So the Elon Musk-Twitter (TWTR) deal is apparently moot, and the company's stock suffered for it on Monday. On Friday afternoon, the Tesla (TSLA 0.27%) CEO disclosed in a regulatory filing that he aimed to withdraw from the arrangement, and investors promptly traded the stock down by more than 11% the following trading day.
Tech stocks have been out of favor with investors lately, and Musk's attempted retreat isn't helping boost sentiment on Twitter. While many correctly speculated that the mercurial Tesla leader wouldn't go through with his $44 billion play for the micro-messaging company, others clearly believed in it. That's why the company's share price spiked when news of the offer hit the headlines in late April.
Musk's pull-out is ostensibly happening because the company didn't provide enough information for his side to "make an independent assessment of the prevalence of fake or spam accounts on Twitter's platform," as stated in a letter to the company cited in the regulatory filing.
For its part, Twitter denies it was in breach of its arrangement with Musk. It said it aims to file a lawsuit in Delaware's Chancery Court, as per the terms of the deal, to force the businessman to follow through with the acquisition.
This means that Twitter is going to have to marshal at least some time, effort, and resources on battling Musk not only in the courtroom but in the ever-critical court of public opinion. The company has always had shakier finances and more struggles with profitability than many other top tech titles, and this current brouhaha probably won't help. It's understandable that investors bailed from the stock on Monday.