Their largest one-day decline in more than two months, Twitter shares dropped $4.16, or 11.3 percent, to $32.65. In the S&P 500 on Monday, the stock had the worst performance. The action comes in response to Mr. Musk’s disclosure to securities regulators on Friday that he is seeking to renegotiate his $44 billion deal to buy Twitter and take it private because the company hasn’t given him the information he needs to assess the prevalence of fake or spam accounts. Mr. Musk claimed that the company hasn’t given him the information he needs.
An astonishing turnabout for what was once thought to be the most talked-about deal of the year can be seen in Twitter stock, which is currently trading about 40% below the $54.20 per share price at which Mr. Musk agreed to purchase the company in April. Its stock is also trading below where it did in early April, before Mr. Musk unexpectedly purchased a 9% stake in the business, formally launching his takeover bid.
In the midst of a global stock market decline, Mr. Musk’s attempt to acquire Twitter has caused shares of both Tesla Inc. and the social media company to soar. The electric vehicle manufacturer’s CEO, Mr. Musk, sold Tesla stock this year after deciding to purchase Twitter.
When the acquisition was first announced, Twitter shares and options saw a spike in activity, with many individual investors jumping in. Since 2020 in April, when Mr. Musk first made a bid for the company, purchases of Twitter shares among individual investors have increased to about 11 times the monthly average.
Shares of both companies have since experienced a further decline. Since the announcement of the deal, shares of Tesla and Twitter have fallen by about 30% and 37%, respectively, versus a roughly 10% decline for the S&P 500.
Stock prices have fallen precipitously, and shares of technology companies have been hit particularly hard by concerns about inflation and a possible impending recession.
The tech-focused Nasdaq Composite has lost 27% of its value for the year as a result of investors selling their shares in both tech giants and nonprofitable growth companies. Twitter recently cut 30% of its recruitment team in response to the gloomier future for digital advertising.
The drama between Mr. Musk and Twitter has made shares of Tesla, a stock known for its wild swings, even more volatile. With the new initiative, some Tesla supporters expressed worry that Mr. Musk would lose focus from the electric vehicle manufacturer, which hurt the stock price of the company.
Throughout the turmoil this year, investors’ most popular bearish wager on the U.S. market has continued to be Tesla shares. According to data from S3 Partners as of July 1, the stock’s decline has also made the short position the one that is most profitable.
As worries about the deal falling through circulated, Tesla’s stock already saw a boost last week and was among the biggest gainers in the S&P 500. Tesla shares decreased by $49.26, or 6.6 percent, to $703.03 on Monday.
Investors, attorneys, and observers are currently preparing for what may turn out to be one of the most unique legal disputes in the annals of corporate takeovers, a drama reflected in Twitter’s shaky stock. From its closing high of $51.70 in April, the social media company had lost more than $11 billion in market value as of Friday.
Until now, traders in the options market have bet that the deal will ultimately fall through.
According to Amy Wu Silverman, managing director at RBC Capital Markets, “right now, the options market is leaning more towards they won’t” execute a deal.
According to Ms. Wu Silverman, the markets for Tesla and Twitter options have been experiencing two distinctly different dynamics. While Twitter’s expected volatility has been increasing, it has been decreasing for Tesla. According to Ms. Wu Silverman, traders have been paying more to insure against further losses in Twitter stock through the options market, whereas the price of such insurance has been edging lower in Tesla options.
According to data provider Trade Alert, Tesla options linked to the shares rising to $760 were among the most popular in the entire market even before Mr. Musk’s regulatory filings late Friday. Only bets linked to the S&P 500 as a whole and Apple Inc. stock were ahead of them.
In an effort to end the agreement, Mr. Musk claimed Friday that Twitter had broken the terms by making significant changes to the regular operation of the business without his permission. Additionally, he claimed that the business had withheld data from him. In the early hours of Monday, Mr. Musk reiterated his position with a string of distinctive memes and Twitter replies.
Twitter has previously stated that it has shared information with Mr. Musk and will do so in the future. The business has now announced that it will file a lawsuit, claiming that Mr. Musk must complete the agreed-upon transaction.
