Twitter stock swoons as Elon Musk pulls back bid to buy social media company

TWITTER shares plummeted yesterday after Elon Musk abandoned his $44 billion deal to buy the company, setting the stage for a destructive legal battle.

The stock fell 8.8 percent to $33.59 as of midday in New York and was on track to lose about $2.5 billion in market value after Musk backed out of an agreement the Buy social media giant and privatize it.

Shares in Tesla, the Musk-led electric carmaker, fell about 6.3 percent.

Twitter shares traded well below the $54.20 per share offer Musk made in April.

The billionaire claims Twitter misrepresented user data and says the number of spam bots on the platform is much higher than the company disclosed.

The stock fell along with the tech sector amid rising interest rates.

“It comes as no great surprise to anyone that Musk is trying to walk away from the deal,” said Adam Crisafulli, founder of Vital Knowledge.

“The problem, however, is that this whole saga has probably been quite disruptive over the past few months, which could weigh on Twitter’s performance not just in Q2, but Q3 as well.”

With a $1 billion termination fee, traders brace for more chaos as Twitter takes Musk to court.

Twitter chairman Bret Taylor said the company will take legal action to complete the transaction “at the price and terms agreed by Mr. Musk.” The company has hired merger-law heavyweights Wachtell, Lipton, Rosen & Katz and intends to file suit earlier this week, according to people familiar with the company’s plans, who asked not to be identified as the matter is private.

Twitter has denied Musk’s claims, saying bots make up less than 5% of total users, with executives repeating on Thursday that their estimates were correct.

“They’re going to ask Musk to close the deal, even though he says it’s done, and they have, I’d say, a better than 50% chance they’ll win,” said market strategist Cabot Henderson, who himself focused on business merger arbitrage and special situations at JonesTrading.

“It would be a huge win for Musk to pay just $1 billion.”

All eyes will be on the company’s quarterly results, which are expected to be released later this month.

For the first-quarter financials, revenue rose to $1.2 billion, missing analysts’ estimates on a slowdown in advertising.

“The company is well known, but not a great deal,” said Kimberly Forrest, founder and chief investment officer of Bokeh Capital Partners. “Wall Street needs companies that show revenue and/or earnings growth.

“Twitter doesn’t seem to have any plans to grow at this point, either.” Twitter stock swoons as Elon Musk pulls back bid to buy social media company

Fry Electronics Team

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