TWTR Stock drops 10% as Musk says Twitter deal ‘on hold’
Twitter (NYSE:TWTR) the stock is down 10% today after Elon Musk announced his deal to buy the social media company has been put on hold.
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In a tweetMusk said:
“The Twitter agreement is temporarily suspended pending details supporting the calculation that spam/fake accounts actually represent less than 5% of users.”
This news caused TWTR stock to drop sharply today. Shares of the social media company are up 6% year-to-date as Musk’s $44 billion bid to buy the company and take it private is expected to go ahead as planned .
Now that the deal has been thrown into doubt, the stock is crashing.
What happened with TWTR stock
The musk had warned earlier this week that the deal could still fall apart as it scrambles to secure the funding to buy Twitter outright, a move that has been approved by Twitter’s board.
Musk has previously said that one of his top priorities on Twitter will be to remove “spam bots” and fake accounts from the social media platform. Twitter said in a recent regulatory filing that less than 5% of its monetizable daily active users in the first quarter of this year were bots or spam accounts. Musk is apparently trying to confirm the accuracy of this statement.
why is it important
It’s unclear what will happen to Twitter if Elon Musk doesn’t buy the company. Analysts and some investors viewed Musk as a white knight for Twitter, a tech-savvy billionaire who planned to fix his problems and then send a new and improved version of the company back to the public markets.
However, even before today’s share price plunge, Twitter’s market value had fallen amid the ongoing stock market rout that has been particularly hard on tech stocks. Twitter’s value is now well below Musk’s offer price for the company.
Earlier this week, Twitter said it was undertaking a hiring freeze and a massive cost-cutting program ahead of its potential takeover. Specifically, Twitter said it would not hire new employees and cut costs such as travel, consulting and marketing. Multiple frames have also left Twitter in recent days.
What’s next for Twitter
Chaos and turmoil look likely to shake up TWTR shares today and beyond as the deal that would see Elon Musk buy the social media giant has been thrown into doubt.
As of the date of publication, Joel Baglole had no position (directly or indirectly) in the securities mentioned in this article. The opinions expressed in this article are those of the author, subject to InvestorPlace.com Publication guidelines.