Twitter shares plunged Friday after Elon Musk stated that he would temporarily suspend his acquisition. This added confusion about whether or not a deal will be made. Analysts predict that Musk could be seeking an excuse to back down or negotiate a lower price.
Twitter’s stock fell roughly 10% on Friday after Musk said he would put his planned $44 billion takeover “on hold” until he finds out more about the number of fake and spam accounts on the platform.
Musk’s “bizarre” tweet will send the “Twitter circus show into a Friday the 13th horror show,” wrote Wedbush analyst Dan Ives, with “many questions and no concrete answers as to the path of this deal going forward.”
Markets are reacting as though he will pull out of the deal. This could be true according to Michael Hewson (chief markets analyst at CMC Markets), who stated that this is straight from Musk’s playbook and keeps shareholders on their toes .”
Musk’s decision was “very troubling” for investors–Twitter’s stock fell over 10% on Friday, and amid the wider market selloff this year, Musk could well be using the fake accounts as an excuse to “get out of the deal,” Ives adds.
While Musk may be nervous about following through on his plans, Angelo Zino, CFRA analyst, notes that this move “is likely to drive more uncertainty and chaos in [Twitter],, which could have negative consequences for its own business prospects.”
Amid the buzz generated by Musk’s offer to buy the company in April, Twitter shares are down just 4% so far in 2022–having surged over 20% last month alone, and are outperforming the rest of the market (the benchmark S&P 500 index has fallen over 15%).
What to Watch Out For:
The Tesla billionaire may simply be holding out for a better deal, potentially hoping to lower his original offering price of $54. 20 per share. Twitter’s board of directors last month accepted his bid, however, which valued the social media company at roughly $44 billion. Ives predicts that Musk will choose to follow the deal path. However, it is possible for a clear renegotiation to take place.
The confusion surrounding Musk’s purchase of the company by
Twitter short sellers, who believe the stock will plummet, is attracting attention. “I’m seeing the bright side of life today,” Nathan Anderson, founder and CEO of short-selling firm Hindenburg Research wrote Friday, shortly after Musk tweeted. On paper, Twitter short-sellers received a $136 million boost–bringing potential monthly returns to around $262 million, according to S3 Partners.
Big Number: $232 Billion
That’s how much Musk is worth, according to Forbes‘ calculations, making him the richest person in the world.