Tesla misplaced $126 billion in worth as particulars of CEO Elon Musk's deal to purchase Twitter emerged, complicating the tech mogul's plans to take over the social media platform.

The value of Tesla shares on Tuesday dropped by over 12 p.c following information that Musk could be developing with near half the cash for the roughly $44 billion deal to buy Twitter. The sharp lower within the worth of Tesla shares additionally means a monetary hit for Musk, the corporate's largest shareholder, as he seeks to seal the cope with Twitter.

As a part of the deal introduced Monday, Musk agreed to offer $21 billion in fairness to purchase the social media platform. Musk is presently the world's richest man, in response to Bloomberg's Billionaire Index, with a value of $252 billion. A lot of his wealth is tied up in Tesla, proudly owning about 17 p.c of the corporate's shares.

Developing with the cash to buy Twitter might imply Musk must promote shares in Tesla, sending the corporate's inventory worth tumbling.

Tesla NYC
Tesla shares on Tuesday dipped barely in afternoon buying and selling after CEO Elon Musk reached an settlement to amass Twitter. Above, an inside view of a Tesla showroom in New York Metropolis on April 26, 2022.Kena Betancur/Getty Photographs

Tesla shares dropped in November after Musk tweeted a ballot asking his followers if he ought to promote 10 p.c of his shares within the firm. Share costs continued to fall after Musk offered over 5 million shares value $5.69 billion.

The corporate acknowledged the connection between its worth and its CEO's choice to unload inventory in a submitting with the Securities Change Fee (SEC) earlier this 12 months.

"If Elon Musk have been compelled to promote shares of our frequent inventory that he has pledged to safe sure private mortgage obligations, such gross sales might trigger our inventory worth to say no," reads the submitting.

The submitting additionally states that banks have made loans to Musk partially secured via inventory owned by the CEO. If the worth of the inventory declines, Musk could possibly be compelled to promote shares of Tesla to pay again the loans.

"Any such gross sales might trigger the worth of our frequent inventory to say no additional," the submitting reads.

Musk is also on the hook for more cash. A brand new SEC submitting on Tuesday said that each Twitter and Musk could possibly be required to pay a $1 billion termination charge if the deal falls via or a scenario arises that "would trigger the associated closing circumstances to not be happy," in response to the submitting.

Every week earlier Tesla posted a document quarter with income of $16.86 million, an 87 p.c year-over-year improve, regardless of provide points.

Newsweek has reached out to Musk for remark.