Elon Musk’s decision to abandon his $44 billion takeover bid for Twitter (TWTR:NYSE) could potentially help Tesla’s (TSLA:NASDAQ) share price recover from big losses this year.

Shares in the electric vehicle company have lost nearly 40% to $703 since Musk first pitched the idea of buying the micro-blogging platform in early April 2022.

The billionaire sold 9.6 million Tesla shares at an average price of around $885 per share to part-fund the buyout, while using his near-16% remaining Tesla stake as collateral for loans.

Tesla has also been hit by a wider market sell-off amid the worst opening half of the year for stocks since 1970, lockdowns affecting Tesla’s Shanghai factory, and mounting competition from other car manufacturers going electric. However, in June Tesla more than doubled vehicle production in China compared with May.

Doubts remain over legal action being taken by Twitter to try and force through the $54.20 per share takeover deal. Since Musk said he was pulling out, Twitter’s stock has slumped to $32.65.

If Musk loses his legal battle against Twitter and is forced to complete the acquisition or pay a stiff penalty, he could conceivably have to sell more Tesla shares, spooking investors and hurting the value of his remaining Tesla stake, says Guidehouse Insights analyst Sam Abuelsamid.

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