An analyst is using a food analogy to describe the potential of the world’s richest man needing help to finance his acquisition by selling shares of leading electric vehicle company Tesla Inc (NASDAQ:TSLA).
What Happened: On Tuesday, it was announced Tesla CEO Elon Musk sent a new proposal to social media platform Twitter Inc (NYSE:TWTR) to acquire the company for $44 billion, or $54.20 per share.
The acquisition is at the original price set earlier this year by Musk before he walked away from the deal.
Earlier this year, Musk sold shares of Tesla on two occasions with financing the Twitter deal among the reasons cited.
Wedbush analyst Daniel Ives has been skeptical of Musk buying Twitter since it was announced and shared that opinion during an interview with BBC Wednesday.
Ives used a food analogy of an expensive item and a cheap item to compare selling Tesla shares for Twitter.
“That’s like me giving away caviar to buy a $2 slice of pizza,” Ives said.
The analyst’s comments echoed his previous take that Tesla will be more valuable in the long run and Musk shouldn’t sell his shares.
Musk sold shares of Tesla in August and cited the reason as being the “unlikely event that Twitter forces this deal to close.”
The Tesla CEO said the sale was to help avoid “an emergency sale of Tesla stock.”
With financing lined up for the new acquisition proposal, it remained to be seen if Musk will have to sell more Tesla shares to help finance the deal. Ives is worried more Tesla shares will be sold by Musk to help ultimately finance the deal.
Ives had a Hold rating on Twitter with a price target of $54.20.
Why It’s Important: While Ives was critical of the Twitter acquisition, the analyst said submitting the new proposal to Twitter could prevent a long and unnecessary court battle.
“Writing was on the wall he could not win in Delaware and this saves both sides a long and ugly court battle ahead,” Ives said. “Musk will now own the Twitter platform as an end to this saga and soap opera that began in April.”
Ives had an Outperform rating on Tesla shares and a price target of $360.
Musk is the richest person in the world with a wealth of $222 billion, according to the Bloomberg Billionaires Index. Much of Musk’s wealth is tied to his ownership stakes in Tesla and SpaceX, of which he is the CEO of both.
After the August sale of Tesla shares, Musk owned 155,039,144 shares of Tesla, representing 14.9% of Tesla’s outstanding shares. The share count was before a three-for-one stock split occurred in August 2022 and doesn’t include unlocked options that are part of a compensation package for Musk.
TWTR, TSLA Price Action: Twitter shares are down 0.99% to $50.79 and Tesla is down 0.57% at $239.43 on Thursday.
See Also: Analyst Ratings On Tesla
Photo: Pizza, caviar, Shutterstock; Elon Musk, Pixabay
