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Will Elon Musk Finally Acquire Twitter?

Plus500 | Thursday 06 October 2022

The controversy surrounding the efforts of the world’s richest man to acquire microblogging platform Twitter (TWTR) has consistently made headlines across financial journalism outlets throughout the world in recent times. With Elon Musk seemingly ready to return to the original terms set down in ink months ago, some may be wondering if this tech billionaire could finally be on track to take Twitter into the private sphere.

Musk acquisition

Return to the Negotiating Table?

Paperwork made public on October 4th revealed that Elon Musk, following months of apparent efforts to wriggle out of the acquisition deal, could be prepared to move forward. This past Monday, the Tesla (TSLA) CEO issued a letter to Twitter indicating his intention to purchase the social media platform for the original price of $54.20 per share agreed upon last April.

This latest twist in the megabusiness drama may have been particularly surprising considering Twitter saw fit to bring suit against Musk in the U.S. state of Delaware’s Chancery Court in order to force the deal through. Early last July, the multibillionaire publicly expressed concerns regarding the presence of bots, or fake accounts, on Twitter, saying the extent of the issue was deliberately misrepresented by Twitter executives. In Musk’s eyes, due to this discrepancy, he would no longer be able to acquire the platform for the agreed-upon price of $44 billion. 

Whether the true proportion of bot accounts on Twitter is no more than five percent, as stated by company executives, or far more, as contended by Elon Musk, it appears as though the latter is seeking to avoid the complex business litigation set to begin in the coming weeks in Delaware. Musk’s Monday letter asked that the trial, set to begin on October 17th, be paused. This latest request came after the billionaire’s legal team asked last month for the proceedings to be delayed to November. (Source:CNBC)

In any case, it seems that Twitter’s team may still be wary regarding Musk’s true intentions. The speculations that the social media platform may seek to institute extra safeguards to ensure the deal’s safe passage to completion, as well as monetary compensation from Musk for the delays, might be seen as understandable considering the ups and downs of the negotiations between the two sides in recent months. 

Share Price Rollercoaster

The volatility observed across Indices from New York to Tokyo is not news to the savvy market watcher. However, the unique conditions imposed by Twitter’s widely-publicised acquisition deal have proven to exert an outsize influence on the tech firm’s share price.

Twitter Price Chart

Twitter, though smaller in size compared to industry peers like Facebook, operated by Meta (META), has become popular in recent years in part because of its status as a town square-type space available for all and sundry to voice their opinions, at least in principle. However, Musk, an avid Tweeter, has consistently criticized the firm’s policies and even spoken out against the platform’s decision to ban former U.S. President Donald Trump. 

The company Elon Musk is set to acquire, should the deal finally proceed, has been rocked by the push-and-pull between the two sides over the past months, with employees expressing concern regarding Musk’s intentions and advertisers increasingly shying away. Some are even positing that after taking Twitter private, the world’s richest man may make a clean sweep of the firm’s executive suite, as well as rebuild the platform’s content policy from the ground up. (Source:The New York Times)

With speculation still raging about the way forward for this multi-billion dollar acquisition, Twitter shares have jumped by just under 17% so far this week. However, this stock is still more than 26% below the value it held when Musk’s offer was first announced on April 14th. At this point, it’s too early to say whether the deal will come to fruition or whether analyst suppositions regarding the volatility of Twitter’s stock price will be borne out; traders will have to wait and see how it all unfolds. 

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