Investors in Elon Musk's flagship electric car maker Tesla are a worried lot as the stock slumped another 4 percent on Friday. The stock slide continued after Musk sold more than 20 million Tesla shares to raise as much as $3.5 billion earlier this week.
Tesla shares have now plunged as much as 16 percent for the week, taking it to multi-year lows, fueled by concerns that Musk has been using, of late, the Tesla stock as a personal 'cash vending machine' as some analysts have put it.
Tesla shares closed at $150.23, losing $7.44.
Twitter Nightmare
"The Twitter nightmare continues as Musk uses Tesla as his own ATM machine to keep funding the red ink at Twitter which gets worse by the day as more advertisers flee the platform with controversy [increasingly] driven by Musk," Dan Ives of Wedbush wrote in a note, according to Yahoo Finance. "In late April Musk said he was done selling Tesla stock, instead the exact opposite has happened and put massive pressure on Tesla shares which have significantly underperformed the market since Musk took over Twitter in late October," he added.
Musk has been selling huge chunks of Tesla stock throughout the year even as he was embroiled in the controversial takeover of Twitter Though Musk did not give a reason for the latest sale, the big ticket sale is seen as an outcome of the expensive purchase of Twitter.
Investor Concerns
The overall value of the Tesla share sale by Musk since then stands at around $40 billion. According to a Tesla filing at the US Securities and Exchange Commission (SEC) following the latest share sale filed with, Musk's shares in Tesla are now worth about $66 billion. There has been increasing investor concern if Musk's obsession with Twitter was diluting the prospects of Tesla.
The latest stock selloff reveals Musk's increasing interest commitments arising from the expensive Twitter acquisition. Twitter had taken on $13 billion in debt including about $3 billion of unsecured debt on which the company is paying interest at the rate of 11.75 percent.
On the sidelines, Musk has also lost the crown of the world's richest man. He has suffered a $100 billion drop in his wealth in the current year so far, which resulted in him losing the top wealth tag to French businessman Bernard Arnault.
New Offer
Musk's latest share sale in Tesla is seen to be affecting the blue chip tech stock further. Tesla has seen more than 50 percent erosion in value in 2022. As of Wednesday, the value of Tesla shares on Nasdaq index stood at below $500 billion, compared with more than $1 trillion a year ago.
Meanwhile, other reports said Musk is looking for new investors in Twitter. Jared Birchall, the trusted lieutenant of Musk has approached potential investors this week, Reuters reported, citing news platform Semafor. According to the offer, Twitter shares would be offered to the potential investors at $54.20, the price at which Musk completed the Twitter acquisition.
