What happened

Tesla (NASDAQ: TSLA) shares have now plunged more than 20% in less than 20 days. There are several reasons for that, but a new catalyst now has the drop gaining momentum. Today, as of 10:34 a.m. ET, the stock was trading at its morning lows down 5.4%. 

So what

Today's move lower was sparked by the news that Tesla CEO Elon Musk has reversed course and now intends to follow through with his bid to purchase Twitter for his original offer price of $54.20 per share. Musk has been fighting in court to back out of the deal, but now intends to spend the full $44 billion he originally offered. That's likely the part that has Tesla shareholders on edge today. But it shouldn't be the only point of concern. 

Now what

Musk already sold about $20 billion in Tesla stock over a six-month period beginning late last year. He sold an additional $7 billion in August as the fate of his fight to back out of the deal remained uncertain, and he might be forced to pay the full amount. Now he has agreed to that, and Wedbush analyst Dan Ives thinks he might sell another $2 billion or $3 billion of Tesla stock, according to Barron's. 

But that's not the sole concern for Tesla shareholders. In taking over Twitter, Musk has to now lead a company he himself damaged with repeated claims of fake accounts and incorrect reporting metrics. Now he'll have deal with repercussions that could include lost advertising and other income streams. Investors are right to wonder whether that could take his focus away from Tesla at a time when the company is ramping up two new factories and fending off an influx of new competition. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Tesla shares dropped Wednesday appeared first on The Motley Fool Australia.

What happened

Shares of Twitter (TWTR 22.24%) soared today after Elon Musk finally agreed to buy the social media company for $44 billion, the original price he offered several months ago. The Tesla CEO's decision appears to conclude several months of legal wrangling as Musk had sought to get out of the deal by claiming, among other things, that bots were inflating Twitter's user base.

The stock popped shortly after noon when Bloomberg broke news of the deal. Twitter finished the day up 22.2% at $52 a share, 4% below the originally negotiated buyout price of $54.20.

So what

Seemingly to avoid an upcoming deposition and a court battle, Musk sent a letter to Twitter Monday night saying he intended to close the transaction as the two parties had initially agreed to back in April.

Twitter said in response that the company intends to close the deal with Musk at a price of $54.20 a share. The news seems to bring a monthslong saga to a close, though the fact that Twitter is still trading at a discount to the buyout offer indicates some skepticism among investors that the deal will close.

A deal could be completed as soon as this Friday.

Now what

A buyout seems to be the best option for Twitter shareholders because the social media platform never really fulfilled its potential as a business. User growth has stalled, and its advertising never developed the kind of targeting and value to small business that Facebook's did.

It's unclear where the company will go in Musk's hands, but he's likely to take risks with it that the current management otherwise wouldn't. 

The deal hasn't officially closed. Given that Musk seems to have been backed into a corner, it makes sense for him to finally go through with the purchase.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Twitter stock skyrocketed today appeared first on The Motley Fool Australia.