Posted by Zaina Murad.
Elon Musk is the CEO of the company Tesla Motors and had previously made a bid statement on purchasing Twitter. However, soon after he rescinded his statement and stated that he was not given crucial information regarding the nature of the company. Musk stated that he wanted to terminate the deal due to being misreported the amount of spam and fake accounts on the social media platform. The CEO of Tesla had collected testimony from Twitter chief executive Parag Agrawal and the former head of security at Twitter, Peiter Zatko. Twitter, as a result, filed a suit against Musk by stating that Musk did not have proper evidence to terminate his bid.
An article published by Washington Post states that weeks before the trial, Musk suddenly became very willing to close the deal at its original price of $54.20 a share. According to legal experts, this is likely due to Musk realizing he was not in a great position to go into the trial and realized he would likely lose due to the depositions that were collected. In the article, Dave Ives who is an analyst at Wedbush Securities wrote, “This $44 billion deal was going to be completed one way or another.” This implies that Musk would have had to go through with the deal through legal proceedings or through going back to his original bid with the company. Twitter has not only dealt with problems regarding this deal in the past year but had also struggled with a stock decline and the loss of many senior executives and rank-and-file workers. Musk’s sudden decision to reinstitute this offer can prove to be a turning point for Twitter’s success.
Due to Musk’s offer, Tesla’s stocks have dropped which is detrimental to Musk’s personal wealth. Washington Post stated, “He had planned to finance the deal through a combination of loans and a $33 billion equity commitment tied to his own wealth, which would draw on investors.” Hence, the deal would be a large deal that Musk would be taking. Interestingly enough, Musk had also sold close to $7 billion of Tesla stock after the deal was going to court and before he had reinstituted his bid. His motives for doing so are unclear.
Overall, Musk’s ownership of the company would come with large changes to the social media platform. The platform would likely have no restrictions on the freedom of speech and unblock the former President of the United States from using the social media platform.
Zaina is a finance major at the Stillman School of Business, Seton Hall University, Class of 2024.
https://www.washingtonpost.com/technology/2022/10/04/elon-musk-twitter-deal/