Extremalby
Menu
  • Business
    • Entrepreneurship
    • Personal Finance
  • Entertainment
    • Books
    • Celebrity
    • Music
    • TV
  • Sports
    • Golf
    • NCAAB
    • SOCCER
  • Technology
    • Artificial intelligence
    • Internet
    • Mobile
  • Contact Us
  • About Us
  • Important Links
    • Cookie Policy US
    • DMCA
    • Terms and Conditions
    • Privacy Policy
Menu
Elon Musk Twitter deal on hold;  'take the money and run' theory

Elon Musk Twitter deal on hold; ‘take the money and run’ theory

Posted on May 15, 2022 by mangakiko

The Elon Musk Twitter deal is now ‘temporarily on hold,’ says the billionaire, in a tweet today. Twitter had told him that spam and fake accounts represent fewer than 5% of users, and Musk now says he wants to see the evidence for this.

While Musk followed up with ‘Still committed to acquisition,’ some are suggesting that this is not the case …

Background

The Tesla and SpaceX CEO last month offered to buy Twitter outright at a price per share which valued the company at around $44B – a significant premium over its then-current value. This followed his quiet purchase of almost 10% of the company.

Twitter later announced it would accept Musk’s offer of $54.20 per share, inviting him to join the company’s board. Most reactions to the news were best described as less than enthusiastic, with most fearing that the entrepreneur’s vision of unrestrained free speech would amount to those with the loudest and most aggressive voices prevailing. There are also fears that disinformation will flourish to an even greater extent.

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

Three theories are now circulating about the reason behind the announcement.

Theory 1: Musk can no longer afford the purchase

Vanity Fair summarizes a Hindenburg report questioning the viability of the purchase plan.

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,” he 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.

Theory 3: Musk wants to take the money and run

Musk sold $8.5B worth of Tesla shares to help fund the purchase, and a range of factors – some macroeconomic, some specific to Musk – saw the EV maker’s share price fall 27% since then. At today’s price, Musk could repurchase the shares for $6.2B.

As things stand, he’s on the hook for a $1B penalty clause if he walks away from the deal – though it would still make money. But some believe raising this concern is paving the way for him to be able to avoid the penalty for claiming Twitter misled him.

The only thing one can say with certainty is we’ll have to wait and see. No-one but Musk knows what he intends to do, and many would argue that the statement could be shortened to ‘No-one knows what he intends to do.’

Photo: Jeremy Bezanger/Unsplash

FTC: We use income earning auto affiliate links. More.


Check out 9to5Mac on YouTube for more Apple news:

Share this:

  • Twitter
  • Facebook
  • More
  • Reddit
  • Pinterest
  • Telegram
  • WhatsApp

Related

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Recent Posts

  • Best Forex Trading Market Internationally
  • All Essential Tips About Forex Trading
  • How to Invest In Forex Trading in 2023
  • The importance of modern forex levels today 2022
  • What about forex trading and how to deal with it step by step?

Recent Comments

No comments to show.

Archives

  • January 2023
  • December 2022
  • November 2022
  • October 2022
  • September 2022
  • June 2022
  • May 2022

Categories

  • Artificial intelligence
  • Books
  • Business
  • Celebrity
  • Entertainment
  • Entrepreneurship
  • Environment
  • forex
  • Golf
  • Internet
  • Mobile
  • Music
  • NCAAB
  • Personal Finance
  • Physics
  • SOCCER
  • Sports
  • Technology
  • TV
©2023 Extremalby | WordPress Theme by Superbthemes.com