New York Post
WHAT A ‘TWIT’SHOW
Elon post casts doubt on deal, roils stock price
Elon Musk sent Twitter’s stock on a roller coaster ride early Friday as he claimed that his $44 billion deal to take over the site was “temporarily on hold” — then insisted hours later that he was “still committed” to the buyout.
“Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users,” the Tesla CEO said in a tweet posted at 5:44 a.m. Friday.
Twitter’s stock then dipped more than 25% to as low as $33.79 in pre-market trading — far below Musk’s marijuana-themed purchase price of $54.20, indicating investors were betting the deal wouldn’t go through.
Then, at 7:50 a.m., Musk posted a follow-up tweet saying he was “still committed to acquisition.”
Twitter’s shares erased some of their losses and were hovering around $40 shortly before markets were set to open Friday morning. The stock closed at $40.72. That’s still about 10% lower than at Thursday’s close.
After the first tweet, Wedbush Securities analyst Dan Ives estimated that Wall Street investors saw a less than 50% chance that the deal would close. He added Musk’s tweet amounted to a “Twitter circus show” since Wall Street is liable to view the deal as “likely falling apart” or “Musk negotiating for a lower deal price.”
Ives said Musk could be trying to rearrange the financing so he doesn’t have to rely on leveraged shares of Tesla. Concerns about Musk’s Twitter takeover and a broader tech sell-off have sent the electric-car firm’s shares plummeting 29% over the past month.
Alternatively, Ives said, Musk could simply walk away from the deal and pay a $1 billion breakup fee: “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.”
In Musk’s initial tweet, the billionaire included a link to a May 2 Reuters article quoting a Twitter 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 Reuters article read.
Musk has said that cracking down on spam accounts and bots will be one of his top priorities for Twitter if the deal goes through.
Investors have had to weigh legal troubles for Musk, as well as the possibility that acquiring the platform could be a distraction from running the world’s most valuable automaker.
On Thursday, Twitter said the company was pausing most hiring except for business-critical roles, adding in a statement that “we are pulling back on non-labor costs to ensure we are being responsible and efficient.”
In a memo sent to staffers and confirmed by Twitter, CEO Parag Agrawal said the company has not hit growth and revenue milestones. Agrawal also announced the departures of two Twitter honchos, both of whom said they were let go by Agrawal: Kayvon Beykpour, the company’s general manager, and Bruce Falck, Twitter’s head of revenue.