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Elon Musk’s $44 billion acquisition of the social media app formerly known as Twitter might cost him billions in Tesla stock, according to reports.
With X/Twitter’s main source of revenue, advertising, down over 80% since Elon Musk took over in October 2022, a report from Fortune posits that Musk will have to provide a fresh injection of cash into the company to ‘salvage’ his takeover, and in order to do that, he may sell off shares of Tesla to raise money.
“The last publicly available figures prior to Musk’s acquisition, from Q2 of 2022, had revenue at $661 million. After you account for inflation, revenue has actually collapsed by 84%, in today’s dollars.”
“I would be expecting something between $1 and $2 billion in stock [sold by Musk],” said Bradford Ferguson, president and chief investment officer of asset manager Halter Ferguson Financial, in comments posted to YouTube on Wednesday. This alone could cause the stock to lose between 5% and 10% of its value. “It’s a massive hole they need to plug.” [via Fortune]
While there are multiple reasons behind X/Twitter’s collapse in revenue, Musk famously telling potential advertisers to “Go f— themselves” certainly didn’t help. The social media app has also seen a rise in hate speech since he purchased the company, another factor that’s been turning off potential advertisers.
Fortune notes that while “no one knows” how much longer X/Twitter will survive, Musk previously stated that it could face bankruptcy due to what he calls an advertising “boycott,” which is actually just companies exercising their rights in the free market to promote their brands wherever they see fit.
Most recently, Musk made news for wondering why there haven’t been any assassination attempts on Vice President Kamala Harris and her Democratic running mate, Minnesota Governor Tim Walz. Musk later deleted the post and explained that the “joke” was “funnier in person.”