UPDATE: Tesla shares up 0.9% premarket a day after shedding $126 billion in market cap amid Twitter deal

0
23

Tesla Inc. shares TSLA, -12.18% were up 0.9% in premarket trade Wednesday, after falling 12.8% on Tuesday to shed a stunning $125.98 billion in market cap. The stock was slammed after Chief Executive Elon Musk’s $44 billion bid for Twitter Inc. TWTR, -3.91% was accepted by its board, raising concerns he will have far less attention to pay to the EV company than before, and that he may have to sell his Tesla stock to finance his portion of the deal. Musk has pledged $21 billion in equity financing. Wedbush analyst Dan Ives said there is a “lot of confusion” about the equity component, and whether Musk will bring in private equity investors to help finance it or go it alone. “Naturally this has put a black cloud over Tesla’s stock in the near-term as the Twitter financing component for Musk is now front and center for the bears.” Ives wrote in a note Wednesday. “As we have said before, the Twitter transaction was never ideal for Tesla investors as the stock will now ultimately bear the burden of acquiring Twitter through its equity based financing mechanics.” Ives said the potential for Musk to be distracted by the Twitter deal and pulled in too many directions is less of a worry for him, as he doubts Musk will be CEO but rather chairman with less time pressures. Still, “While the Tesla story is not impacted, Musk is the hearts and lungs of the Tesla story and the Twitter saga now unfortunately becomes an overhang for Tesla shares in the near-term. We maintain our OUTPERFORM rating,” he wrote. Tesla shares have fallen 17% year to date, while the S&P 500 SPX, -2.81% has fallen 12%.

This article was originally published by Marketwatch.com. Read the original article here.

Previous articleNeed to Know: The bond market has crashed. Why one strategist says embrace the pain and get back in.
Next articleArchegos engaged in ‘brazen scheme’ to manipulate market, SEC says

LEAVE A REPLY

Please enter your comment!
Please enter your name here