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Twitter Stock Plunges After Elon Musk Called Off $44 Billion Purchase

Image of Elon Musk's Twitter profile displayed on a mobile phone screen over several print reproductions of the social network's logo in this illustration image taken April 28, 2022. REUTERS/Dado Ruvic
Image of Elon Musk’s Twitter profile displayed on a mobile phone screen over several print reproductions of the social network’s logo in this illustration image taken April 28, 2022. REUTERS/Dado Ruvic

Twitter shares fall about 7.3% after trading opens on Mondaysince it is expected that a legal dispute Come in Elon Musk and the social media company takes center stage after the world’s richest person withdrew from the deal. 44 billion dollars.

MuskCEO of Tesla, said on Friday that terminated its agreement to buy Twitter because the company had breached several provisions of the merger agreement.

Twitter plans to sue Musk this week and force him to complete the acquisition, they told Reuters people familiar with the matter.

On Monday, Musk criticized Twitter’s stance, tweeting that the legal battle would see the company reveal information about bots and spam accounts in court.

The series of tweets which included some memes, it was Musk’s first public response since Friday’s announcement.

Twitter shares ended at $36.81 on Friday and were 32% off Musk’s $54.20 offer.as they were hit by a double whammy of a decline in the broader stock market and investor skepticism about the deal.

“We believe that Elon Musk’s intentions to terminate the merger are based more on the recent market sell-off than on Twitter’s ‘failure’ to comply with his requests,” Jefferies analyst Brent Thill said in a note.

“In the absence of a deal, we wouldn’t be surprised to see the stock find a bottom at $23.5″.

The contract requires Musk to pay Twitter a fee of billion dollar break if you are unable to complete the deal for reasons such as acquisition financing falling off or regulatory blockage. Nevertheless, the breakup fee would not apply if Musk terminates the deal on his own.

futures in red

Aside from Twitter, all US stock indices were down on Monday, bracing for a leg that could see earnings come under pressure at a time of growing fears of an economic downturn due to aggressive interest rate increases.

After a dismal first half of the year, US stocks started July on an upbeat note, however, market participants fear that upcoming quarterly results may trigger other losseswith earnings potentially below estimates.

Approximately 20 minutes into the trading session, the industrial average dow jones had fallen a 0.6 percent to 31,162.32.

The S&P 500 broad based fell 1.2 percent to 3,852.12, while the composite index nasdaqrich in technology, fell 2.1 percent at 11,395.27, after five days of steady gains last week.

Trading was choppy last week, but investors were somewhat relieved by the easing in commodity prices and the US Federal Reserve hinting at a more dovish program of rate hikes amid growing concerns of a global recession.

Investors wait to know the next steps of the Federal Reserve (REUTERS / Leah Millis)
Investors wait to know the next steps of the Federal Reserve (REUTERS / Leah Millis)

The market is now heavily pricing in a 75 basis point rate hike in late July, however, concerns about the pace of future rate hikes have increased after a stronger-than-expected jobs report on Friday.

The report, which noted a job market still stronghelped ease some fears about an immediate recession, but added to concerns about more aggressive monetary policy tightening by the Fed to quell runaway inflation.

Big banks like JPMorgan Chase, Citi Group Y Morgan Stanley they will post earnings later this week, and their results will be scrutinized for signs of slowing economic growth.

Investors will also focus on US consumer price data. later this week to gauge the state of inflation and how aggressively the Fed might respond.

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