Elon Musk Ruffles Twitter’s Feathers

Twitter‘S

TWTR -7.74%

The field perch has lost everything and has not found a safe landing.

Elon Musk tweeted early Friday morning that his deal to buy the social network was “temporarily on hold” pending details of how the company calculates its user base.

His tweet was linked to a May 2 Reuters article about how spam and fake accounts make up less than 5% of Twitter’s reported daily active users, based on figures from the profile. 10-Q of the company that day — a composite disclosure included in all of Twitter’s quarterly and annual fluctuations since the company went public in 2013.

Two hours later, Mr. Musk tweeted, “Still committed to acquisition.” But the damage has already been done: Twitter shares have fallen about 8% by mid-morning to about $41.46, just about 5% higher than the price the stock was buying before Mr. Musk announced it. disclosed on 4 April that he held a sizable ownership stake in the Company. That turned out to be a prelude to an offer to buy the company outright next week that culminated in a deal announced on April 25 for $54.20 per share in cash. face.

Shares of Twitter were about 17% below Thursday’s closing price – an unusually wide spread that reflects growing skepticism about Mr Musk’s take on the trade, at least at the price. it has come to an agreement. But sticking to the long-revealed issue of fake versus real users — a murky issue that plagues every social media platform — is odd. Regardless, the world’s richest mind-changer could use the issue to negotiate a deal price down or as an excuse to walk away altogether, with uncertain legal consequences.

In the latter case, Twitter’s stock will almost certainly fall more – possibly more.

Consider that since April 1, the S&P 500 is down 12% while the Nasdaq Composite is down 18%. Internet stocks did even worse, with the Nasdaq CTA Internet Index falling 24% during that time. Alphabet Inc.

and Meta Platforms—the parent company of online advertising giants Google and Facebook—have lost 17% and 12% of their value respectively during that time while Snap’s parent Snapchat Inc.

was reduced by 35%.

Without Mr. Musk’s offer, Twitter might not have succumbed to the same gravity. The company’s first-quarter revenue reported April 28 fell slightly short of Wall Street expectations despite a surprising spike in daily active users. Overall, online advertising is under the combined pressure of rising inflation, supply chain challenges, and the war in Ukraine.

The industry is still working on changes Apple made to its mobile operating system last year that made it more difficult to track users. There’s also the growing competitive force of TikTok, which has quickly become the third most-used social media app, according to a survey by Edison Research.

A drop just mirroring the Nasdaq Composite from Twitter’s pre-Elon levels would leave the stock at $32 a share — about 23% lower than it changed hands Friday morning. And the stock could be even more bearish than its peers as the loss of the contract will focus the light more clearly on Twitter’s internal unrest. Mr. Musk could still do the deal, but that’s unlikely to be certain in the first place. Looks like there’s even less than one now.

Elon Musk has cultivated close ties with Beijing to build Tesla’s business in China. Now that he’s buying Twitter and focusing on free speech, the WSJ looks at how China has used the social media platform to promote its views and why that has raised concerns. Photo illustration: Sharon Shi

Write letter for Dan Gallagher at dan.gallagher@wsj.com

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https://www.wsj.com/articles/elon-musk-ruffles-twitters-feathers-11652457698?mod=rss_markets_main Elon Musk Ruffles Twitter’s Feathers

Edmund DeMarche

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