Talk of the town is Elon Musk’s Twitter deal and how he planned to secure that deal. However, as the deal is in jeopardy, it is unclear what the future of Tesla stocks holds.
“Elon Musk will most probably sell Tesla shares regardless of if he buys Twitter or not,” said Mike Loukas, CEO of TrueMark Investments. He is not alone in this. His theory echoes the sentiment of 68% of surveyed people. “But if investors are really reading too much into it, they’re most likely not seeing the forest through the trees.” he added.
That could signal a further crash for Tesla stock, which is down about 16% this year, which accounts for more than the 13.3% decline in the S&P 500. The Texas-based company has been shaken by supply-chain issues and shortages, Covid 19-related lockdowns in China, and plain and straightforward confusion surrounding Musk’s pursuit of Twitter.
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Elon Musk, who is 51, is the world’s richest person, with a fortune of $260 billion, derived mainly from his stake in Tesla. But he’s been selling his shares as of late. In November, Elon conducted a Twitter poll regarding selling 10% of his position and then really proceeded to sell more than 15 million shares over the next few months.
In April 2022, Musk offloaded about 9.4 million Tesla shares after his deal to buy Twitter. This amounted to $25 billion worth of stock that Elon sold in the span of six months. The deal was the talk of the town, and Elon was hailed by some and hated by some for his decision to but Twitter. However, as of today, he is attempting to back out of the agreement, which will be the focus of a fast-tracked October trial in Delaware Chancery Court, where his odds of winning are slim.
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Whatever the outcome of the trial, investors expect that shareholders of Tesla will welcome an end to this matter.
“If his stock sale is followed by a final agreement that puts the Twitter mess behind him, Tesla could rally,” said Steve Sosnick, chief strategist at Interactive Brokers. “A conclusive end to Twitter would remove a distraction and theoretically allow Musk to concentrate more on Tesla.”
The threat of competition for Tesla in the electric vehicles market looms large, with most global automobile manufacturers working on their own EVs. This has come about as the demand for electric vehicles has increased quite sharply due to a steep increase in fuel prices.
Those broader concerns were on the minds of the investors who responded to the survey conducted earlier, resulting in a careful note. They expect value stocks to perform significantly better than growth shares over the span of six months, though the largest technology companies are more likely to post at least decent gains from here through year-end.
According to an internet poll done recently by a famous corporation, 50% of people were of the opinion that Elon Musk, who was No.1 on the list of wealthiest people, will be dethroned soon. Given his backing out of the Twitter deal and dissolving his Tesla stock, this may be, in actuality, true. But, let us see if the genius entrepreneur can cross this hurdle as he has done before!