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Twitter shares are close to where they were before the Tesla CEO’s initial stake of around 9% was revealed.
Alastair Pike/AFP via Getty Images
AN cheep from
Tesla
CEO Elon Musk sent
Twitter
markedly lower shares. Another sent the action in the other direction.
The
Tesla
(ticker: TSLA) The CEO said on Friday that his deal to buy Twitter (TWTR) was “temporarily on hold” pending an estimate related to the number of fake Twitter accounts.
Hours later, Musk tweeted again saying “Still committed to the acquisition.”
Twitter shares fell more than 18% in premarket trading. After the second tweet, shares were down 9.2% at $40.96 in morning trading. That’s close to the level Twitter was trading at before Musk’s initial stake of more than 9% in Twitter was revealed.
The original tweet was attached to a May 2 Reuters article about the number of accounts on the social media platform that were bots and spam accounts. Twitter, in its first-quarter financial filing, said those types of accounts accounted for less than 5% of what it calls its mDAU, or monetizable daily active use.
Twitter and Musk did not immediately respond to requests for comment.
Keeping up the deal because of bots is a bit surprising, given that bots are not a new problem. Musk has said several times that eliminating spammers and bots is important to increasing the value of Twitter. He touched on the subject again this week when he spoke at the Financial Times Car of the Future conference.
Twitter “is the least bad public square, a forum for the exchange of ideas,” Musk said Tuesday. “It could be so much better… to be better, you really need to get rid of the bots and the scams, the scammers. Anyone trying to create a false influence on the site.”
If the fake accounts represent more registered Twitter users than originally believed, Musk may not want to pay the original offer price of $54.20 per share.
Future active fund ETF
(FFND) co-founder Gary Black suggested on Friday that Musk may want to renegotiate terms after the latest slide in Tesla shares.
Entering trading on Friday, Tesla shares are down about 36% since Musk’s Twitter involvement surfaced. The
Nasdaq Composite
It has dropped 22% in the same period. It’s hard to say exactly how much of the excessive decline in Tesla shares, relative to the index, is related to Twitter. Tesla is usually more volatile than the Nasdaq, rising more in good times and falling more in bad.
Whatever the exact split, the plunge in Tesla stock has wiped out roughly $400 billion in market value since the beginning of April. Shares of Tesla rose 5.5% in Friday trading to $768.
The S&P 500 Y Dow Jones Industrial Average they rose 2.2% and 1.5%, respectively.
If the deal doesn’t happen. Musk could be in hot water for the $1 billion breakup fee that was negotiated as part of the deal. Musk paid about $36.15 per share, on average, for his initial 73 million Twitter shares. He is still in the black at current levels.
Email Al Root at [email protected]
Reference-www.barrons.com