“By their jokes, ye shall know them!”
Twitter’s stock price jumped by over 20% within a few hours after Elon Musk, the world’s richest man announced his renewed interest in the Twitter deal, The New York Stock Exchange (NYS) immediately suspended trading of Twitter stock to avoid a market disorder.
Musk revived a bid to buy Twitter Inc. at the original price of $54.20 a share, backtracking on his effort to quit the deal and potentially avoiding a contentious courtroom fight.
Is Elon Musk for real this time, or is he about to manipulate the stock market once again?
Musk made the proposal in a letter to Twitter on Monday, according to a filing with the Securities and Exchange Commission. Twitter said it received the letter and intends to close the deal at the agreed-upon price, without commenting specifically on how it will respond to Musk.
For Twitter, proceeding with Musk’s plan augurs a future under a mercurial billionaire who has spent months publicly criticizing its management, questioning its value and changing his mind. It also means that his contested claims — that Twitter was lying about which percentage of users were bots, for instance — are not likely to be scrutinized in a court of law.
Musk had been trying for months to end his contract to acquire Twitter, signed in April. The billionaire began showing signs of buyer’s remorse shortly after the deal was announced, alleging that Twitter had misled him about the size of its user base and the prevalence of automated accounts known as bots.
Musk’s legal team was getting the sense that the case was not going well, as Judge Kathaleen St. J. McCormick sided repeatedly with Twitter in pretrial rulings. Even with the late emergence of a Twitter whistle-blower who alleged executives weren’t forthcoming on security and bot issues, there were concerns Musk’s side would not be able to prove a material adverse effect, the legal standard required to exit the contract.
Is this another Elon Musk “joke”?
This is not the first time Elon Musk is playing games with the stock market. In August 2018, the unpredictable billionaire said he wanted to take Tesla private at $420 per share and that he had secured the funding to do so. Tesla’s shares spiked as a result.
Musk and Tesla each had to pay the SEC a $20 million fine to settle the suit, and Musk has since agreed to submit his public statements about Tesla’s finances and other topics to vetting by its legal counsel. Musk has never done so.
Bitcoin’s value jumped more than 20% to $38,566 in January last year after Elon Musk changed his personal Twitter bio to #bitcoin. Less than 24 hours earlier, the billionaire appeared to prompt shares in CD Project, which makes the Cyberpunk 2077 computer game, to surge more than 12% after he said via Twitter that a new model of Tesla’s Model S Plaid car would allow passengers to play the game.
Similarly, the Tesla CEO fueled the frenzied surge in GameStop shares when he tweeted “Gamestonk!!” The tweet appeared to help GameStop’s valuation to skyrocket to more than $10 billion in after-hours trading and resulted in some amateur trading apps to pause trading.
What if Musk sends out another Tweet anytime from now that he was joking about going ahead with the Twitter deal? Just as he joked that he was buying Manchester United Football Club.
Should he repeat this joke, Twitter’s share price would plunge, leaving many retail traders and immigrant investors with huge losses, after Musk and other big-time investors must have cashed out.
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