After Tesla’s (TSLA) CEO, Elon Musk, closed the deal to buy Twitter for $44 billion, Tesla shares accelerated their decline. Markets are anticipating banks who backed the deal to ask Musk to raise more cash.
Musk financed the Twitter acquisition with debt, secured by Tesla stock. The more Tesla stock falls, the less equity there is backing the loan. Musk already sold billions of dollars worth of TSLA stock.
Buyers are stepping in amid the downtrend in Tesla stock. This might prove too early. Musk has a loss of more than $100 billion on paper in 2022 so far. He might cut his exposure to Tesla stock further to avoid bigger paper losses.
Electric Vehicle Bubble Pops
The 2022 bear market is causing the EV sector to pop. Shares of Chinese automotive firm Nio (NIO) peaked at $42.51 before settling at around $10 recently. Rivian (RIVN) investors are struggling to keep the stock at the $29.50 - $40.00 range. Lucid Motors (LCID) is faring even worse. The luxury EV firm’s stock peaked at $56.70 before trading below $10.
Your Takeaway
Tesla is the strongest EV stock amid falling valuations. Continue watching CEO Musk turn Twitter around. Once he finishes fixing the company, he may turn his attention back on growing Tesla.
