Twitter Is Down By 11%, Here Is Why

Key Insights

• Twitter shares found themselves under strong pressure after Elon Musk paused the deal. 
• Musk said that he wanted to make sure that spam/fake accounts represented less than 5% of users. 
• Traders are worried that there is some other reason for his decision, and sell the stock. 

Twitter Falls After Elon Musk Says That The Deal Is Temporarily On Hold

Twitter stock was back into spotlight today after Elon Musk tweeted  that the Twitter deal was temporarily on hold “pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users”.

Musk also added a link to a Reuters report , which discussed Twitter filing that contained the information about the percentage of false or spam accounts.

It is not clear why the exact percentage of false/spam accounts has suddenly started to play a major role in the deal. Previously, Musk looked determined to buy Twitter for $54.20 per share, so the traders are left guessing what has gone wrong with the deal.

What’s Next For Twitter Stock?

Not surprisingly, Twitter stock found itself under significant pressure at the start of the trading session. Traders are worried that Musk’s words on false/spam accounts are just an excuse to pause the deal, and that there is another reason for his decision.

The market was never certain that the deal would go through. Twitter stock closed near the $45 level on Thursday, 17% below the price offered by Musk.

The discount to the offer price would grow as the level of uncertainty has clearly increased. At the same time, it remains to be seen whether Twitter stock could fall towards the yearly lows near the $31.50 level.

Shorting the stock below $40 would demand a lot of courage as there is a material chance that Musk or some other investor would ultimately buy Twitter for $54.20 per share. Without serious short-selling and sales from current investors, Twitter stock may stabilize in the upcoming trading sessions despite the disappointing news.

For a look at all of today’s economic events, check out our economic calendar.