Twitter’s stock steeply fell in premarket trading on Monday after Elon Musk withdrew his offer to purchase the platform last week. Its shares trade for $34.31 at the time of writing, down 6.89% from Friday’s $36.85 closing price.
The new price reflects a 36% discount from Elon Musk’s offer to purchase the company for $54.20 per share in April. Its dip over the weekend was pronounced compared to other tech stocks, which have collectively fallen during this year’s rising interest rate environment.
Though Twitter initially accepted Musk’s $44 billion buyout offer, the CEO suspended the agreement weeks later. “Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users,” he tweeted in May.
On Friday, Musk ultimately terminated the agreement due to Twitter’s alleged non-compliance in providing him with sufficient information relating to the platform’s spam accounts. He claimed that information provided by the platform repeatedly came with “strings attached,” making it “minimally useful” to him and his advisors.
However, a clause within the original merger agreement grants Twitter permission to force the billionaire into closing the deal. Twitter Chairman Bret Taylor has already confirmed that his company will pursue legal action against Musk to close the deal on the terms to which they’d agreed.
Adam Crisafulli – founder of Vital Knowledge – said it’s not surprising that Musk would try to jump ship on the deal, according to Yahoo Finance.
“The problem, though, is that this whole saga was probably quite disruptive over the last few months, which could weigh on Twitter’s performance not only in the second quarter but third quarter too,” he said.
In a briefing shared with journalists and executives on Thursday, Twitter claimed to remove 1 million spam accounts from its platform every day. This reportedly represents well below 5% of its active user base each quarter.
Binance backed Musk’s initial Twitter bid with $500 million, alongside numerous other large companies. However, Binance’s CEO clarified last month that he’d only remain supportive if Musk followed through on the deal. “If he doesn’t, then I think we’re off,” he said.
Meanwhile, while Ethereum founder Vitalik Buterin said he doesn’t “oppose” Musk running Twitter, he did object to the general enthusiasm for the hostile takeover of a social media firm.
Other supportive figures like FTX CEO Sam Bankman-Fried and MicroStrategy CEO Michael Saylor have pitched ideas for how Musk could enhance the platform by better-integrating crypto. For instance, Saylor suggested using lightning network Bitcoin deposits to let users earn an “orange checkmark” on their accounts, verifying that they aren’t fake.