Tesla (TSLA) shares moved lower Monday amid reports that CEO Elon Musk is nearing closure on his $43 billion takeover of Twitter (TWTR) and officials in Shanghai extended their Covid lockdown into a fourth week.
The Wall Street Journal said Twitter is in 'advanced' talks with Musk, adding a deal could be made public as early as this week. Bloomberg reported the deal could be announced as early as today.
Musk has financing in place for his 'best and final' offer for Twitter that is linked to his current 173 million in Tesla shares, around 88 million of which are pledged against various personal loans. Yet even with funding of around $46.5 million established, Musk is likely to offload billions in Tesla stock in order to reach his suggested contribution of between $20 and $30 billion.
A successful Twitter takeover would also heap another significant challenge on top of the billionaire's growing leadership portfolio, which includes space exploration group SpaceX, The Boring Company construction company and neurotechnology specialists Neuralink Corp.
Tesla shares were marked 0.3% lower in early trading Monday to change hands at $1,000.79 each, a move that takes the stock back to levels just after its better-than-expected first quarter earnings last week.
The stock was also pressured by news that Shanghai reported 51 Covid deaths yesterday, the highest total of the year so far, with total new infections rising to 19,500.
Officials are ordering mandatory testing for millions of residents in the country's biggest city -- as well as in the capital of Beijing -- and plan to extend tough lockdown rules into at least the next month.
Tesla said last week that quarter deliveries should be flat -- or "maybe slightly lower" -- when compared to the first three months of the year thanks in part to the multi-week shutdown of its Shanghai gigiafactory -- which made around half of the group's cars last year -- amid China's 'zero Covid' crackdown.
Shanghai reported 51 Covid deaths yesterday, the highest total of the year so far, with total new infections rising to 19.500.
Tesla posted stronger-than-expected first quarter profits last week, as well as record sales, with Musk telling investors there was a ""reasonable shot" for 2022 deliveries to rise 60% from last year, thanks in part to the ramp-up of production facilities in Berlin and Austin.
"I think notwithstanding new issues that arise, I think we will see a record output per week from Giga Shanghai this quarter, albeit we are missing a couple weeks," Musk told investors on a conference call last week. "So that means that most likely vehicle production in Q2 will be similar to Q1, maybe slightly lower."
"But it’s also possible we may pull a rabbit out of the hat and be slightly higher, but it should be roughly on par. But then, Q3 and Q4 will be substantially higher," he noted.
