Twitter shares set to plunge by a third as Musk deal collapses
TWITTER was facing ‘the worst case scenario’ last night after billionaire Elon Musk withdrew from a £36billion deal to buy the social media giant.
Experts predict Twitter’s value could plunge by as much as 30 per cent tomorrow when stock markets reopen.
Musk, 51, walked away from the deal late on Friday claiming Twitter had more fake accounts – or ‘bots’ – than it had said.
The collapse could signal disaster for Twitter with one employee saying: ‘Morale is at an all-time low. Recent events have trashed its reputation and the company may now appear to be damaged goods in the eyes of investors. It’s the worst case scenario.’
Musk, who is the world’s richest person, initially offered to buy the company in April and take it private. However, he said the deal was contingent on Twitter proving how many ‘real’ users it has because that drives advertising revenue. Under the terms of that deal, he agreed to pay £830million if he backed out.
In a legal letter announcing his withdrawal, the Tesla and SpaceX billionaire said: ‘Twitter has not complied with its contractual obligations.’ The company, which claims to have around 450million active users, says about five per cent of its daily users are spam accounts, but Musk believes the number could be far higher.
‘Twitter has failed or refused to provide this information,’ the letter claims. ‘Sometimes Twitter has ignored Mr Musk’s requests, sometimes it has rejected them for reasons that appear to be unjustified and sometimes it has claimed to comply while giving Mr Musk incomplete or unusual information.’
Twitter responded angrily, saying it will sue Musk to force him to go ahead with the acquisition – although that could drive down its share price.
One analyst said: ‘Everyone is predicting Twitter shares will plummet as soon as the markets open. Some are saying the company could lose as much as 30 per cent of its valuation. Of course, there is speculation that this is what Elon wants because he will then end up buying the company anyway but at a steep discount.’ Musk, who has a £164billion fortune, offered to buy the company at $54.20 (£45) a share. On Friday, each share was worth $36.81 (£31).
It didn’t take long for Twitter to light up with barbs about Musk’s withdrawal.
Screenwriter Randi Mayem Singer wrote: ‘Elon Musk has announced he’s pulling out of his Twitter deal in order to spend more time with his ego.’ And, referring to a revelation last week that Musk had recently fathered twins with an executive at one of his tech companies, making him a father-ofnine, another joked: ‘Elon Musk pulls out, for the first time ever.’
The twins were born in November just weeks before the birth of his second child with singer Grimes, 34. One Twitter user wrote: ‘Elon Musk looked at his child support bills and realised he can’t afford Twitter any more.’