Tesla (TSLA) shares rose more than 2.5% during the regular session on July 8 and advanced a further 2.3% during after-hours trading. The stock’s rise followed Elon Musk’s decision to quit the Twitter (TWTR) buyout deal. Musk is the CEO of Tesla, the world’s leading electric vehicle (EV) company.
In a deal that valued the social media company at $54.20 per share, Musk agreed to acquire Twitter for $44 billion in cash. However, he is no longer seeking to complete the transaction. The billionaire blames Twitter for allegedly violating terms of the agreement for his decision to abandon the deal. Musk had intended to use his Tesla shares to finance the Twitter acquisition.
Tesla Investors Cheer the Twitter Deal Collapse
Tesla shareholders have been wary of Musk’s Twitter deal from the start. For example, Tesla shares fell after Twitter’s board accepted Musk’s buyout offer. The stock rose after Musk said he was temporarily putting the Twitter deal on hold.
Apart from Tesla, Musk oversees several other companies, including the Boring Company, SpaceX, and Neuralink. Tesla investors have appeared concerned that buying Twitter would distract Musk.
Additionally, Musk’s reliance on Tesla stock to fund the Twitter deal has made some investors uncomfortable. For example, Tesla stock could drop sharply if Musk sold a large number of his shares in the company to finance the Twitter deal.
Wall Street’s Take on Tesla
The Street is cautiously optimistic about Tesla stock with a Moderate Buy consensus rating, based on 16 Buys, eight Holds, and six Sells. The average Tesla price forecast of $867.41 implies 15% upside potential to current levels. Shares have declined 37% year-to-date.
Blogger Are Bullish About TSLA
TipRanks data shows that financial blogger opinions are 68% Bullish on TSLA, compared to a sector average of 63%.
Key Takeaway for Investors
While Tesla investors may be happy to see Musk get out of the Twitter deal, they cannot celebrate yet. Musk may only be seeking to renegotiate the Twitter buyout price rather than walking away outright. Moreover, Musk may not have the last say on how the matter ends when it goes to court, considering Twitter has sought to enforce the buyout agreement.
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