Elon Musk’s Twitter Buyout Deal is Very Fragile and Could Unravel


There have been few events that in recent history have provoked so much lamentation and handwringing from the left than the possibility that Elon Musk may own Twitter.

However, have their tears really been for nothing? Musk’s deal to purchase the social media giant is fragile. It could fall apart just as quickly as it was made.

The market is one indicator. It’s usually a good indicator of what will happen. After investors started to scrutinize the deal, Twitter shares plunged. Investors are now questioning whether Musk will sell some of his Tesla stock in order to complete the deal. Musk had promised to make a $21billion cash contribution.

Musk has a history of changing his mind. Remember Musk’s 2018 announcement that he had secured funding for Tesla Private, but then he didn’t act on the deal. He also stated that he would take a seat on the Twitter board, but then backed off.

The Twitter deal is complex and investors aren’t sure Musk can pull it off.

Reuters: There are many reasons for him not to get cold feet. Tesla is the biggest. Tesla’s stock has fallen by around a fifth in the five years since Musk revealed his stake in Twitter. This is partly due to Musk selling shares to finance his new venture. The $40 billion in recouped wealth that Tesla would have if it bounces back, which is likely if the Twitter deal fails, would more than compensate for the break fee.

China is another major problem. There, Tesla makes half its vehicles and generates 25% of its revenue. The People’s Republic is not a friend of Twitter. It was recently criticized for its handling of content related to the Hong Kong protests. China could easily take Tesla hostage if Musk-owned Twitter doesn’t cooperate. This is a difficult situation for a self-confessed “free speech absolutist”.

Politics could be the biggest deal-breaker for Musk. Not just left-leaning Americans are in a coma over Musk’s purchase of Twitter. Europeans are able to take action because they have a different view of free speech.

Musk’s absolutism won’t likely survive a Twitter deal. Thierry Breton, European Union Commissioner, told the Financial Times that the company must monitor illegal or harmful content to avoid being banned. Other technology companies could pose the same threat in the United States, which has less aggressive regulators. Apple is an example of this. It has the power to choose which apps are displayed in its store.

If Musk does not back down, he would be responsible for a $1 million walk-away fee. Even for a man worth $240 billion, it’s not pocket change. Musk could still walk away and ease investors’ concerns. Since Musk’s announcement, the value of Tesla has fallen more than 12% to $40 billion. According to The Street, Musk would be able to recoup this much if he canceled the Twitter deal. This makes the $1 billion penalties seem very small.

It all depends on Musk’s commitment to building an inclusive platform that allows speech to be freely expressed. Musk may be able to see the finish line if he is serious and determined.

Musk may decide to give up if he feels the fight isn’t worth it.