Tesla Shares Dip After CEO Elon Musk Makes Bid to Buy Twitter

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  • Tesla shares dipped Thursday morning after CEO Elon Musk offered to buy Twitter for $54.20 a share.
  • The chief executive would likely need to sell more Tesla shares in order to fund an acquisition.
  • Musk has been spending time pulling in and out of Twitter dealings over the last week.

Tesla shares closed down about 3.6% Thursday after company CEO Elon Musk offered to buy social media company Twitter.

Musk offered to buy Twitter for $54.20 a share, or about $43 billion, in a filing published Thursday. He said the social media company needs to be transformed privately. The offer comes a little over a week after another Securities and Exchange Commission filing revealed Musk's 9.1% stake in the company.

Wells Fargo analysts said in a note on Thursday they're concerned about the distractions Twitter would present for Musk.

"If the deal is successful, there are two concerns from a TSLA shareholder perspective," the Wells Fargo analysts said. "One, TSLA is currently in the early days of ramping two factories, Austin & Berlin, which will likely double its global capacity. Running Twitter would be a possible distraction for a CEO that already has a full plate. Two, the takeover financing terms are unclear. Elon's most liquid assets would be his TSLA shares valued at $170B."

"Therefore, there is a risk if he decides to sell more TSLA shares to fund the takeover, which could put pressure on the stock."

Shares of Tesla are down about 14% since Musk first revealed his stake in the company on April 4.

The acquisition offer is the latest development in Musk's Twitter saga over the last week. He first disclosed his stake in the social media giant on April 4. He later planned to sit on the company’s board of directors, if approved, but then reversed that decision.

Meanwhile, the Tesla CEO already finds himself in battles with regulators that tend to be public and messy, occasionally including vulgar taunts. Earlier this year, the SEC subpoenaed Musk and Tesla after he informally polled his tens of millions of Twitter followers, asking if he should sell 10% of his Tesla holdings. The majority of his followers voted yes.

Tesla recently achieved two major goals, opening new vehicle assembly plants in Germany and Texas. But now it is in the middle of a Covid lockdown in Shanghai that has forced it to suspend production at its factory there. Tesla also is still facing chip shortages, inflationary and other supply chain pressures plaguing the entire auto (and solar) industry.

Musk's aerospace venture, SpaceX, is also facing growing pains.

SpaceX has completed multiple high-altitude flight tests with its Starship prototypes, but the prototype's next major step is to reach space. Starship is the spacecraft the company is developing to one day embark on a mission to Mars. Its progress was delayed on multiple fronts last year, and an orbital flight test is now pending regulatory approval.

SpaceX needs a license from the Federal Aviation Administration to move ahead with the flight test, and a separate, key environmental assessment also is pending.

Twitter shares were up about 2.2% Thursday after closing at $45.85 a share on Wednesday.

CNBC's Lora Kolodny contributed to this report.

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