Elon Musk Postpones Twitter Deal

Elon Musk drafted an official press release this morning declaring his intent to postpone his deal with Twitter…

…Just kidding. 

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

C’mon guys. You know that’s not how Elon rolls. 

He actually just dropped the above tweet at 5:44 AM EST with no forewarning. 

The Tweet references a self-report from Twitter estimating that the full userbase contains less than 5% of spam accounts and bots. Elon’s not clear about where that “supporting calculation” is coming from, or what percentage of Twitter accounts he believes are fake. 

But according to a follow-up tweet, he is still interested in the deal.

Still committed to acquisition

— Elon Musk (@elonmusk) May 13, 2022

Stock Market Shakeup

As with any major announcement that Elon Musk makes, the stock market cares.

Twitter ($TWTR) fell hard on the news, dropping more than 11% within the first 30 minutes of trading. It currently hovers above its pre-Elon price.

Source: Google Market Summary

This may mean that investors don’t believe Elon Musk’s tweet saying that he’s “still committed to the acquisition” — it could also mean that investors believe Elon will try to negotiate a lower acquisition price. 

Conversely, Tesla shares are riding high — up more than 5% in the same amount of time. 

Source: Google Market Summary

Many Tesla investors have expressed concerns about Elon’s Twitter deal. Some believe it could create a distraction for the already busy CEO, or that the deal was being politicized, potentially damaging Tesla’s brand. 

More importantly, Elon had to pledge some of his Tesla shares in order to obtain financing for the deal, which presents a margin risk if Tesla shares were to plunge. 

Check out Jon Najarian’s quick take on the big news from this morning’s 60 seconds:

The Bottom Line

Any time Elon shakes things up like this, it creates chaos, volatility, and most importantly: trading opportunities. Investors who can react quick enough to his entropic announcements and decode his cryptic tweets are often rewarded.

We’ll be keeping a close eye on the situation for updates from Elon or from Twitter, and if you’re invested in either Tesla or Twitter, you probably should be too.