Twitter shares sank sharply in early premarket trade Monday after Elon Musk said he is trying to terminate his $44 billion takeover of the company.
Shares of the company fell nearly 9% in U.S. premarkets before paring some losses to trade 7% lower. Tesla stock, meanwhile, was up around 1% in premarket trade.
On Friday, Musk’s attorney notified Twitter’s board that he wants to cancel the deal. The billionaire has taken issue with the number of bots and fake accounts on Twitter and says the company isn’t being truthful about how much activity on the service is authentic.
Twitter, on the other hand, says it has given Musk the information he needs to assess its claim that spam accounts make up only 5% of monetizable daily active users, including its so-called “firehose,” an unfiltered, real-time stream of daily tweets.
Bret Taylor, Twitter’s board chair, said the company would pursue legal action in the Delaware Court of Chancery to enforce the agreement.
Musk responded Monday by posting a meme mocking Twitter management over the botched deal. It features images of Musk laughing alongside text claiming the company is trying to “force” him to buy it in court.
A Twitter spokesperson declined to comment on the meme.
Musk is one of Twitter’s most popular users, with over 100 million followers. He’s used the social media site for everything from corporate communications for his various companies to bashing the very platform he previously wanted to acquire.
Richard Windsor, founder of research company Radio Free Mobile, said Musk’s “desire to greatly renegotiate the price of Twitter” was likely the reason for his exit from the deal.
While he’s not a Twitter shareholder, Windsor says that, if he was, he’d sell now.
“There is still a disconnect between the fundamentals and the share price,” Windsor told CNBC’s “Squawk Box Europe” Monday.
“If you look at some of where the technology sector has gone over the last couple of months, you could put Twitter’s valuation somewhere between $13 [billion] to $15 billion which is around about roughly 50% below even where the share price is today.”
