Twitter's stock has fallen so much that Elon Musk's $1.1 billion profit is now a $40 million loss

• Social media stocks are reeling after Snap said it would miss its revenue targets and the broader tech sector has buckled.
• Twitter's stock fell 5.5% Tuesday, dropping below Elon Musk's average purchase price.

Elon Musk has seen potential gains of $1.1 billion wiped out over the past four weeks as Twitter's stock has plummeted.

Musk began snapping up shares in the social media company in January, building up a 9.1% stake. Before agreeing to buy the company outright on April 14, he owned 73 million shares at an average price of $36.16.

Twitter shares hit $51.70 on April 25 - which would have represented a $1.1 billion profit for Musk. But they've since fallen 31% to below $36 - turning that billion-dollar gain into a $40 million loss.

Twitter fell 6% Tuesday as investors sold off social media and advertising stocks after Snap announced it would miss its second-quarter revenue target. It's fallen 28% in the last month and 18% so far this year.

"Snapchat's owner has sent ripples across the market for social media companies," Russ Mould, an investment director at AJ Bell, said. "Tighter monetary policy, meaning less and more expensive fun money for investors, and a series of share price crashes are dampening appetite for this sort of stock."

Tesla's decline this year has added to Musk's woes. The electric vehicle manufacturer also fell 6% Tuesday, dropping well below its S&P 500 inclusion price of $695.

Wedbush managing director Dan Ives said Musk's Twitter losses have likely exacerbated Tesla's fall.

"This circus show has been a major overhang on Tesla's stock," he said in a note on Monday. "Musk is facing a fork-in-the-road situation in which he has to decide his next step in this soap opera, as Tesla investor patience is wearing very thin."

Musk does have the right to walk away from the deal - but he would have to pay Twitter a $1 billion breakup fee.