While Elon Musk was fighting over Twitter, he created three holding companies opening the door to a new “super corporation” that would include all of Musk’s businesses. Bloomberg reports that Musk created three new Delaware corporations Tuesday with variations of the name of “X Holdings.” It is not clear if Tesla and SpaceX would be connected with these holding companies, but as experts suggest, they would be connected with the purchase of Twitter.
Musk is identified as the president, treasurer, and secretary of the first company, X Holdings I Inc., likely to become Twitter’s parent company. Twitter would also merge with X Holdings II Inc. as part of the transaction.
According to experts, Musk, to consolidate his businesses under one roof, should follow the footstep of Google and other digital giants that were combined into a holding company called Alphabet Inc.
According to SEC filings, Musk plans to put the money in one of the corporations to support the purchase of Twitter through a tender offer: X Holdings III LLC would be used to help with financing the transaction.
Tesla Vs Twitter
Twitter stock (NYSE:TWTR) fell 3.9 percent on Tuesday to $49.68 as Musk had agreed to buy it for $54.20 per share. This market fear indicates that Tesla’s stock price plunge, which is where Musk gets most of his $239bn wealth (which includes Twitter), might cause Musk to reconsider the Twitter acquisition.
Musk also borrowed $12.5bn to finance his Tesla equity as part of the Tesla deal. Musk had borrowed against approximately half his Tesla shares before.
David Kirsch, a University of Maryland professor, who focuses his research on innovation and entrepreneurialism, stated that investors started to worry about Musk’s loans due to a “cascade of margin calls” by Musk.
Tesla’s valuation has been reduced by $126bn (PS100bn) amid concerns that Elon Musk might have to sell shares to pay for his $44bn purchase of Twitter.
Tesla stock (NASDAQ:TSLA) was targeted even though the company wasn’t involved in the offer. Musk, the chief executive of Tesla and its largest shareholder, is funding the Twitter transaction with $21bn and an additional $12.5bn loan.
Tesla’s stock loss of 12.2 percent on Tuesday equals $21bn in Tesla’s value, which is the same as the pledged cash stake in the Twitter transaction.
Analyst at Wedbush Securities Dan Ives said that Musk’s potential stock sales and the possibility that he is being distracted by Twitter are holding back the electric carmaker’s shares. But, he said, “This [is] creating an annual beer festival on its name.”
Oanda analyst Ed Moya said that if Tesla’s share prices continue to fall, his financing will be put at risk.
That was also due to poor trading conditions for IT companies. In addition, investors feared that the US Federal Reserve would increase interest rates and weaken global growth, which led to Tuesday’s Nasdaq closing at its lowest point since December 2020.
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