The Twitter-Elon Musk Fiasco; Stock falls 6.6% as Musk Withdraws

Paigambar Mohan Raj
Source: MarketWatch

Alt heading: Elon Musk Could Face Charges for Withdrawing from Twitter Deal; Stock falls 6.6% /// The Elon Musk-Twitter Love Story; Breakup Drops Stock by 6.6% //

Elon Musk’s purchase of Twitter has been a hot topic in not just the world of finance but also in tech. On July 9th, Tesla’s CEO announced that he was pulling out of the $44 billion deal to purchase the social media platform. The announcement had ramifications on Twitter stock prices which fell by 6.6%.

Musk is a long-time proponent of Twitter and is an avid member who often uses the platform to share his thoughts. Musk currently has over a hundred million followers on Twitter. His decision to pull out of the deal is the latest twist in the protracted saga.

Elon Musk & Twitter: A love-hate story?

Musk initially started to purchase Twitter stocks in late January. By March, his holdings crossed 5% of the company. By April 4th, Musk’s holdings increased to 9.2%, making him the most prominent individual stakeholder in the company. Although there was talk of Musk joining the board, he later turned down the position.

On April 12th, a group of Twitter investors sued Musk for not disclosing his purchase of a significant number of shares to the SEC. However, two days later, on the 14th, Musk offered to purchase all of Twitter for a whopping $44 billion. This comes to around $54.20 per share. The board accepted Musk’s offer. However, the excitement would not last.

On May 14th, Musk announced that the Twitter deal was on hold. He cited reasons for the company’s spam bot claims. Twitter CEO Parag Agrawal explained via a Tweet thread how the company found that less than 5% of accounts were bots.

Nonetheless, more troubles were en route for the deal. The SEC announced its investigation of Musk’s Twitter stock purchase in late May, and the agency wanted to find out if the billionaire had rightfully disclosed his stake.

In June, Musk wrote a letter accusing the platform of “actively resisting and thwarting” his rights to information regarding spam/fake accounts and bots. Consequently, on June 8th, the company agreed to provide Musk access to its full “firehose” of all public tweets.

That brings us to last week’s news of Musk trying to pull out of the deal. He said that the company has not stuck to its contractual obligations. Musk said in an SEC filing that the social media company had given inaccurate and misleading information about spam and fake accounts on the network.

What’s with the bots?

Twitter is notorious for bot accounts, and this has caused concern for many. It has often played a role in shaping public opinion and giving weight to things that may not be in the public’s best interest. Musk had stated that he wanted to create a platform for free speech. However, the fiasco around the bots has held this deal back.

So, what’s keeping Twitter from releasing its bot info? Well, there are many theories on this. Firstly, it is possible that there isn’t a proper way of calculating the number of fake accounts. Secondly, it is also possible that the number of fake accounts is so high that it could change people’s opinions about the platform. And lastly, it also could be possible that the number of users is less than what the company would like to disclose and hence is reluctant to release the numbers.

Whatever the case, the controversy around the bots is at the center of the Twitter deal going south. With Musk wanting to pull out of the agreement, Twitter stocks fell by 6.6%.

Musk may now face a lawsuit from Twitter for his attempt to pull out of the deal. Bret Taylor, the chairman of the Twitter board, has stated that legal action will be taken to enforce the merger deal.

At press time, Twitter was trading at $36.81.