Elon Musk is Tesla (TSLA) .
It’s hard to separate a visionary entrepreneur from the company he’s running.
The technology group — Tesla develops human-like robots and software using artificial intelligence — and the company’s overall energy owes its place in one of the world’s most valuable companies to Musk’s ambitions and vision.
The billionaire’s bets have paid off so far. The entire auto industry is now focused on developing electric vehicles. Car manufacturers are also starting to develop in-house software to make their cars autonomous.
Musk has also innovated by providing routine over-the-air updates to the software that supports the vehicles. Competitors are now also considering embracing Tesla’s marketing model of direct-to-consumer sales, along with their traditional sales through dealerships.
Musk and Tesla are causing a fundamental turmoil in the auto industry, and investors are joining in. They proved it again after the billionaire revived his bid to acquire Twitter (TWTR) A $44 billion microblogging platform.
Lots of money – but investors are worried
Musk is the richest man in the world – his fortune is estimated at $222 billion as of October 5, according to the Bloomberg Billionaires Index.
But the idea of him financing such a huge deal clearly worries investors. His fortune is not liquid. It is largely related to his stock in Tesla. Musk owned 155 million of them as of August and has an option to buy another 100 million. This gives him control of 20% of the company’s outstanding shares.
While the billionaire was able to get support from seven major banks and third parties to help fund the deal, investors fear he still has to sell additional shares in Tesla to raise what he needs to close the deal.
In August, the billionaire sold $7 billion of Tesla stock in order to fund the acquisition of Twitter. On August 9, when an investor and Tesla fan asked Musk if he had finished selling Tesla stock, he answered clearly.
“Yes,” Musk said on Twitter. “In the (hopefully unlikely) event that Twitter forced this deal to close* and some of the equity partners did not conclude, it is important to avoid an emergency sale of Tesla stock.
But the environment has changed since then. The instability and volatility started due to fears of a possible recession as the Federal Reserve aggressively raised interest rates.
That puts pressure on the seven banks — Morgan Stanley, Societe Generale, BNP Paribas, Mizuho, Barclays, Bank of America and MUFG — which pledged on April 25 to provide them with nearly $13 billion.
Musk still has to find at least $6 billion to complete the operation, according to various calculations by experts.
“TSLA is likely to underperform the dollar as long as @elonmusk remains silent on whether it should sell more TSLA shares in dollars,” said Gary Black, investor and bull of Tesla. “However, if the banks pull the plug on $12.5 billion of required debt, Elon can walk away and pay a $1 billion termination fee. In this case, the TSLA jumps 5-10% and the TWTR dollar collapses into the mid-30s.”
Donate caviar to buy a $2 slice of pizza
Dan Ives, an analyst at Wedbush Securities, said the revival of Musk’s Twitter acquisition is bad news for Tesla.
In an interview with the BBC, Ives said that Musk would have to sell more Tesla shares to fund the Twitter deal, which could cause Tesla stock to fall.
“This is like giving up caviar for a $2 pizza,” Ives said.
Tesla shares fell nearly 4% in the October 5 trading session, the first session after confirming that Musk had brought his offer back to the table.
Besides funding, investors are also wondering if Twitter will be a distraction for Mask as Tesla ramps up production capacity and has a jam-packed product roadmap: Tesla Semi, Cybertruck, Optimum, a humanoid and a robotaxi, all in just the next. Two years.
On the other hand, the billionaire seems to have big ambitions for Twitter, which is part of a global project to launch a kind of Chinese-style super application that combines social networking, payments, a shopping platform, and more.
“Twitter is an accelerator for achieving http://X.com’s original vision,” Musk reiterated on October 5.
There is no WeChat equivalent outside of China
In fact, during an internal session with Twitter employees on June 16, Musk said his model is WeChat, the Chinese app that blends social media, payments, games, messaging, airline ticket booking, food ordering, shopping, and more.
“There is no WeChat equivalent outside of China,” Musk said. “You basically live on WeChat in China. If we can recreate that with Twitter, we’ll be a hit.”
Basically, it will be a competitor to Meta Facebook and Instagram (dead) tik tok, uber (Uber) Amazon (AMZN) apple (AAPL) and the alphabet (The Google) .
Musk has always been very effective at multitasking. He already runs Tesla, SpaceX, Neuralink, and Boring Co. All of them are major players in their respective industries.