Tesla Stock Plunge Wipes Out $114 Billion

[Mark Kaine]

 

Summary

Tesla shares collapsed Tuesday as investors continued to digest the implications of Twitter’s acceptance of CEO Elon Musk’s $44 billion bid for the social media giant, tacking onto already-staggering losses (Oops)

 

 

Quotes

Quote

 Tesla shares fell as much as 11% Tuesday to $890, pushing the stock down more than 28% from its all-time high in November and wiping nearly $25 billion from Musk's fortune and $114 billion from Tesla's market capitalization, which now stands at $920 billion.

 

My thoughts

Very stably! Welp, he always seemed incredibly lucky, maybe his streak comes to an end sooner or later though? In any case, its interesting, i think his recent "acquisition" might be in jeopardy now, since paying up will get harder, what do you guys think?

Also will Tesla keep falling or will he be able to recover reasonably?

 

Sources

 https://www.forbes.com/sites/jonathanponciano/2022/04/26/tesla-stock-plunge-wipes-out-114-billion-in-value-as-twitter-deal-sparks-fears/?utm_campaign=forbes&utm_source=twitter&utm_medium=social&utm_term=Gordie

[Shreyas1]

So if I'm understanding this right, then the general belief is that Musk buying twitter involves him selling some tesla stock, which lowers the price. So the panic behind that itself is reducing the stock value?

 

Why doesn't this also happen when other billionaires purchase companies? Like when Bezos bought washington post, did amazon stock fall? Granted, I think it was much cheaper than twitter

[ebprince the computer nerd]

yes very sad, anyways

 

all jokes aside the entire market plummeted today, with stocks and crypto. google missed earnings, nasdaq tanked almost 4% today, and all around a bad day.

[Zodiark1593]

Considering the massive valuation increase over the past couple years for Tesla, I think investors will survive.  My condolences for Netflix holders though. 

[niofalpha]

7 minutes ago, ebprince the computer nerd said:

yes very sad, anyways

 

all jokes aside the entire market plummeted today, with stocks and crypto. google missed earnings, nasdaq tanked almost 4% today, and all around a bad day.

Tesla composes roughly 5% of the Index so a lot of it can be blamed on Tesla. Due to some fancy market magic related to ETFs, Tesla definitely contributed to the overall decline.

 

Plus with Netflix missing earnings, lots of investors are sheepish on Tech at the moment. MS beats earnings, and Google missed, so we're probably seeing the trend continue for the foreseeable future.  

[Mark Kaine]

1 minute ago, Zodiark1593 said:

Considering the massive valuation increase over the past couple years for Tesla, I think investors will survive.  My condolences for Netflix holders though. 

Yeah, i know the tesla stock is massively over valued, I guess we just have to wait and see how far and for how long it falls, its hard to predict?

 

I just cant get over all the implications this has, wasn't he supposed to keep his money together... I mean, while it looks all rosey right now, SpaceX is all but secured in the future (afaik) like he needs every cent, quite literally... so that doesn't look good for once.

 

28 minutes ago, Shreyas1 said:

So the panic behind that itself is reducing the stock value?

 

Why doesn't this also happen when other billionaires purchase companies? Like when Bezos bought washington post, did amazon stock fall?

I guess its panic, but bezos acquisition also kinda made sense, musks recent one arguably doesnt. 

[pstrick2]

26 minutes ago, Shreyas1 said:

So if I'm understanding this right, then the general belief is that Musk buying twitter involves him selling some tesla stock, which lowers the price. So the panic behind that itself is reducing the stock value?

 

Why doesn't this also happen when other billionaires purchase companies? Like when Bezos bought washington post, did amazon stock fall? Granted, I think it was much cheaper than twitter

Musk took out a margin loan against his Tesla stock to afford Twitter. It was probably around a 14 Billion dollar loan.

 

Margin loans require the underlying asset (TSLA stock in this case) to maintain a certain value. If it drops below this, the loan gets 'margin called'.

 

If Musk gets margin called, he owes the balance of the loan immediately. Like same day. The person who gave him the loan also has the ability to force the sale of assets (TSLA stock) to get their money.

 

So TSLA is dropping because Musk just handed control of over 1 million shares to somebody who doesn't care about the company. If TSLA drop below $600 (or somewhere around there), Elon could have a substantial portion of his Tesla ownership unloaded at whatever the stock is selling for on the open market.

TSLA is also dropping because Musk hasn't disclosed any of this. It's possible that his shares are safe, but investors don't like that much risk.

[Mark Kaine]

7 minutes ago, pstrick2 said:

If Musk gets margin called, he owes the balance of the loan immediately. Like same day. The person who gave him the loan also has the ability to force the sale of assets (TSLA stock) to get their money.

Oh, i see now... well, but i dont think he expected such a big plunge, its huge isnt it? (and it may continue for some time) 

[Zodiark1593]

3 minutes ago, Mark Kaine said:

Oh, i see now... well, but i dont think he expected such a big plunge, its huge isnt it? (and it may continue for some time) 

10% on something like Apple would be pretty huge. Tesla is fairly volatile, so 10% isn’t far out of line for it. 

[Kisai]

3 minutes ago, Mark Kaine said:

Oh, i see now... well, but i dont think he expected such a big plunge, its huge isnt it? (and it may continue for some time) 

Kinda. A Margin call for "rich" people is different. A company that gets margin called goes bankrupt, instantly, if they can't make up the difference, their company is the equity.  A person, especially a rich person is basically shielded to losses in the margin account. A Bank can't just go "hey Elon doesn't have enough shares of X, give us more." 

 

On the other hand, this could also be a short-squeeze, which would be hilarious.

