Musk has already pledged a large percentage of his Tesla stock to fund SpaceX. Now Musk is pledging most or a very large percentage of his remaining Tesla stock to purchase a company with very little earnings. The SpaceX loan and the proposed Twitter loan are or will be margin loans and so declines in Tesla stock affects how much Musk can borrow.
The stock price of Tesla has declined a great deal since this deal was announced. In the real world, shareholders evaluate all sorts of risks including the concept that a significant percentage of the ownership of the company may be subject to being disposed in a fire sale based on the results of the operations of a company that has little or no earnings.
Twitter has weak revenue in the real world which is why Twitter was unable to find a white knight and had to accept Musk's offer. I personally doubt that Musk will be able to change Twitter in such a fashion to increase revenue in any meaningful amount. If Musk wants to impose user fees on users, there will mask defections. If there was a viable way to increase revenue at Twitter, current management would have pursued it.
Currently Twitter is trading at around $45 a share which indicates that the market has significant doubts about this deal. Musk has one SEC cease and desist in effect due to Musk's 2018 "joke" announcement that he was taking Tesla private and there is a current SEC investigation pending on Musk's ignoring Section 13D of the Securites and Exchange Act (this is the SEC requirement that one notifies the shareholders and the SEC if one has more than 5% of the stock of a public company). There is one lawsuit pending on the 13D violation and at least one shareholder lawsuit pending on the transaction.
In the good old days, the shareholder lawsuit would be settled for some increase in the purchase price and the payment of legal fees to the strike lawsuit attorneys, but this deal may be fully priced already. I have not seen anyone simply ignore Section 13D in the way that Musk did, and that lawsuit and the SEC investigation will be fun to follow
Again, the use of margin loans to finance this transaction and the other factors listed above are good reasons for Tesla shareholders to be worried. I will be curious to see if this deal is consummated.
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