What’s the deal with Musk and Twitter?

By Scoop
July 11, 2022 · less than 3 min read

Why are we waiting?

Run out of steam

Rumors first broke at the end of last week, but over the weekend it all became official. Elon Musk is pulling out of the Twitter deal. The takeover termination all relates to Twitter’s reluctance to divulge data about how many of its active users are actually bots.

Without the data that he needed, Musk and his team have been unwilling to part with the mega millions. Despite Twitter’s board approving the takeover, it seems from team Musk’s side, the deal is off and judging by his own tweets, he isn’t feeling too down about it.

Public forum or private project?

Musk’s takeover had always caused a great amount of unease within Twitter. It’s been desperately trying to clean up its image in light of certain political events and had taken steps to implement a more rigid set of conditions on what is and is not allowed on the platform. Musk was keen to see all of that undone.

And it’s not just the bot issue that’s pushed Musk away. Since announcing the deal, the tech sell-off has had a pretty profound impact on the share prices of both Tesla and Twitter, meaning that even after finding some alternative backers, Musk may not have actually had the cash needed to complete the deal.

But pulling out of the deal now means that Musk might have to pay a pretty price in the future. There’s a $1 billion break-up fee he’ll be liable to pay if he can’t prove something substantial has happened to Twitter that makes the takeover much less viable. Legal experts doubt that the bot issue would qualify, meaning that the Tesla founder will need to find another way out of paying this sum.

Is a share price play on the cards?

Twitter’s shares reacted very negatively to Musk’s withdrawal, compounding a difficult calendar year-to-date. While there’s no question investors are looking for safe investment options, Twitter’s importance to the data and information economies means it’s not likely to stay at these lows forever. So, what does that mean for you? Potential buyers of Twitter shares should pay close attention to the changing picture around the takeover, but these low prices make Twitter an option well worth keeping an eye on.

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