Twitter shares slump as Musk abandons $44bn deal
Updated : 10:52
Twitter shares slumped in pre-market trade on Monday after Tesla owner Elon Musk backed out of a deal to buy the social media platform.
At 0950 BST, Twitter shares were down 6.5% at $34.41 after Musk’s advisers sent a letter to Twitter formally notifying the company that he was terminating the merger agreement.
Musk decided to back out of the $44bn deal after Twitter failed to provide proof that its spam accounts make up less than 5% of the user base.
Twitter is now suing Musk but the billionaire appears to be taking it in his stride, posting a series of memes of himself on the social media platform, with various captions.
— Elon Musk (@elonmusk) July 11, 2022
Neil Wilson, chief market analyst at Markets.com, said: "It could be the bots, but probably not. It’s most likely the valuation - the Nasdaq has plunged since the deal was inked, so Twitter is by any normal model worth a lot less than $44bn today. Also, Tesla’s stock, upon which Musk’s wealth rests, is down more than a quarter since the deal was signed. And that debt/equity raising proved harder than expected.
"It could be that he wants to renegotiate Twitter down to a lower price...he didn’t exactly do much modelling before, and the market has soured since. That would make sense if this were not Musk. Some prefer the idea that it was always a joke, that he just got bored with the idea and decided to walk away. I prefer the idea that it always a trick to sell some more Tesla stock.
"Does Musk have a point? It is a legally binding transaction, so he will need to find some way to prove Twitter breached covenants. Bots...well that seems to be the nub of it. Musk says Twitter has been misleading advertisers and investors for years by misrepresenting the number of spam or fake accounts."