Elon Musk’s Twitter transaction is now ‘temporarily on hold,‘ according to a tweet from the entrepreneur today.
Musk claims he wants to examine the proof supporting Twitter’s claim that spam and false accounts account for less than 5% of its users.
While Musk replied, “Still committed to the acquisition,” others speculate that this is not the case…
Last month, Elon Musk, the CEO of Tesla and SpaceX, proposed to acquire Twitter altogether for $44 billion, a considerable premium over the company’s current worth. This came after he quietly purchased about 10% of the firm.
Later, Twitter said that it would accept Musk’s $54.20 per share offer and invite him to join the company’s board of directors.
The majority of responses to the announcement were lukewarm, with many concerned that the entrepreneur’s vision of unrestricted free speech would lead to the loudest and most aggressive voices prevailing.
There are also concerns that misinformation may spread much further.
Elon Musk Twitter deal on hold
Musk tweeted the update today.
Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of usershttps://t.co/Y2t0QMuuyn
— Elon Musk (@elonmusk) May 13, 2022
Theory 1: Musk can no longer afford the purchase
Hindenburg Research, a firm that has a short position on Twitter’s stock, published a report on Monday stating that there is “a significant risk that the deal gets repriced lower.” While Hindenburg voiced support for “Musk’s efforts to take the company private” and said it believes Musk “could get it done,” it also wrote that he has no reason to follow through with his initial offer. The report went on to question how Musk would finance the buyout, writing that “placing both Twitter (and ultimately Tesla’s) future on a foundation of further equity-backed margin loans, or potentially more sales of Tesla equity amidst a volatile market, adds risk to both enterprises.”
Theory 2: Musk wants to renegotiate
Some are suggesting that this is simply paving the way to reduce his offer – possibly prompted by his co-investors, suggests Reuters.
While Musk has said he does not care about the economics of buying Twitter, some investors think the 27% drop in Tesla shares since he revealed his stake is driven partly by concerns he may have to sell more shares. Therefore Tesla’s stock would be under less pressure if Musk can negotiate a lower acquisition price. Some co-investors may egg him on if they become concerned about overpaying.