Tesla lost $ 126 billion of its market value as investors worried CEO Elon Musk might sell its shares to fund his $ 21 billion equity contribution in the $ 44 billion purchase of Twitter.
While Tesla was not involved in the Twitter purchase, its shares have been the target of speculators after Elon Musk did not publicly disclose where the money for the acquisition came from.
Analysts see the decline as stemming from investor concerns over the possibility of an upcoming stock sale by Elon Musk and he will be distracted due to Twitter.
However, the decline was not due to that factor alone but essentially Tesla shares were also affected by the fall in the technology-related stock market, which saw the Nasdaq close at its lowest level since December 2020 on Tuesday.
The gloomy outlook for slowing global economic growth due to the closure of Covid-19 in China and more aggressive interest rate hikes from the Federal Reserve (Fed) has weakened global stock markets.
Twitter shares also fell 3.9% on Tuesday even after Elon Musk agreed to buy it for $ 54.20 a share in cash.
As part of the Tesla deal, Elon Musk also issued a $ 12.5 billion margin loan tied to its Tesl shares. He has borrowed from about half of his shares.
