Flaunt Weekly
HomeMediaElon Musk sends Twitter stock into a tailspin after announcing that a deal for the site is ‘temporarily on hold.’
Elon Musk Twitter Deal

Elon Musk sends Twitter stock into a tailspin after announcing that a deal for the site is ‘temporarily on hold.’

Elon Musk sent Twitter’s stock soaring early Friday after claiming that his $44 billion takeover bid was “temporarily on hold” — only to insist hours later that he was “still committed” to the deal.

“Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users,” Tesla CEO Elon Musk tweeted at 5:44 a.m. on Friday.

Twitter’s stock then fell more than 25% in pre-market trading to as low as $33.79, far below Musk’s marijuana-themed purchase price of $54.20, indicating investors were betting the deal would fall through.

Then, at 7:50 a.m., Musk tweeted again, saying he was “still committed to acquisition.”

Twitter’s stock recovered some of its losses and was trading near $40 shortly before the markets opened on Friday morning. This is still about 11% lower than where they ended on Thursday.

Following the first tweet, Wedbush Securities analyst Dan Ives estimated that Wall Street investors now believe the deal has a less than 50% chance of closing. He went on to say that Musk’s tweet was a “Twitter circus show,” because Wall Street is likely to see this deal as “likely falling apart” or “Musk negotiating for a lower deal price.”

 

Ives speculated that Musk may be attempting to rearrange the financing of the deal so that he does not have to rely on leveraged shares of his electric car company, Tesla. Concerns about Musk’s takeover of Twitter, as well as a broader tech sell-off, have sent Tesla shares down 29 percent in the last month.

Musk could also simply walk away from the deal and pay a $1 billion breakup fee, according to Ives.

“Many will interpret this as Musk using these Twitter filing/spam accounts to get out of this deal in a rapidly changing market,” he said.

 

 

Musk’s first tweet included a link to a Reuters article from May 2 that cited a Twitter regulatory filing.

According to Reuters, “Twitter Inc estimated in a filing on Monday that false or spam accounts represented less than 5% of its monetizable daily active users during the first quarter.”

 

Musk has stated that if the deal goes through, one of his top priorities for Twitter will be to crack down on spam accounts and bots.

Investors have had to weigh Musk’s legal problems against the possibility that acquiring the platform would be a distraction from running the world’s most valuable automaker.

Twitter announced on Thursday that it was halting most hiring except for mission-critical positions, adding that “we are pulling back on non-labor costs to ensure we are being responsible and efficient.”

 

 

In memo sent to employees and confirmed by Twitter, CEO Parag Agrawal stated that the company has yet to meet growth and revenue targets despite investing “aggressively” to grow its user base and revenue.

 

Musk slammed the brakes day after firing two Twitter executives.

 

Agrawal announced the departures of Kayvon Beykpour, the company’s general manager, and Bruce Falck, Twitter’s head of revenue, in memo distributed to employees on Thursday.

 

Beykpour’s position will be filled by Jay Sullivan, the head of consumer product.

 

Twitter has been in turmoil since last month’s announcement by the company’s board of directors that it had accepted Musk’s $44 billion buyout offer.
He has stated that he intends to buy out the company’s shareholders and take it private.
Musk has promised to overhaul the company’s content moderation policies, which have resulted in bans on controversial figures, many of whom are political conservatives.

 

According to regulatory filing submitted this week, Twitter has been concerned that employees will resign in droves ahead of Musk’s planned takeover.

 

Musk said at Financial Times conference on Tuesday that Twitter’s decision to ban former President Donald Trump was “morally bad.”

 

He reiterated on Twitter on Thursday that he does not support Trump as presidential candidate.

 

“Even though believe less divisive candidate would be better in 2024,” he wrote, “I still believe Trump should be restored to Twitter.”

 

The former president has stated that he does not intend to return to Twitter, but rather to focus on developing his own Truth Social platform.

 

He was permanently banned from Twitter in January 2021 due to the “risk of further incitement of violence” following the storming of the US Capitol, according to the company at the time.

 

Trump is reportedly considering running for president again in 2024.
Himanshu Mahawar

Himanshu Mahawar is the Editor and Founder at Flaunt Weekly.

Magazine made for you.