Is Elon Musk Backing Away From His Deal For Twitter?
A Friday morning tweet has put Elon Musk's purchase of Twitter in jeopardy, but what could possibly be the reason?
May 16, 2022

I thought we'd finished talking about this, but like any great performer, Elon Musk has dragged me back in with his latest act. A Friday morning tweet sent shockwaves across Wall Street as the deal to purchase Twitter (NYSE: TWTR) appears to be on hold.

Let's just get right to it, shall we?

Nothing's ever simple...

Twitter's stock plunged following Musk's throwaway tweet -- such is the damage that the Tesla (NASDAQ: TSLA) CEO can do with just 280 characters. Elon quoted a Reuters article stating that Twitter claims fake accounts account for less than 5% of its user base. Musk appears skeptical of this and wants proof of the calculations. Until he receives this, the $42 billion deal is "temporarily on hold."

Is this truly the reason for such a rash move, however? Speculation is rife across Wall Street that there may be a more insidious reason behind the pausing of the deal. Since the announcement of Elon's accepted bid, Twitter's share price has been slowly sliding further away from the $54.20 he had agreed to pay. Many are questioning whether or not Elon is indeed ruing the timing of his blockbuster offer -- including our own financial analyst, Michael O'Mahony:

"Even with a $1 billion break-up fee incurred if he walks away, Musk could easily get a better deal if he leaves the table now and comes back with a new offer. It's not a very realistic outcome, and he'll have to traverse a lot of broken bridges, but when did reality have anything to do with this story?"

It should be noted that all of this is speculation. Musk is right to have concerns about the true nature of the social media platform's user base. However, surely this is the kind of question that should have been answered before finalizing the deal? I'll let Mike sum it up...

"With Elon, it was never going to be simple, was it?"


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