
Musk’s ability to finance the Twitter deal has also been a key point for Tesla investors. As stated by Twitter, Musk agreed to personally put forth $21 billion of the roughly $44 billion price tag through “equity financing,” but there has been little information about how Musk would fulfill that hefty task. The majority of his $259 billion in wealth is currently held in Tesla stock, meaning he likely would have to either sell or borrow against his shares in the company in order to procure the capital needed. Either of those options would negatively affect Tesla’s price per share, and it clearly already has before any public disclosure from Musk.
Twitter itself has dealt with wide follower fluctuation since Monday. Multiple accounts with large follower counts reported losing followers by the thousands, with some growing to hundreds of thousands. Former President Barack Obama, the most followed Twitter user, lost more than 300,000 followers since the acquisition was announced. Katy Perry lost more than 200,000 followers. At the same time, notable controversial right-wing figures, including Rep. Marjorie Taylor Greene and Brazilian President Jair Bolsonaro, have seen their follower counts rise by nearly 100,000.