Here’s what’s next for Elon Musk and Twitter: Live updates

When Elon Musk offered to fund his bid to buy Twitter, he said I promised $21 billion in cash.

even for mr. Musk, whose fortune is north of $200 billion, is a lot of money. Most of his wealth is tied up in Tesla shares, and one of the most obvious ways to raise money is to sell some of those shares.

Given the massive market capitalization of Tesla and its inclusion in major stock indexes, it is likely that everyone with a 401(k) owns some Tesla stock. potential mr. Musk to sell some of his holdings, spending less time on Tesla as he shifts his focus to Twitter, has raised questions about Tesla’s stock price outlook. The stock fell 12.2 percent on Tuesday, with the Standard & Poor’s index down 2.8 percent.

Tesla shares have lost about 20 percent of their value since Mr. Musk first revealed that he had bought a large stake in Twitter, and speculation began about the acquisition. Jim Kramer, frantic host of CNBC’s “Mad Money” Tesla accused of “serious harm to this market.”

Did Musk sell shares to fund his Twitter offer?

It is too early to tell. Such sales must be reported to the Securities and Exchange Commission, but these reports are not immediate. It may take a few days for sales to post.

What effect does Musk’s sales have on Tesla’s stock price?

Even selling a large portion of Mr. Musk’s Tesla stock isn’t likely to affect the Tesla stock price for very long.

Mr. Musk is Tesla’s largest shareholder, owning about 17 percent of the company’s shares – about 175 million shares in total.

He would need to sell nearly 24 million shares at Tuesday’s price to generate $21 billion in cash. That’s about the average daily trading volume of Tesla stocks – a lot, but not enough to flood the market. On Tuesday, about 45 million shares were bought and sold.

Mr. Also includes Musk’s Twitter finance package $12.5 billion in loans using his Tesla shares as collateral. If Tesla shares fall enough, lenders will require Mr. Musk to add collateral to back loans, which could force him to sell more shares to get cash.

Mr. Musk has sold large slices of Tesla stock before. Last year, he sold about 15 million shares worth over $16 billion over a two-month period. These sales don’t appear to have measurably lowered Tesla’s price, although it’s unknown if the price would have gone up had he not been selling.

When Tesla Stock Goes Down, What Happens to the Rest of the Market?

Tesla is a component of both the S&P 500 and the Nasdaq Composite Index. In addition to being measures of how stocks are performing in the United States, both indicators are mirrored by the many mutual funds that are widely invested.

The S&P 500, considered the benchmark for the United States, measures companies according to their market value. Tesla, which is worth about $900 billion, is one of the most influential stocks in the index.

For every dollar that Tesla stock fell on Tuesday, the S&P 500 lost 0.099 points, according to Howard Silverblatt, chief index analyst at S&P Dow Jones Indices. That means the drop in Tesla stock is roughly a tenth of the S&P 500’s drop on Tuesday.

“So it had a very big impact,” he said. “Not the top,” Silverblatt said. Apple, which is worth three times more than Tesla, has a much greater impact. Its stock’s 3.7 percent drop on Tuesday contributed further to the index’s overall decline.

So why did Tesla stock drop?

Tesla It is a stock that is famous for its volatility. Tuesday’s 12.2 percent drop was its worst daily drop since 9/11. 8, 2020, when it lost about 21 percent of its value. But in the past six months, Tesla shares have fallen nearly twice by 12 percent November. 9 wan. 27.

Some – Including Mr. Musk sometimes – They suggested that Tesla exaggerated. Among those who believe in the valuation of Tesla, which is significantly higher than that of rival automakers for the size of its operations, much controversy depends on the master. Musk supervision. Even Tesla admits it, stating that it’s a risk In its most recent quarterly report,: “We rely heavily on the services of Elon Musk, our Tesla tech king and CEO. Although Mr. Musk spends a significant amount of time with Tesla and is very active in our management, he does not devote his full time and attention to Tesla.”

So much about Mr. Musk’s plan to buy Twitter is unknown, including how involved he is. “Tesla investors are concerned that Musk may spend too much time trying to fix the social media giant’s problems, and that it will take away its laser-like focus,” said Edward Moya, chief market analyst at OANDA.

or as mr. “It’s a prediction of something that hasn’t happened yet,” Silverblatt said. “It will be a while before we know anything.”