On Friday, what many tech industry pundits thought would happen finally came to pass: Elon Musk officially informed Twitter that he will not go through on his offer to buy the company. A lengthy legal battle is likely on the horizon as Twitter says it will hold Musk to the $44 billion deal. In the meantime, two stocks associated with Musk—Twitter Inc. and Tesla Inc.—are moving in opposite directions. Here’s what you need to know.
- Why is Elon Musk pulling out of the Twitter buyout deal? According to Musk’s legal team, “Mr. Musk is terminating the Merger Agreement because Twitter is in material breach of multiple provisions of that Agreement [and] appears to have made false and misleading representations upon which Mr. Musk relied when entering into the Merger Agreement.”
- What does that actually mean? In short, Musk says Twitter underestimated the number of bots active on the platform. However, many industry watchers think Musk has gotten cold feet for the deal since Twitter shares have sunk over 30% since the takeover was announced—making Musk’s $44 billion offer look like way too much to pay for the company.
- How are Twitter shares reacting to the pullout? Not well. TWTR shares closed at $36.81 a share on Friday–down 5.10% for the day, according to Yahoo! Finance. And this morning, in pre-market trading, they are down even more. As of the time of this writing, TWTR shares are down to $34.68–that’s a fall of another 5.79%. To put that in perspective, Musk originally offered $54.20 per share in his Twitter buyout deal.
- What about shares of Musk’s other company, Tesla? While Tesla shares aren’t skyrocketing, they are up on the news that Musk wants to pull out of the Twitter deal. As of the time of this writing, TSLA shares are up $2.74 to $755.03 per share—a 0.36% bump over its Friday closing price.
- Is Musk’s Twitter pullout good for Tesla? Investors seem to think so. Tesla shares have sunk from a price of $1,145 back in April to just around $755 today. Many Tesla investors have long had concerns that Musk wouldn’t be able to devote as much time to his flagship company if he were also running Twitter–and the stock’s fall in price since April reflects that.
- How has Musk reacted to all this? In a very Muskian way, of course. By sharing memes about the Twitter battle—on Twitter.
— Elon Musk (@elonmusk) July 11, 2022