Elon Musk may have to sell shares in his company, Tesla, in order to complete the controversial Twitter acquisition.
According to Arab Net, US economic analysts said that Musk may have to sell up to $ 10 billion worth of Tesla shares he owns.
According to a report by Business Insider, Musk may sell this huge amount of his shares in Tesla within the next few days.
Wedbush analyst Dan Ives said in a note Friday that Elon Musk may have to sell between $5 billion to $10 billion of Tesla stock next week to be able to complete the $44 billion purchase of Twitter.
Musk currently has $12.5 billion, but he is looking for outside investors to come in and help make another $32 billion he needs to close the Twitter deal, while analysts say the current bleak stock market environment makes it more difficult for Musk to convince investors of the opportunity to invest in Twitter.
It's very simple, the more investors save this deal, the more money Musk will need to contribute and thus sell more Tesla shares, Ives continued.
The deadline for the deal is set for October 28, which means that Musk faces a watershed week, which means he is likely to sell Tesla shares within the next few days.
Ives described the situation as brutal for Tesla investors, as they will eventually have to bear the brunt of potential Musk stock sales.
Musk's stock sales will come at a time when the electric car company is considering a first-ever share buyback of between $5 billion and $10 billion, Musk himself said following the announcement of third-quarter earnings last Wednesday.
To make matters worse, Ives says, Musk's deal to buy Twitter is not a good deal at its current price.
Twitter's $44 billion price tag is just a train wreck, Ives said, with fair value at best in the $30 billion range amid daunting growth challenges like Mount Everest.
Recent reports suggest that Musk may cut Twitter staff by up to 75% when he takes over the company, but Ives doubts that such deep cuts will make the deal better.
Clearly, massive cuts in staffing and expense controls have to be done on a $44 billion leveraged deal, Ives says, and Twitter has been long overdue in cutting costs due to lack of growth.
