Twitter (NYSE:TWTR) stock is down 5% after Elon Musk revealed that he received a call from the social media company’s lawyers informing him that he has violated a non-disclosure agreement (NDA).
The latest news that could create hurdles for Musk’s planned $44 billion acquisition of Twitter has sent the social media giant’s stock down today.
On Friday, TWTR stock fell sharply after Musk announced that he was putting his plan to purchase the company “on hold” while he confirmed the number of bots, spam and fake accounts on Twitter.
What Happened With TWTR Stock
In a series of tweets over the weekend, Elon Musk, who is also the CEO of Tesla (NASDAQ:TSLA), said that Twitter’s legal team accused him of violating a non-disclosure agreement by revealing that the sample size for the social media platform’s checks on automated users was 100.
Twitter legal just called to complain that I violated their NDA by revealing the bot check sample size is 100!
This actually happened.
— Elon Musk (@elonmusk) May 14, 2022
On Friday, Musk tweeted on Friday that his $44 billion deal to take Twitter private was “temporarily on hold” while he awaited data on the proportion of its fake accounts. He said, at that time, that his team would test “a random sample of 100 followers” on Twitter to identify the bots. Musk is looking for confirmation that less than 5% of total accounts on Twitter are fake.
Then, over the weekend, Musk said that over 90% of daily active users could be fake.
There is some chance it might be over 90% of daily active users, which is the metric that matters to advertisers.
Very odd that the most popular tweets of all time were only liked by ~2% of daily active users.
— Elon Musk (@elonmusk) May 15, 2022
Why It Matters
There is speculation online that Musk is trying to lower the price that he pays for Twitter. In recent weeks, the share prices of Twitter and Tesla have each fallen sharply. This raises the prospect that Musk might overpay for Twitter based on its current valuation, and that he would have to sell more of his TSLA stock to help finance the acquisition.
Some people online are criticizing Musk for effectively trying to negotiate a better price for Twitter publicly. Other speculate that Musk is trying to justify his plans to drop his bid to buy Twitter entirely.
What’s Next for Twitter
The drama over Twitter’s future continues and so do the ups and downs for TWTR stock. As Elon Musk continues to discuss his proposed acquisition, the shares look likely to continue swinging higher and lower.
Until the current situation is resolved, Twitter shareholders should anticipate that the bumpy ride will continue.
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.