What if Elon Musk doesn’t buy Twitter?

Could Elon Musk not buy Twitter? Doubts appear to be brewing on Wall Street as shares in Tesla and the social network lost ground on Thursday, and the capricious entrepreneur escalated the taunts against the platform and its executives.

“Everything we’ve seen in the past month has happened so quickly and so unexpectedly that people are bracing themselves for the possibility that the transaction won’t happen,” Scott Kessler, an analyst at Third Bridge, told AFP.

On Monday, Twitter accepted an offer to buy Elon Musk for $44 billion, or $54.20 a share. The stock approached that value on Monday afternoon, but has since fallen. It remained below $50 on Thursday at 9pm.

Read too: Turnover below expectations, but Twitter users on the rise

“The costs of breaking the deal are only $1 billion,” said Scott Galloway, a professor of marketing at New York University. “Elon Musk didn’t buy Twitter, but a $44 billion call option […]. I don’t think he will enable that option.”

The world’s richest man said he had secured $46.5 billion: $21 billion from his personal fortune and two Morgan Stanley bank loans. But “there are still a lot of uncertainties surrounding the operation,” added Scott Kessler, evoking in a half-word the multibillionaire’s latest adventures.

Tesla’s Concerns

Since Monday, he has posted countless messages for the attention of his 88 million subscribers: big statements in defense of free speech – his stated goal – ideas for improving the platform, jokes (“I’ll then buy Coke and put cocaine back”), but also criticism and mockery aimed at current Twitter officials.

In particular, he supported a derogatory tweet to Vijaya Gadde, the lawyer considered the moral authority of the social network, and then published a meme (parody image) to mock the content moderation policy and the person responsible.

However, the acquisition agreement signed by Elon Musk expressly authorizes him to tweet about the operation, but with this restriction: “provided that the tweets in question do not denigrate the company or its representatives”.

Read too: Between the end of “agreed censorship” and fear for democracy, Elon Musk’s takeover of Twitter divides

Another concern for the market: Tesla, the flagship of the ambitious boss, has lost more than 13% since Friday. This drop is mainly due to the possibility of Elon Musk selling shares to finance his new project.

“A significant portion of Musk’s Tesla shares will be set aside/used as collateral for the transaction,” Wedbush analyst Dan Ives explained in a note, “which is not ideal for Tesla investors.” They are also concerned that the head of SpaceX, Neuralink and other companies, “distracted” by their new adventure, is less concerned about the automotive group, the expert noted.

Twitter, a company already in debt

By financing much of the acquisition with bank loans, Elon Musk will also increase the debt level of Twitter, a company that does not shine with its profitability. On Thursday, it reported revenues of $1.20 billion, slightly below expectations for the first quarter. Its net income was $513 million.

The tweet network saw the number of active users rise to 229 million (6.5% more than at the end of the year), better than the 226 million forecast. This may be one of the group’s last earnings releases, as Elon Musk intends to take the platform off the New York Stock Exchange if it achieves its goals.

The California-based company said in its press release that it expects the transaction to close by the end of 2022, if it meets regulatory conditions and is approved by shareholders.

“We believe the results, along with the current difficulties facing the advertising industry, support the board’s decision to accept Elon Musk’s offer, as we see little reason to believe that Twitter could deliver more value. ” commented Angelo Zino of CFRA. But Elon Musk also said that in buying the “public square”, he was “not looking to make money”.

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