Twitter shares could end up wiping out all their gains since Elon Musk first built a 9.2% stake in his favorite social media platform.
News that the Tesla CEO had frozen the deal pending confirmation over the number of fake bot accounts on Twitter sent the stock tumbling to around $40 early in the session, well below his $54.20 offer price.
That would be the lowest level since April 1, the final day of trading before Musk’s economic interest in the company first came to light.
“I’m looking on the bright side of life this morning,” Nate Anderson, founder of short-seller Hindenburg Research, crowed on Friday, a direct reference trolling Musk’s jibe at his recent short position on the social giant.
Investors had become increasingly skeptical the Twitter bid would go through the longer the stock market slump continued.
A selloff in Tesla forced the serial entrepreneur to look at alternatives to avoid pledging too many shares as collateral for a costly loan.
As of Friday, it looks as if Elon Musk has found in the company’s bot analysis the excuse he may have been looking for to try to renegotiate the $44 billion price tag on his Twitter bid—or drop it entirely.
In a Twitter post, he said he needs to confirm first whether the number of fake accounts is indeed as low as management has said.
“We have performed an internal review of a sample of accounts and estimate that the average of false or spam accounts during the first quarter of 2022 represented fewer than 5% of our [daily average users] during the quarter,” Twitter revealed in its first-quarter letter to shareholders.
Twitter made one important qualification that could offer Musk the wiggle room he needs to extricate himself from the high bid price, however.
“In making this determination, we applied significant judgment, so our estimation of false or spam accounts may not accurately represent the actual number of such accounts, and the actual number of false or spam accounts could be higher than we have estimated,” it added.
Musk followed up his Friday announcement with a tweet that he is “still committed to acquisition.”
Even if he is forced to pay the $1 billion breakup fee for reneging on the negotiated agreement, at current prices it would be well worth it.
During an interview with the Financial Times on Tuesday Musk already appeared to cast doubt on whether the terms reached were final: “It’s certainly not a done deal,” he told the FT’s Future of the Car summit.
For short-sellers like Anderson’s Hindenburg Research, the stock price plunge is the first vindication of their warning that Musk’s $54.20-per-share offer made on April 14 was at “significant risk” given he held “all the cards.”
The news comes at an inauspicious time for the social media platform, whose staff have been rocked by repeated speculation over imminent sweeping changes.
Twitter cofounder and ex-CEO Jack Dorsey, who has supported Musk’s efforts over his own board numerous times, is also put in a difficult position.
Musk’s decision to freeze the deal came only hours after Twitter CEO Parag Agrawal sacked two senior executives in a management reshuffle.
Head of sales Bruce Falk and head of product Kayvon Beykpour were let go—the latter fired while on paternity leave.
While Twitter stock fell by more than 11%, shares in Tesla jumped over 4% in a relief rally.
This story was originally featured on Fortune.com