When Tesla (TSLA) CEO Elon Musk bid for Twitter (TWTR) in April, stock market participants briefly
believed he offered a genuine deal. Within a month, doubts intensified.
Last Friday, July 8, 2022, Musk sent a letter to Twitter. He said he would terminate the deal. This
termination will not absolve him from either closing the buyout at $54.20 or paying the $1 billion
breakup fee. The CEO had offered a Twitter buyout that wavered any conditions.
At the time of the bid, Musk sold $8.5 billion worth of shares days after the agreement. TSLA stock
peaked at $1000 - $1100. The stock bottomed at around $650 before rebounding to $752.29.
Musk’s real reason for terminating the Twitter buyout is because he completed selling over-inflated
TSLA stock. If he followed through by over-paying for Twitter, he would commit one-quarter of his assets
to the besieged micro-blogging site.
Twitter is in serious trouble. The company is now distracted in a fight with Musk to force the buyout.
Twitter should enact a specific performance clause. It acted in good faith to supply proprietary data. It
explained its methods for estimating bot accounts.
Your Takeaway
The saga will offer Tesla traders plenty of buying and selling opportunities. Merger and acquisition
investors may the court favors Twitter. In that scenario, traders may bet on Twitter stock, too.
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