New Delhi: Elon Musk’s Tesla has been under constant selling pressure since the mercurial technocrat picked up a stake in the social media platform Twitter.
Shares of Tesla have dropped about 24 per cent from the month’s peak as experts believe that Musk would need to liquidate his holding to make his contribution to the $44 billion buyout deal.
Viram Shah, co-founder & CEO, Vested Finance, said that Musk has committed to providing $21 billion of equity, which is spooking traders.
“There are two key fears — Musk’s focus over EV markets, which if shaken, may hinder Tesla’s growth and more painful, liquidation of stake in Tesla by him to only fund the deal.”
Tesla’s market cap has taken a hit worth $230 billion since April 4 dropping to a little over $911 billion on Wednesday, April 27, from $1.14 trillion on the given date.
Indian investors can assume the magnitude of the fall as the lost m-cap is a little less than the total market cap of Reliance Industries ($248 billion) itself.
Vinay Bharathwaj, co-founder and Co-CEO of Stockal, said that there is no clarity over monetisation
strategy of Twitter and it may appear like a frivolous bet to most stakeholders, causing a short term impact on Tesla’s stock price.
“There will be questions over the entire deal structure as the Tesla shareholders will not witness any clear value for them in this decision in the short term,” he added.
As part of the Tesla deal, Musk also took out a $12.5 billion margin loan tied to his Tesla stock. He had already borrowed about half of his Tesla shares.
It is clear that without the direct involvement in the Twitter deal, Tesla stocks are facing the heat. Furthermore, the latest correction in technology shares is intensifying the largest auto player in the world.
According to data by Vested Finance, about 10 per cent of total buying volume has been into Tesla. The net buying volumes of Tesla trebled on April 25, the platform said.
“Tesla is in top ten since the start of April and currently it is at number 1 when it comes to most popular stocks on the Vested platform,” Shah said in a reply to ETmarkets.com’s query.
Even on Stockal’s platform majorty investors are holding Tesla stocks and it continues to be one of the most popular stocks on our platform.
“As long as Tesla beats the delivery expectations, QoQ results and continues to bring forth innovative products, the company should operate fine,” Stockal’s Bharathwaj said.
Tesla announced strong results last quarter, where revenue increased by 81 per cent to $18.8 billion. The company had posted record earnings, signaling a sound growth outlook for the company.
Interestingly, its operating margins zoomed 3.5x over the same period last year, registering an increase to 19.20 per cent from 5.40 per cent, despite supply chain issues and increased raw materials costs.
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