Twitter (NYSE:TWTR) stock is down 10% today after Elon Musk announced that his deal to buy the social media company has been put “on hold.”
In a tweet, Musk said:
“Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users.”
That news has sent TWTR stock sharply lower today. Shares of the social media company had risen 6% year to date on expectations that Musk’s $44 billion bid to buy the company and take it private will go through as planned.
Now that the deal has been thrown into doubt, the stock is tanking.
What Happened With TWTR Stock
Musk had warned earlier this week that the deal could still fall apart as he works to secure the financing needed to buy Twitter outright, a move that has been approved by Twitter’s board of directors.
Musk has said previously that one of his main priorities at Twitter would be to remove “spam bots” and fake accounts from the social media platform. Twitter said in a recent regulatory filing that fewer than 5% of its monetizable daily active users during the first quarter of this year were bots or spam accounts. Musk is apparently trying to confirm the accuracy of that statement.
Why It Matters
It’s not clear what will happen to Twitter should Elon Musk fail to purchase the company. Analysts and some investors had viewed Musk as a white knight for Twitter, a tech-savvy billionaire who planned to fix its problems and then return a new-and-improved version of the company to public markets.
However, even before today’s plunge in the share price, Twitter’s market value had fallen amid the ongoing stock market rout that has been particularly hard on technology securities. Twitter’s value is now well beneath Musk’s offer price for the company.
Earlier this week, Twitter said that it is undertaking a hiring freeze and massive cost-cutting program ahead of its potential takeover. Specifically, Twitter said it won’t hire new employees and will pull back on costs such as travel, consulting and marketing. Several executives have also left Twitter in recent days.
What’s Next for Twitter
Chaos and turmoil look likely to roil TWTR stock today and beyond as the deal that would see Elon Musk buy the social media giant has been thrown into doubt.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.