Since Tesla and SpaceX CEO Elon Musk first announced his intentions to buy the social network Twitter, his net worth has dropped $49 billion. That’s partially because he sold off some Tesla stock to fund the deal. He is still the richest man on the planet, with a net worth of $210 billion, ahead of Jeff Bezos, who is worth $131 billion.
Both billionaires lost substantial money on paper as the Dow Jones Industrial Average plummeted by nearly 3% over the past few days. Most of their wealth is tied up in stocks for their respective companies, so as the stock market fluctuates, so does their total net worth.
However, Musk’s recent tweets may also be a net negative concerning Tesla stock prices. The market as a whole is down but, in the past, when Musk stirred up controversy, Tesla stock tended to fall. This time, perhaps Tesla stock’s fall is dragging Twitter stock down with it.
But the real question, for stockholders, is not about who loves or hates Musk — and his outspoken ways on Twitter — but should you buy, sell or hold the assets?
Should You Buy, Sell or Hold Tesla Stock?
Tesla is currently trading just over $700 and is 40% down from its high for the year. Tesla bull Leo Koguan asked the company, in a tweet, to buy back $15 billion in shares through 2023, CNBC reported this morning.
Stock buybacks, CNBC reported, are a way for firms to return capital to their shareholders — and such a move could raise the stock price. Of course, there’s still talk of a split with the company’s stock — and a strong Q1 report supports the idea that Tesla will continue to grow. But factory shutdowns in China, continued supply chain issues and the Twitter deal are hampering the stock’s value.
In spite of being rated the favorite stock of millennial and Gen Z investors, Tesla could be a risky proposition right now, Investor’s Business Daily says. MarketSmith chart analysis shows Tesla trading below its 50-day line, with a buy point of $1,208.10, IBD reported two days ago.
What Should You Do with Twitter Stock?
There’s a lot less to risk when making market decisions regarding Twitter, which has seen a 52-week high of $73.34 and a low of $31.30. The stock plummeted roughly 70 cents at market open but by mid-morning was already starting to climb again, showing a loss of just 0.52% for the day, so far. At roughly $36, it’s still close to its 52-week low.
In the past week, Twitter lost three senior employees, Bloomberg reported, as they await the terms of the acquisition. Musk recently took Twitter to task for the number of bots and spam accounts on the network and asked the SEC to investigate. In a statement to CNN Business on May 17, Twitter said it intends to “close the transaction and enforce the merger agreement.”
Whatever happens, however, CNN Business analysts Clare Duffy and Catherine Thorbecke wrote: “Musk has created a big mess for Twitter, the effects of which won’t be easily or quickly undone. And in the meantime, the company’s employees, users and shareholders hang in the balance.”
In a situation like this, some investors might consider buying Twitter stock while it’s low and holding onto it for the long haul. But if the deal goes through, there could be no such opportunity, Mallika Mitra of the Money Research Collective writes. “If the deal goes through, Twitter will become a private company. Investors wouldn’t be able to buy Twitter stock anymore, and existing shareholders would get a payout of $54.20 for every share they own.”
Some experts are recommending investors steer clear. Matthew Tuttle, CEO of Tuttle Capital Management, was quoted by the Money Research Collective: “If the deal does not go through, which is a big IF when dealing with Elon Musk and all the baggage that comes with him, the downside is pretty huge.”
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