What if Elon Musk doesn’t end up buying Twitter?

Could Elon Musk End Up Buying Twitter? Doubts appear to be emerging on Wall Street as shares of Tesla and the social network lost ground on Thursday and the erratic businessman staged provocations against the platform and its executives.

“Everything we’ve seen in the past month has happened so quickly and so unexpectedly that people are bracing for the possibility that the transaction won’t happen,” Scott Kessler, an analyst at Third Bridge, told the AFP.

On Monday, Twitter accepted a takeover offer from Elon Musk for $44 billion, or $54.20 per share. The stock approached that amount Monday afternoon, but has since fallen. It stayed below $50 at 9 p.m. Thursday.

Also read: Turnover below expectations, but users up sharply for Twitter

“The cost of breaking the deal is only $1 billion,” said Scott Galloway, a marketing professor at New York University. Elon Musk Didn’t Buy Twitter, But a $44 Billion Buyout Option […]† I don’t think he will enable that option.”

The richest man in the world said he secured $46.5 billion: $21 billion of his personal fortune and two Morgan Stanley bank loans. But “there are still many uncertainties surrounding the operation,” added Scott Kessler, recalling the multibillionaire’s latest escapades.

Caring for Tesla

Since Monday, he has published countless messages to the attention of his 88 million subscribers: great statements about defending free speech – its stated goal -, ideas to improve the platform, jokes (“I will buy Coca-Cola then and the cocaine back in), as well as criticism and ridicule aimed at current senior Twitter officials.

Notably, he backed a derogatory tweet to Vijaya Gadde, the lawyer considered to be the social network’s moral authority, then published a meme (parody image) mocking the content moderation policy and the person in charge. †

However, the acquisition agreement signed by Elon Musk expressly authorizes him to tweet about the operation, but with this restriction: “provided that the tweets in question do not denigrate the company or its representatives”.

Also read: Between the end of “waking up the censorship” and fears of democracy, Elon Musk’s takeover of Twitter is splitting

Another concern for the market: The action of Tesla, the flagship of the ambitious boss, has lost more than 13% since Friday. This decrease is mainly caused by the possibility that Elon Musk will sell shares to finance his new project.

“A significant portion of Musk’s Tesla stock will be reserved/used as collateral for the transaction,” Wedbush analyst Dan Ives said in a note, “which isn’t ideal for Tesla investors.” They are also concerned that the boss of SpaceX, Neuralink and other companies, “distracted” by his new adventure, is becoming less involved with the automotive group, the expert noted.

Twitter, a company that is already in debt

By financing much of the acquisition with bank loans, Elon Musk will also increase the debt burden of Twitter, a company that has not excelled in its profitability. On Thursday, it reported revenue of $1.20 billion, slightly below expectations for the first quarter. Net income was $513 million.

The tweet network, on the other hand, saw the number of active users rise to 229 million (6.5% more than year-end), ahead of the 226 million expected. This could be one of the last results releases for the group as Elon Musk plans to pull the platform from the New York Stock Exchange if he achieves his goals.

The California-based company said in its press release that it expects the transaction to close by the end of 2022, if it meets legal requirements and is approved by shareholders.

“We believe the results, along with the current difficulties facing the ad industry, support the board’s decision to accept Elon Musk’s offer, as we see little reason to believe that Twitter could generate more value for its shareholders by staying in the stock market,” noted CFRA’s Angelo Zino. But Elon Musk also said that by buying the “public square”, he was “not looking to make money”.

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