Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge. When he's not neck-deep in crypto stories, Tolu enjoys music, loves to sing and is an avid movie lover.
Twitter stock was trading at $37.39 on Monday, representing a complete reversal of gains acquired after Musk announced minority ownership.
Twitter Inc (NYSE: TWTR) stock has shed all of its gains back since Elon Musk disclosed his 9% stake in the company last month. On Monday, May 16th, Twitter stock plunged to $37.39, which sits below April 1st’s closing price of $39.31. The given date was the last trading session before Musk disclosed that he had bought a 9% stake in the social media giant – granting him minority ownership.
Twitter Stock Decline Triggered in Part by Musk Deciding to Pause Acquisition Deal
The Tesla (NASDAQ: TSLA) CEO seemed to put investors in a tailspin when he announced a pause on the Twitter deal late last week. Musk, who had earlier reached an agreement to buy Twitter outrightly for $44 billion, stated on Friday that he sought to further investigate the platform’s 5% fake account estimation. In response to the Twitter revelation, which first debuted in its quarterly report, Musk paused the acquisition proceedings. Investors interpreted this move as a red flag, suggesting that the Tesla CEO wants to back out. As a result, they began dumping Twitter stock which was already on a decline from an early week sell-off.
Although Musk later reaffirmed his commitment to buying Twitter after his initial tweet, the billionaire businessman is in an expensive bind. Should he opt out of the deal, Musk may have to part with a $1 billion breakup fee.
Twitter CEO Parag Agrawal said he still expected the sale to Musk to go through. However, Agrawal also added that he remains prepared to continue “leading and operating Twitter” if the deal falls apart.
Over the weekend, Musk continued to tweet about Twitter’s algorithm problems and other “potential bugs in the code”. Also, the Tesla and SpaceX CEO further explained that his expose was not meant to be a scathing assessment. He wrote in a tweet:
“I’m not suggesting malice in the algorithm, but rather that it’s trying to guess what you might want to read and, in doing so, inadvertently manipulate/amplify your viewpoints without you realizing this is happening.”
Twitter CEO Touches on Spam & Fake Account Issues
Musk’s sustained questioning of Twitter’s backend operations finally seemed to invoke an explanatory response from Agrawal. In a series of tweets on Monday, the company CEO provided insight into how Twitter tackles spam, saying:
“Our team updates our systems and rules constantly to remove as much spam as possible, without inadvertently suspending real people or adding unnecessary friction for real people when they use Twitter: none of us want to solve a captcha every time we use Twitter.”
In addition, Agrawal also touched on the fake account issue of the microblogging platform.
“The hard challenge is that many accounts which look fake superficially – are actually real people. And some of the spam accounts which are actually the most dangerous – and cause the most harm to our users – can look totally legitimate on the surface,” stated he.