- Daily Zen
Elon Musk twitter profit could soon be a mirage that blew off in Wall Street storm.
The Elon Musk Twitter saga is headed for some dark days ahead, as the share price of Twitter tanked wiping away millions in profit. Elon Musk’s Twitter profit stood at nearly $1.1 billion at the time of the deal, but now it has turned into a loss of nearly $40 million in just four weeks.
On April 25, the share price of Twitter stood at $51.70 but today it hovers around $39.52.
So, how did the Elon Musk Twitter deal lose around $10 million a week? Twitter’s most recent fall can be attributed to a bearish outlook in the market towards social media stocks. Snap’s results added to the panic as Wall Street tried to cut losses and flee. On Monday, Snap reported that it will miss its earnings and revenue targets for the current quarter.
In April, the company informed its investors that they are expecting 20% and 25% year-over-year growth in revenue. Snap CEO Evan Spiegel’s candid take on the present market conditions had investors scurrying for exits. While assuring stakeholders that the company is growing, just not as fast as expected, he admitted, “the macro environment has deteriorated further and faster than we anticipated when we issued our quarterly guidance last month.”
After Spiegel shared his views, Snap’s stocks plunged nearly 30% in after-hours trading on Monday. This sentiment cascaded down to other social media stocks and the digital ad industry, which had already cutback on its spending. Twitter lost nearly 43% of its market share, while Pinterest lost 23.6%, Google lost 5%, Meta lost 7.6%, and Twitter lost 5.6%.
Rising inflation, the invasion of Ukraine, supply chain issues, policy changes like Apple iPhone’s privacy feature, and labor disruptions have all had a negative impact, according to Spiegel.
When the Elon Musk Twitter deal was announced, it had sent the micro-blogging site’s share price soaring.
On Tuesday, May 24, Twitter’s stock plunged further as investors tried to rid themselves of social media stocks in wake of Spiegel’s announcement. So far, Twitter’s stock has fallen by nearly 18% this year. According to Bloomberg, Elon Musk’s net worth has dropped by $58.7 billion since the beginning of 2022.
Elon Musk tweets have always made news, and one of his Twitter polls eventually resulted in him making an offer to buy the company. Musk has been critical of Twitter’s free speech policies as he believes the social media giant which is “the de facto public town square” is restrictive in its policies.
Expert analysts admit that Spiegel’s confession has thinned investor appetite for social media stock. Furthermore, it is clear that the advertising environment is set to worsen with no end in sight. Add to it the prevailing economic uncertainty, and Wall Street does not want to bet anything that has an ambiguous future. Russ Mould, an investment director at AJ Bell, told Business Insider that “tighter monetary policy, meaning less and more expensive fun money for investors.” Twitter’s misfortune has also rubbed off on Tesla stocks. Tesla investors have waited with bated breath to see how Musk will fund his Twitter purchase. Recent filings revealed that he plans to put up nearly $33.5 billion of the $43 billion and has secured an additional $6.25 billion in equity financing. For now, the deal is on hold after Musk stated that he will not complete the acquisition unless Twitter can prove that spam bots account for less than 5% of its users.
If things continue to stay the way they are, Elon Musk’s Twitter profit could be non-existent. The Tesla CEO can still choose to walk away from the deal, but he must pay Twitter a $1 billion penalty.