A special meeting of Twitter stockholders is planned for Wednesday, as investors are expected to vote on the $44 billion acquisition offer made by Tesla's billionaire Chief Executive, Elon Musk. TWTR stock now trades well below Musk's offer.
Last week, the board of directors unanimously recommended that shareholders accept Musk's offer of $54.20 a share for TWTR stock, though the ultimate outcome remains unclear.
Musk recently suggested in a tweet he might seek to lower the price of the deal. But Twitter executives have said they won't renegotiate the agreed-upon price.
Twitter stock fell 1.1%, closing at to 37.86 on the stock market today.
TWTR Stock: Investigating Bots
Musk recently tweeted the deal was on a "temporary hold" so that he can investigate the quantity of fake accounts, bots and spammers.
Twitter has said less than 5% of subscribers fit into that category. But it also said the percentage could be higher.
Musk has estimated the figure could be as high as 20%. But he has not presented any evidence for that claim to be reviewed. Many analysts have said getting an accurate count is difficult to unlikely.
Musk has his back against the wall in other ways. He signed off on the negotiated due diligence. As such, it means Musk may have already agreed to Twitter's position on the count.
Moreover, on Thursday, Twitter executives told employees the deal to sell the company to the billionaire is moving forward as planned, and that they won't renegotiate the agreed-upon price.
Deal Moving Forward As Planned
A report by Bloomberg said Vijaya Gadde, Twitter's top lawyer and head of policy, told workers that there is "no such thing as a deal being on hold."
And, if Musk decides to walk away from the deal, which requires a $1 billion penalty for cancellation, it's not as if he can just sign a check and walk out the door. The way the acquisition contract is written, it gives Twitter certain authority that could force the billionaire back to the negotiating table, Bloomberg said, citing the deal contract.
Twitter filed its proxy statement with the Securities and Exchange Commission last week, which outlined the transaction's history and terms of the negotiations.
Investors on Wall Street are also making their voice heard as to whether they think a deal will be reached. The answer, for now, is not at the going rate. Tesla stock currently trades about 30% below Musk's offer.
"Our view in a nutshell is that the $54.20 deal price for Twitter is now out the window in the Street's perspective," Wedbush analyst Dan Ives said in a note to clients. "It's about either driving a lower deal price or Musk could walk away."
Musk Has To Sell Tesla Stock
Possibly the biggest reason Musk might jettison Twitter has to do with Tesla stock. After agreeing to buy Twitter, Musk has had to sell about $8.5 billion worth of Tesla stock.
Tesla stock is down about 40% since Musk, on April 1, revealed he had purchased a 9.1% stake in Twitter. He then announced a plan to acquire all outstanding shares of Twitter that he didn't own. He made the offer on April 14 and the Twitter board agreed to it on April 25.
"The Street is assigning the chance of Musk walking as more than 50% which speaks to the pressure on Twitter shares," said Ives.
The Twitter meeting starts at 10 a.m. PT. Twitter stockholders can attend a virtual shareholder meeting via a live interactive webcast. They can also vote online.
Please follow Brian Deagon on Twitter at @IBD_BDeagon for more on tech stocks, analysis and financial markets.
