Tesla (TSLA:NASDAQ) posts largest profit ever, as Musk secures funding for Twitter (TWTR:NYSE)

Tesla Inc. (TSLA:NASDAQ) saw its stock rise 3.23 percent on Thursday as the electric vehicle manufacturer reported its largest quarterly profit since going public. At $1,008.78 a share, the stock was up $ 31.58, or 3.2 percent. Earlier in the day, shares rose as high as $1,092.22, gaining about 12%, before falling in line with the larger market.

Tesla announced a record profit of $3.3 billion for the first three months of the year late Wednesday, indicating that vehicle manufacturing will continue to increase despite China’s shutdowns. Elon Musk, the business’s CEO, predicted that the company will build more than 1.5 million vehicles in 2022, up 60% from the previous year.

The findings revealed improvement in Tesla’s operations, as well as hurdles faced by the global economy’s stop-start rebound following Covid-19 lockdowns and supply-chain snarl-ups that have followed the extraordinary recovery.

In the first quarter, Tesla shipped roughly 310,000 vehicles worldwide, up from 184,877 a year ago. After a jump in prices for basic materials ranging from lithium to nickel, Mr. Musk acknowledged that increased input costs were causing problems. “I believe the official estimates understate inflation’s true size,” he remarked.

Tesla stock has always been fueled by a passion for the firm and its CEO, Elon Musk, who has a devoted Twitter following. During the pandemic, a drop in interest rates encouraged investors into more risky financial markets, driving the stock upward. The gains perplexed some investors, who said they were unrelated to Tesla’s commercial performance and made Mr. Musk the world’s richest man by certain standards.

When Tesla joined the S&P 500 index in December 2020, the stock received another lift, pushing money managers who watch the index to buy Tesla stock. In early November 2021, Tesla reached its greatest closing price of $1,229.91. The stock sank shortly after Twitter users voted for Mr. Musk to sell a portion of his ownership in the company.

Tesla’s price has subsequently fallen, but it has held up better than many other firms that investors poured into during the Covid-19 shutdowns. Its stock has dropped 4.5 percent so far in 2022, outperforming the S&P 500’s 7.8% drop.

In other news, Elon Musk said that he has secured $46.5 billion to fund his acquisition proposal for Twitter Inc. (TWTR:NYSE), resolving the greatest uncertainty that has hovered over his takeover offer.

Mr. Musk also stated in a regulatory filing that he was considering going straight to Twitter shareholders with his bid, bypassing a board that appeared to be set in its ways. On Thursday, Twitter said that it was examining the newly detailed plan.

Under the funding plan, Musk stated he will hock $62.5 billion of Tesla stock, one-third of his stake in the world’s most valuable car company, as collateral for bank loans. He’ll need to come up with $21 billion more in cash, which would likely mean selling Tesla stock or whittling his stakes in his privately held ventures, SpaceX and Boring Co.

A consortium of banks led by Morgan Stanley (MS:NYSE), Bank of America (BAC:NYSE), and Barclays would provide the remaining $25.5 billion (BCS:NYSE). This leaves little margin for error at Twitter, which would be saddled with a heavy debt load under a new owner who has said he doesn’t care whether the company makes money.

People familiar with the matter said that the Tesla CEO is still considering bringing in potential equity partners and has had conversations with some, which would lighten his financial burden. He is also in line to receive billions of dollars in Tesla stock options after the electric-vehicle maker reported record quarterly earnings this week.

The recent revelation provides legitimacy to an offer that lacked the technical elements often associated with a genuine takeover bid. Skeptics who were comparing Musk’s takeover offer to his notorious “funding secured” tweet from 2018, which hinted at an ultimately nonexistent effort to take Tesla Inc. private, were taken aback.