Tesla Shareholders Are Forced to Consider The Key-Man Risk as a Result of Elon Musk’s Stake on Twitter!
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Tesla shares fell as investors digested the likelihood of a new source of Musk’s distraction.
Elon Musk’s $43 billion unsolicited takeover proposal for Twitter Inc. is the first time he’s tried to purchase a full-fledged firm of that magnitude. His prior businesses, such as SpaceX and The Boring Company, were mainly developed in his image from the ground up.
At 10:53 a.m. on Thursday in New York, Tesla was down 3.8 percent. Since Musk declared a position on Twitter last week, the stock has dropped approximately 5.7 percent, which is more than double the drop in the broader S&P 500 Index during the same time period.
Tesla faces “substantial competition” as traditional manufacturers catch up with electric car development, according to Trainer. Shareholders may be concerned that if Musk’s offer for Twitter is granted, he will be taken away from the company’s operations, according to the Bloomberg Wealth Index. Tesla‘s product decisions are under Musk’s control, and the Cybertruck, Semi, and next-generation Roadster are set to enter manufacturing next year.
Elon Musk owns a significant stake in SpaceX, which last week completed the first private space flight. The firm is a key NASA contractor, and the delayed Crew-4 mission to the International Space Station is expected to take place on April 23.
Even if he employs executives to assist him in running his various businesses, Musk is far from a delegate. Elon Musk refers to himself as a “Nano-Manager” who is in charge of practically all critical decisions in his businesses. When the Model 3 production line was encountering problems, Tesla famously slept at the plant to monitor assembly.
Musk stated on Thursday that he has no faith in Twitter’s present management, implying that if he succeeds in purchasing the firm, he will not be hands-off.
According to Wells Fargo analyst Colin Langan, another risk facing Tesla owners is that Elon Musk may sell part of his stock in the company to pay for the Twitter transaction.
According to Langan in a research report, unloading some of them to pay for the acquisition could cause the stock price to fall. According to Langan, the completion of the expected financing is a condition of Elon Musk’s offer for Twitter, which means that at least some of the acquisition price would come from external references.