Shares of social media platform Twitter Inc TWTR jumped Thursday with a report that an acquisition by Tesla Inc TSLA CEO Elon Musk could be nearing a finish line.
Twitter shares then fell after-hours Thursday after a new report said the deal to buy Twitter is in “peril.”
“Elon Musk’s deal to buy Twitter is in serious jeopardy,” sources told the Washington Post.
Musk has stopped working on funding for the acquisition according to sources with talks between Twitter and Musk cooling.
Twitter handed over data to Musk and his team concerning spam accounts, an issue raised by Musk previously. Due to not being able to verify the validity of the data, Musk and his team could take “potentially drastic action.”
Earlier Thursday, Benzinga reported Twitter manually reviewed thousands of accounts and determined that less than 5% of accounts are bots.
Why It’s Important: Musk began accumulating shares of Twitter earlier this year and surprised many with a $44 billion bid to buy the social media platform.
The terms of the Twitter acquisition come with a $1 billion breakup fee for Musk. A lengthy legal battle could ensue if Musk decides to walk away from the deal on the notion of spam accounts.
Musk waived his rights to explore more of Twitter’s finances in April, which could put him at risk of paying the breakup fee to Twitter or being forced to go through with the acquisition.
With Twitter shares trading below the $54.20 buyout price, there is a chance that Musk comes in with a lower buyout price in an effort to meet in the middle to get a potential acquisition to go through.
TWTR Price Action: Twitter shares are down 4.05% in after-hours trading to $37.22. Shares have traded between $31.30 and $73.34 over the past 52 weeks.
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