Elon Musk avoids legal nightmare in $44 Billion deal U-turn
In recent times, acrimony and misunderstandings have threatened to turn Elon Musk’s shotgun wedding to Twitter into the messiest and most protracted of separations.
It appeared as though Musk had backed out of an agreed $44 billion deal after feuding publicly with Twitter boss Parag Agrawal, while a judge recently gave both parties a deadline of October 28th to resolve the issues.
With this date just weeks away, however, Musk appears to have u-turned once again and is now prepared to go ahead with the deal. But why is this the case, and what does Musk plan to do with the social media platform?
Why Has Musk U-Turned?
It’s almost inevitable that Musk’s U-turn has occurred as a result of continued legal advice, especially as the legislative deadline of October 28th drew closer.
Now less than two weeks away, the date must have begun to weigh heavily on Musk and his legal team, particularly with most legal commentators believing that Twitter had the much stronger case (which is presumably why they sued the Tesla boss in the first place).
In a formal letter to Twitter’s senior leadership, Musk pledged to press ahead with his acquisition of the platform, while agreeing to pay the same price he offered months ago before his attempted withdrawal.
It’s thought that the deal will be concluded for $54.20 per Twitter share, while all that’s left to be done is for the social media giant to formally end its legal action and receive an official offer of financing.
How Has This Affected TSLA and TWTR Share Prices?
Unsurprisingly, the announcement of Musk’s U-turn had a positive impact on Twitter’s share price, which jumped by 22% after the markets re-opened.
Initially, Twitter shares (TWTR) were halted after Bloomberg reported that Musk intended to go ahead with the deal as previously agreed, with their value soaring immediately after trading resumed.
While TWTR shares have thrived, however, Tesla (TSLA) stocks have slumped in the wake of Musk’s revelation. They hit a four-month low of $216.50 per share on October 11th, having peaked just below $350 earlier in 2022 and $308.73 as recently as September 20th.
The decline of TSLA shares is to be expected in some respects, as Twitter will command at least some of Musk’s focus in the near and medium term. Regardless, CFD trading enthusiasts will still be able to profit.
What Does This Mean for Twitter?
From a broad perspective, Musk has discussed evolving Twitter into a Chinese-style “everything app” like TikTok, which now combines social networking and messaging with eCommerce shopping and peer-to-peer payment platforms.
This is an ambitious but not completely unsurprising aim, and it’s far more interesting to note that Musk is a self-proclaimed “free speech absolutist”. Previously, he has talked about censorship and Twitter’s use of algorithms that curate what users see while suggesting that an open-source algorithm may be used to correct the latter issue.
Musk has also suggested that he would offer advice to Twitter’s leadership in terms of how moderators approached content and cracking down on certain types of speech while stopping short of saying he would enforce his ideals on how the site should be run.
Of course, we have yet to see how Musk will approach his role as Twitter owner, or even if the deal will go ahead in the near term.
However, it will be an exciting space to watch, with Musk’s presence likely to disrupt Twitter and the existing social media landscape as a whole.