Twitter’s stock went on a thriller ride early Friday as Elon Musk tweeted that the $44 billion deal to purchase the company is now “temporarily on hold.” Then, a little over two hours later he told the world that he is “still committed” to the plan to buy the company.
“Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users”
Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of usershttps://t.co/Y2t0QMuuyn
— Elon Musk (@elonmusk) May 13, 2022
Twitter’s stock then went down more than 25% to $33.79 in pre-market trading, which is below Musk’s offered purchase price of $54.20, indicating investors were believing that the deal is not going to go through after all.
A couple hours later, Musk tweeted a follow-up saying that he was “Still committed to acquisition.”
Still committed to acquisition
— Elon Musk (@elonmusk) May 13, 2022
The company’s shares then gained back some of the losses and were hanging out at around $40 just before markets were set to open Friday morning. It opened about 11% below what it was at closing on Thursday.
Dan Ives, an analyst for Wedbush Securities, speculated that investors now see a less than 50% change the deal goes through, calling Musk’s tweet a “Twitter circus show” since Wall Street is apt to see this deal as likely falling apart, or that it’s a product of “Musk negotiating for a lower deal price.”
Ives said he thinks Musk may be attempting to rearrange the financing of the deal so that he’s not relying on leveraged shares of his electric car company, Tesla. he said, in the end, Musk could walk away from the deal and end up paying a breakup fee of $1 billion.
“Many will view this as Musk using this Twitter filing/spam accounts as a way to get out of this deal in a vastly changing market,” he said.
Musk’s first tweet includes a May 2 Reuters piece revealing Twitter’s regulatory filing.
“Twitter Inc estimated in a filing on Monday that false or spam accounts represented fewer than 5% of its monetizable daily active users during the first quarter,” the article stated.
The Tesla CEO said that one of his top priorities for the social media company is cracking down on bots and spam accounts.
Twitter said on Thursday that it was setting a pause on hiring other business-critical roles, saying “we are pulling back on non-labor costs to ensure we are being responsible and efficient,” in a statement.
CEO Parag Agrawal said in a memo to Twitter staffers that the company has not hit milestones for growth and revenue after the business started to invest aggressively to expand its revenue and user base.
It was announced that two top people at Twitter were fired by Agrawal, Kayvon Beykpour the general manager, and Bruce Falck, Twitter’s head of revenue. Agrawal distributed the memo to employees on Thursday, and the next day is when Musk hit the brakes.
Twitter workers freaked out once the board of directors last month announced they accepted Musk’s $44 billion buyout offer. They had no choice as the officers of the company had a fiduciary duty to the shareholders of the company’s stock.
Musk said he’s planning to buy out shareholders and take the company private. That way, he controls it and doesn’t have worry about leftist authoritarians trying to sneak in more censorship. Musk promised to rework Twitter’s moderation policies that resulted in high-profile figures being banned, most being conservatives. For goodness’ sake, they banned the President of the United States over lies told by the Democrats and the misinformation news media that Donald Trump incited an insurrection on January 6. Perhaps Twitter had a hand in things going wrong at the Capitol that day when the platform censored Trump’s tweets for people at the Capitol during the riot to remain calm and peaceful and to go home.
Twitter executives have been fearing en masse employee exit prior to Musk taking over the company, according to a regulatory filing submitted earlier this week.
Musk said to a Financial Times conference on Tuesday that the decision by Twitter to ban Trump was “morally bad.” He could have just said it was a progressive move. Same thing.
On Thursday, Musk said he doesn’t support Trump as a presidential candidate. I don’t know why, because love him or hate him, his policies made America great again.
“Even though I think a less divisive candidate would be better in 2024, I still think Trump should be restored to Twitter,” he wrote. Trump has said he doesn’t want to go back to Twitter as he has his own social media platform now, called Truth Social.