 

 

[pstrick2]

1 minute ago, Mark Kaine said:

Oh, i see now... well, but i dont think he expected such a big plunge, its huge isnt it? (and it may continue for some time) 

The drop today was massive. It's hard to say if Elon expected anything like this. I can't figure the guy out.

 

Tesla stock is so weird. There has been a lot of talk about how it's extremely overvalued, yet it continues to rise.

It's certainly possible that this is the catalyst that will drive the stock down to the low hundreds.

 

Or it could reverse tomorrow and hit an all time high.

[Donut417]

1 hour ago, Mark Kaine said:

what do you guys think?

The economy is in a sad place right now. There is a lot of confusion and concern about inflation and how the Fed is going to combat it. The Fed has already raised interest rates but has indicated they might RAISE interest rates. The issue is they are kinda half in and half out on the idea. With all the uncertainty its pushing the market lower. Things are so screwed up that I heard the US government has stopped the switch over from Winter fuel to Summer fuel in order to prevent the economy from slipping out of control (Summer Fuel is more expensive), because they feel that the economy couldn't take the higher prices. 

[Forbidden Wafer]

Not sure it has anything to do with Twitter. The overall market is tanking quite hard. Things that were supposed to be improving are not (e.g. supply chains, oil and food prices).

[Donut417]

4 minutes ago, Forbidden Wafer said:

supposed to be improving are not (e.g. supply chains, oil and food prices).

Well most of that is caused by inflation. Because you cant just print shit loads of cash and inject it in to an economy without bad things happening. Which is effectively how the US government has been operating over the last two years. Im sure other governments are just as guilty. 

[Blade of Grass]

18 minutes ago, Kisai said:

Kinda. A Margin call for "rich" people is different. A company that gets margin called goes bankrupt, instantly, if they can't make up the difference, their company is the equity.  A person, especially a rich person is basically shielded to losses in the margin account.

No? They’re still personally liable for the loan, same as a company.

18 minutes ago, Kisai said:

On the other hand, this could also be a short-squeeze, which would be hilarious.

What could be a short squeeze?

[ebprince the computer nerd]

2 hours ago, niofalpha said:

Tesla composes roughly 5% of the Index so a lot of it can be blamed on Tesla. Due to some fancy market magic related to ETFs, Tesla definitely contributed to the overall decline.

 

Plus with Netflix missing earnings, lots of investors are sheepish on Tech at the moment. MS beats earnings, and Google missed, so we're probably seeing the trend continue for the foreseeable future.  

I never knew that Tesla composes THAT much of the index. Yeah, Netflix lost basically a third of its value in a day and Microsoft barely went up after earnings were announced green.

I personally myself have invested into tech stocks, and I am feeling the pain. I personally think that airline stocks are still a hit and miss, but motor and restaurant/retail stocks will be rising since mandates are lifting at a good pace and people need cars again. I think this will be a good mix for the market away from the big tech stocks like Apple, Google, Amazon, Tesla, etc.

[ebprince the computer nerd]

1 hour ago, Zodiark1593 said:

10% on something like Apple would be pretty huge. Tesla is fairly volatile, so 10% isn’t far out of line for it. 

I disagree. Yeah, 10% on Apple will kill the stock, but Tesla fell 13%, or about $130 today. That is a ton of money gone from the stock price. 10% on Apple would make the company lose probably $150-200 billion of the company wiped, but then again, Tesla lost this much as well. I would say the impact on both is pretty even.

[SansVarnic]

-= Moved to GD =-

Does not meet the definition of Tech News.

[Sauron]

5 hours ago, Shreyas1 said:

Why doesn't this also happen when other billionaires purchase companies? Like when Bezos bought washington post, did amazon stock fall?

I think it's the size of the purchase and the doubt around whether Twitter is actually going to earn him that money back. Bezos bought the WaPo for 250 million, which is a lot for us but pennies for him - even if he proceeded to set fire to it it wouldn't have made a dent in his finances. 44 billion is another matter entirely...

 

Anyway the stock market is basically gambling, what it does doesn't always make sense. Tesla was also clearly overvalued. It would be kinda funny if the decision to purchase twitter ended up ruining Musk though.

[RoseLuck462]

Good time to buy some Tesla stock.

[Mark Kaine]

8 hours ago, Kisai said:

On the other hand, this could also be a short-squeeze, which would be hilarious

I looked this up... how would it be a short squeeze? You mean by the loaner? Because otherwise this doesn't look like the gamestop thing , gamestop was basically bankrupt,  tesla still is doing fine, its just their stocks are inflated/overvalued... 

 

But im in no way saying i understand how this all works, just curious? 

 

 

7 hours ago, ebprince the computer nerd said:

I never knew that Tesla composes THAT much of the index. Yeah, Netflix lost basically a third of its value in a day and Microsoft barely went up after earnings were announced green.

I personally myself have invested into tech stocks, and I am feeling the pain. I personally think that airline stocks are still a hit and miss, but motor and restaurant/retail stocks will be rising since mandates are lifting at a good pace and people need cars again. I think this will be a good mix for the market away from the big tech stocks like Apple, Google, Amazon, Tesla, etc.

Yeah this could be somewhat like the perfect storm, inflation, uncertainty, hostlie twitter takeover, etc...

 

7 hours ago, Forbidden Wafer said:

Not sure it has anything to do with Twitter. The overall market is tanking quite hard. Things that were supposed to be improving are not (e.g. supply chains, oil and food prices).

yeah, as above might be kind of a market normalization,  and the twitter buyout with tesla stock certainly didn't help .

[TetraSky]

So Bill Gates who shorted it (and Musk being mas about it) will be happy.

[Action_Johnson]

BUY. THE. DIP.