Twitter and Elon Musk reportedly dispute terms of deal
Yahoo Finance Live anchors discuss stock performance for Twitter amid reports that the social media giant and Elon Musk are butting heads over the terms of the acquisition deal.
Video Transcript
- Well, talking of wild cards, here's the wildest wild card of them all, the story that we've been following all year. The Twitter Elon Musk saga is what we're talking about. It has dragged on. Now the "Wall Street Journal" is reporting the two parties are butting heads over the terms of the purchase agreement. This after Musk did an about face this week, saying he will now agree to the original deal's terms.
According to reports, Musk had been trying to get Twitter to lower the acquisition price. And now there appear to be concerns surrounding Musk having the necessary financing. So when we first got this headline that this was going to happen, everybody was like, oh, it's happening after all. But there were still some skepticism, right. Is it actually going to happen? We thought it was actually going to happen the first time. And then it didn't end up happening. And if you look at how the stock is trading, that is also telling you that there are some skepticism here because it's not trading at 54.20. It's trading now down near 50 in pre-market trading. So that tells you there are some questions here about what's going to happen.
- And it's in the language in the original filing too because it's where there could potentially be this out and the outcomes with the financing it seems right now. Because this proposal, as they said in the offer, even when Elon Musk had kind of tweeted out, I made an offer, the proposal, non-binding, one structured, and agreed upon, would be conditioned upon a few things.
And one of those last things was the completion of anticipated financing. The banks that are financing this deal are still going to have to pony up a considerable amount. And then there's the additional amount that Musk himself is required to put up for this deal. And that raises the question of, would he be required to sell more of his Tesla shares in order to make this financing possible as well?
- Yeah. Look, this is turning out to be a-- or I would just say a slow motion train wreck. So let's say Musk does close this deal. Next year, right out of the gate, you're probably looking at a ton more layoffs at Twitter. You are probably looking at the return of former President Donald Trump on this platform. And we talked a little bit about this yesterday, Julie. That can bring a lot of problems to Twitter and their advertising sales. And if you're Facebook and you're Snapchat, you're probably using this time right now to reconnect with your avatar. You're saying, you know what, we will take your business. If Trump comes back on this platform, we'll gladly take your business, even if it's at a lower rate. We're here to help. It could be a big tailwind for some of those companies.
- Right. And Musk himself is also now talking about this new X app, this everything app. But I think we get a little bit ahead of ourselves because it's not done and dusted until it's done, right. And for right now, the trial between the two parties, between Twitter and Elon Musk, is still scheduled for October 17.
Now, I was slacking a bit with our legal reporter, Alexis Keenan, this morning. And I said, if Musk loses the financing, does the trial still go ahead? And she said, it looks like maybe not. That would be a way for this-- because if Twitter is accusing Musk of not going through with the deal for spurious reasons, not getting the financing doesn't necessarily qualify-- fall into that category.
- Just to your advertising point. There's so many questions about whether or not Twitter has actually in the future from now, three, five years out from now, still got the same type of advertising relevancy that they did three years ago, even two years ago, because it doesn't have the same type of influence or power that the others have right now, whether that's a TikTok, whether that's an Instagram. And marketers want to see that. They want to see the volume. They want to see the reach, the impressions be directly impacting a lot of their core audience.
And if your core audience is no longer there because now you've got an aging Twitter versus a BeReal, versus a Instagram Reels, versus a Tik-Tok that has that core audience that they're going after because it has better customer lifetime value, more sellability, and even transaction value in the platform, that's directly where Twitter loses a lot of that fanfare. So it's a question of even if this were to fully go through, what type of advertising should we even expect from Twitter?
