Twitter shares plunge as Musk is questioned about the purchase

Twitter shares plunge as Musk is questioned about the purchaseTwitter shares plunge as Musk is questioned about the purchase

The Twitter buy out has no longer looked like a certain thing

Twitter shares plunged Friday following new concerns about the likelihood that Elon Musk’s $44 billion planned acquisition of the social media platform will succeed. The price of shares fell by more than 10 percent before the opening of market, with prices up to 14 points lower than its nominal price of $54.20 per share.

The main reason for the decline was a string of ambiguous statements by Musk and Musk, whom announced that the agreement had been put “temporarily on hold” pending an investigation into the amount of bot accounts that are that are on Twitter. Twitter has stated in a recent filing that bots make up only a fraction of all active users of the platform, but many believe that the real amount is higher.

Musk later stated that Musk has since clarified that he is “still committed to the acquisition,” however, the uncertainty surrounding the deal is difficult to resolve.

“NO CONCRETE ANSWERS AS TO THE PATH OF THIS DEAL GOING FORWARD”

Since the conditions of the deal were set, there’s been major market shifts in the two companies, Twitter and Tesla which accounts for Musk’s largest share of personal fortune. Tesla stock has fallen over 25 percent in the time since Musk announced his deal on April 14th as a part of a wider market slump.

The drop in share prices could have a significant effect on Musk’s capacity to complete the deal, as some of the money is originally secured via loans secured against Musk’s stake in Tesla. But, recent reporting from Bloomberg indicates that Musk has made arrangements for additional equity investors to aid with financing, thus eliminating the need for a loan.

Twitter shares plunge as Musk is questioned about the purchase
Twitter shares plunge as Musk is questioned about the purchase

Twitter has also had a difficult time in recent times, with the company announcing an increase in user numbers during its latest earnings report and still operating in the loss. Recently the the CEO Parag Agrawal abruptly fired two executives in the top ranks which raised serious questions regarding the future of the company. In conjunction with the downturn in the market and the recent market turmoil, it has been a reason for some analysts to think Musk may attempt to negotiate to lower the price.

“THE GUY KNOWS WHAT HE’S DOING,” ONE ANALYST SAID

The agreement signed by Twitter on April 25 with Musk includes a one-time $1 billion termination fee should both parties back out of the deal without a valid reason however there are a number of complicated requirements on when and when it will be initiated. If Musk is able to start the fee for termination however, it will only be a small only a fraction of the price of the agreement and most likely lower than the savings provided by a cheaper price.

Analysts from the financial industry were split over whether the bot issues of Musk had caused the deal to be in danger. “The Street will view this deal as 1) likely falling apart, 2) Musk negotiating for a lower deal price, or 3) Musk simply walking away from the deal with a $1 billion breakup fee,” wrote Daniel Ives of Wedbush Securities saying that the deal had “many questions and no concrete answers as to the path of this deal going forward.”

Others, such as Craig Huber of Huber Research Partners who took a less optimistic perspective. “Our take is Elon Musk is further doing his due diligence on Twitter regarding bots and fake accounts, as he should, and that ultimately he will go ahead with buying Twitter,” Huber said “The guy knows what he is doing as he has shown time and time again.”

See More From IQ Magazines

Leave a Reply

Your email address will not be published. Required fields are marked *

You may also like

Tanaka Ao Age, Position, Salary, Girlfriend, Team, Facts, Football Career

Tanaka Ao is a Japanese professional footballer, who