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Editorial Advisory Board

  • Professor Andrea M. Armani, University of Southern California
  • Ruti Ben-Shlomi, Ph.D., LightSolver
  • James Butler, Ph.D., Hamamatsu
  • Natalie Fardian-Melamed, Ph.D., Columbia University
  • Justin Sigley, Ph.D., AmeriCOM
  • Professor Birgit Stiller, Max Planck Institute for the Science of Light, and Leibniz University of Hannover
  • Professor Stephen Sweeney, University of Glasgow
  • Mohan Wang, Ph.D., University of Oxford
  • Professor Xuchen Wang, Harbin Engineering University
  • Professor Stefan Witte, Delft University of Technology

Due to Spam Bots, the Transaction Between Tesla and Spacex Has Been Suspended.

It has been 79 days since Elon Musk revealed his Twitter TWTR +1.12% ownership and 69 days after he declared “I made an offer” on Twitter, kicking off the buyout drama. As of this writing, it has been 40 days since the announcement that the transaction between Tesla and SpaceX had been put on hold due to spam bots.

The whole affair has been like a soap opera. Investors in Twitter (NYSE: TWTR) and Tesla (NASDAQ: TSLA) have no idea how the show will conclude.

When asked about the “unresolved” problems he wants to fix before completing his proposed $44 billion acquisition of the social media site, Musk said that spam bots on Twitter are one of them. According to Musk, Twitter’s claimed daily use rate of 5 percent is far lower.

The topic of a shareholder vote should not come up. Musk is willing to pay $54.20 a share for the company’s stock. The shares of Twitter finished last week at $37.78, more than $16 a share, or nearly 43%, away from Musk’s offer. In today’s market, investors are unlikely to sacrifice a 40% increase.

Possibly, the hump isn’t that big. Twitter’s share price is below the bid price, and this tells us two things. Starting with the most obvious possibility, Musk may decide to leave and pay the breakup fee with the spam bots. However, Twitter may argue otherwise in the courts. Also, Musk may be negotiating with the seller to get a better deal.

Still, there’s a lot of value in Twitter’s shares that may be sold. Shares have fallen around 4% after the news of Tesla CEO Elon Musk’s ownership was made public. Over the same period, the Nasdaq CompositeCOMP +1.43 percent has fallen approximately 24 percent.

Investors in Tesla are likely to favor a no-deal result. Tesla’s stock price dropped by 40% after Musk’s Twitter ownership was made public. It’s difficult to gauge the EV stock’s exposure to Twitter. In a bear market, Tesla’s stock would normally fall more than the Nasdaq, which is more volatile than Tesla. Tesla’s record-breaking first-quarter earnings are also included in the time frame of the agreement.

Tesla posted record quarterly profits per share of $3.22 at the end of April. For the stock market, a profit per share of about $2.25 was considered satisfactory. It’s simple to make the case that Tesla should be outperforming the Nasdaq based on these outcomes.

Also on Tuesday, Musk had some things to say regarding Tesla, the electric vehicle manufacturer, reaffirming his warning about job layoffs at Tesla and stating that the business would reduce its salaried employees by around 10% over the next three months. For the time being, Musk stated in an interview with Bloomberg, “I believe our headcount will be greater” in terms of both paid and hourly employees, but “a year from now, I think our headcount will be higher”

While Musk was at it, he sought to ease any fears that his Tesla stockholdings might hamper his quest to acquire Twitter. There is no evidence to support the claim that “China does not strive to interfere with American free speech,” Musk said in the interview. 

Musk made a lot of statements. For investors, it all comes down to more time on their hands. Still, there’s a long way to go in this soap drama.

Twitter’s stock price, which has dropped by 12.6% since January, increased by 1.5% to $38.34 on Tuesday morning, just before the market opened. Tesla stock rose 3% in premarket trading. The week is off to a green start. The S&P 500 SPX +0.22 percent futures climbed by 1.9 percent stock’s index

The post Due to Spam Bots, the Transaction Between Tesla and Spacex Has Been Suspended. appeared first on Best Stocks.

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