Just on April 13, the day before Twitter revealed that Elon Musk had made an offer to buy the company, Tesla shares were trading at $340.79. Currently, the electric car company’s share price is around $173.44.
After Amazon, it’s Tesla’s turn to lose nearly half of its stock market value, reducing the net worth of Elon Musk’s fortune by about $70 billion. This drop in Tesla’s stock price also puts its title as the richest person in the world in jeopardy.
Tesla’s value has halved in a few months
As a reminder, billionaire Elon Musk had bought Twitter for $43.4 billion. Since then, Tesla’s stock price has melted like snow in the sun with an estimated 49% drop.
The drop in the company’s shares stems from concerns over recent disruptions at one of its factories in Shanghai. On the other hand, Tesla shareholders are worried about how Elon Musk divides his time between Twitter and his many other companies, such as the rocket company SpaceX. They come to the conclusion that the management of Twitter represents too great a distraction for their CEO. Especially since the quirky CEO is now thinking about creating his own smartphone.
Finally, to address various concerns and cover some of Tesla’s losses, Musk’s bankers are considering replacing some of the $13 billion in debt used for the Twitter takeover with secured margin loans earmarked for stock. You are here.
The title of ‘world’s richest man’ could change hands
To finance the acquisition of Twitter, Elon Musk had to sell Tesla shares for 20 billion dollars. According to Reuters, Tesla’s CEO now only owns 445 million shares. Worse, the current drop in Tesla’s stock price from $151 billion to $77 billion consequently reduces the businessman’s stake in the company’s equity.
This means that his title as the richest person on the planet is in jeopardy. His designated successor appears to be Frenchman Bernard Arnault, chief executive of luxury group LVMH, who has been following him for some time now. Also, the stock market moves last Wednesday allowed Mr. Arnault to briefly take the lead in the rankings.
This situation puts more pressure on Elon Musk, especially with Twitter, which he will have to fix as soon as possible. The businessman has been in difficulties since taking over the company. His policy of mass layoffs of nearly half of Twitter’s workforce, about 3,700 employees, later forced hundreds more to quit.
Worse, the company is facing lawsuits over these layoffs and other internal issues. This week, for example, it was investigated by officials in San Francisco after a complaint that the company was converting parts of its headquarters into bedrooms.
Source: The Guardian