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Will Elon Walk Away?

Elon Musk
Photo by Axelle/Bauer-Griffin/FilmMagic
William D. Cohan
May 1, 2022

It appears that Elon Musk is serious, or serious enough, about buying Twitter that he has begun unloading a substantial portion of his stake in Tesla—and collateralizing billions of dollars more—to furnish the $44 billion in cash he has promised the Twitter shareholders. Of course, as I wrote earlier this week, the fate of this deal over the next several months will likely come down to whether Tesla stock holds up. If it does, I think Elon will end up buying Twitter. (I still can’t figure out for the life of me why he wants to own it, but that’s a discussion for another day.) If it doesn’t hold up, I think he pays the $1 billion break-up fee, walks away from the deal and moves ahead with his famous Plan B. 

But let’s not get ahead of ourselves quite yet. In the last month or so, since the histrionics started, the Tesla stock is down 20 percent, reducing the value of the electric carmaker to $900 billion. If we slice the pie a little finer and look at the performance of the stock since April 25—the day Elon and the Twitter board of directors signed a merger agreement, making the deal a lot firmer—it is down 13 percent. Remarkably, however, the stock dropped less than 1 percent on Friday, after Musk announced that he had sold $8.5 billion of his Tesla stock, or 5.6 percent of his holdings, over the previous several days. That’s a negligible reaction considering that the rest of the market fell out of bed. The Nasdaq, where Tesla trades, was down 4.2 percent on the day. So that’s relatively good news for Elon, assuming he really wants to go through with this thing.