Tesla shares slide could put Musk’s Twitter takeover at risk

Tesla shares fell after investors feared CEO Elon Musk may have to sell shares in the electric-car maker to pay for Twitter’s acquisition.

Tesla had lost more than $125 billion (£99.3 billion) in market value as of Tuesday.

One analyst said Tesla’s fall in value could pose problems for a $12.5 billion loan Mr Musk secured against his stake in the company.

The problems highlight the challenges he faces as he tries to run five companies.

Tesla’s stock price has stalled, with some investors wondering if Mr Musk’s Twitter buy is bad for Tesla.

Shares fell 12.2% from just over $1 trillion to $906 billion.

Some are now wondering if Elon Musk may have bitten off more than he can chew in trying to buy Twitter.

Mr Musk is a famous workaholic. In 2019, he was asked on Twitter if it was true that he worked 90-hour weeks.

“The hours have been a lot higher in recent years,” he said. “I don’t recommend it though – bad for health and happiness.”

Mr. Musk runs Tesla, the most valuable car company in the world. He also runs Space X, a company that designs, manufactures, and launches advanced rockets and spacecraft.

He also founded the Boring Company, which aims to revolutionize transportation through tunneling and Neuralink, with a mission to connect human brains to computers.

That’s a lot to think about.

Now Mr Musk wants to take on one of the toughest jobs in Silicon Valley – the new owner of Twitter.

Twitter is not your average tech company. It is a news generation engine that is influential around the world.

Influencers are on TikTok, world market leaders on Twitter. And if you think Twitter’s influence will be left to the West, think again.

Twitter’s most-followed global leader with a country mile is India’s Prime Minister Narendra Modi.

But the enormous influence of Twitter brings with it great challenges. As the global “town square” for debate, Twitter must decide how the platform is moderated.

Mr Musk says he is a “free speech absolutist”. But make no mistake, the platform has yet to be moderated.

On Tuesday he clarified what he meant: “By ‘freedom of speech’ I mean simply what is in accordance with the law,” he said.

But there are real problems with this definition. For one thing, the law is different in different countries.

Also, it’s often difficult to tell in real time if a tweet is breaking the law.

Have tweets calling for the storming of Washington’s Capitol Hill crossed the line into insurrection? Where does criticism become slander? When does hate speech directed at someone become abuse or harassment?

In February, I interviewed Gab’s chief executive, Jason Miller. He is Donald Trump’s former spokesman and now runs a “free speech” alternative to Twitter.

And yet Gab has a lot of rules about what you can and can’t say.

“I spend a lot of time on moderation politics, which is probably what I get the most requests from people about,” he said.

So Mr. Musk will have to spend a great deal of time thinking about monitoring Twitter and committing resources to whatever happens.

Twitter has some other pretty significant structural problems. Unlike its Silicon Valley competitors like Facebook or YouTube, Twitter has never been very good at monetizing the platform.

Mr Musk believes he can reverse that. But that will take time and effort.

And some are now wondering if he has the time to do so without hurting the other companies he runs.

“Unless Elon Musk invented a way to add hours to the day, he only has so much time to dedicate to all of this,” said Tim Higgins, author of Power Play: Tesla, Elon Musk, and the Bet of the Century.

“I imagine he’ll be deep in the Twitter weeds for the next few months, years. And if you’re a Tesla investor, you’re probably a little nervous about it,” Mr Higgins said.

Tesla shareholders are also concerned that the deal could mean selling a stake in the car company.

As part of the deal, he has to raise $21 billion in equity himself. Where this money comes from is still unclear.

The rest of the money will be raised through loans using Mr Musk’s assets as collateral.

That means that if Tesla shares start falling, a deal structured around the intrinsic value of those shares could fail.

“If Tesla’s stock price continues to free fall, it will put its funding at risk,” said Ed Moya, senior market analyst at Oanda.

Mr. Musk isn’t the first entrepreneur to launch multiple companies. Steve Jobs was a co-founder of Apple and Pixar. Jack Dorsey was CEO of Twitter and Block.

But running five companies means hiring others to effectively run the business on your behalf.

And that goes against the nature of Mr Musk – who is a self-proclaimed “nano-manager”.

Last year he said he didn’t want to be Tesla’s CEO. I asked him why. He told me he didn’t want to be CEO of anything.

That could be true. But he definitely wants to be involved in the day-to-day operations of these companies.

His biographer Walter Isaacson said Tuesday that Mr Musk was working at Space X when the Twitter offer was accepted. That evening at 10 p.m. he attended a meeting on engine design.

“He spent more than an hour working on valve leak solutions. Nobody mentioned Twitter. He can do multiple jobs at the same time,” he said.

There is no question that Mr Musk can multitask. But will he be able to spin that many records at once without them all collapsing?