June 28, 2022

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Twitter shares fell sharply after Musk's statement

Twitter shares fell sharply after Musk’s statement

On the first trading day of this week, all three major indices opened cautiously in the red, but after the close of trading on Monday, it looked like this on Wall Street:

  • The S&P 500 index fell 0.39 percent.
  • Nasdaq fell 1.20 percent.
  • The Dow Jones rose 0.08 percent.

The tech-heavy Nasdaq was affected by dips among heavyweights like Apple, Netflix and Tesla. While Twitter’s share fell by as much as 8.20 percent on Monday, after Elon Musk tackled platform challenges with so-called fake accounts or spam.

Predict whether to try to lower the price

Since it became known that Tesla Chairman Musk is planning to buy Twitter social media entirely for just over 400 billionthere was a great deal of uncertainty associated with whether or not the purchase was actually going through.

On Friday, Musk himself questioned the acquisition when he was I was informed that the agreement has been suspendedappropriately enough in a Twitter message.

“The Twitter agreement has been temporarily suspended pending information supporting accounts that constitute spam or fake accounts for less than five percent of users,” he wrote.

The message sent Twitter’s share down more than nine percent on Friday.

At a tech conference in Miami on Monday, Musk stated that fake and spam accounts make up at least 20% of Twitter accounts. According to Bloomberg, there is now speculation about whether Musk will tackle the issue of fake accounts to lower the purchase price on Twitter. According to the newspaper, Musk himself stated that it wasn’t “Not appropriate” to enter into an agreement at a lower price.

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Current Twitter chief Parag Agrawal took to Twitter on Monday to refute Musk’s allegations of fake offices on the platform.

– Let’s talk about spam. And let’s do that given the data, facts and context, Agrawal writes on Twitter before continuing with a series of messages about how the company is working to remove spam accounts from the platform.

According to Agrawal, spam and fake accounts make up less than five percent of Twitter’s daily active users.

Musk responded to Agrawal’s Twitter messages in the form of an emoji, more specifically a stool diagram.

Twitter’s slide continued anyway on Monday, and the social media share is now trading for $37.38. This is well below Musk’s offer, which corresponds to a price of $54.20 per share.

When it became known in early April that Musk held an ownership stake of more than nine percent of Twitter, the Twitter box rose sharply on the stock exchange. After the steep dips, all that high is now shaved off, according to Bloomberg.

Fear level rises

According to analysts at the US bank Morgan Stanley, more pain awaits investors.

Now that prices are more attractive, the stock market is oversold and interest rates are likely to stabilize below three per cent, it looks as if we are at the beginning of a new run of a “bear market,” according to a Bloomberg analysis.

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– After that, we are sure that there will still be low prices, it is added.

A “bear market” is the opposite of a “bullish market” and is an expression of when the general market, or certain indicators, is down 20 percent or more from its peak list, and over a certain period of time.

A “bear market” often comes at the same time as a bearish economic outlook and a general negative mood in the stock market.

For example, CNN’s “Fear & Greed” index fell well in “Fear,” indicating a market downturn. The indicator is based on the fact that “fear” leads to lower prices, while “greed” leads to higher prices.

Additionally, the much-discussed VIX, an indicator of expectations of volatility or turmoil in the market, is up more than 70 percent so far this year.

Thus, the stock market both in the United States and here at home fell sharply from the semi-euphoric mood that occurred during the Corona pandemic. Technology and growth stocks in particular have fallen in the face of geopolitical turmoil, hyperinflation and rising interest rates.

The bottom has not been reached

According to Morgan Stanley, the bottom has not yet been reached. In an analysis on Monday, bank analysts led by strategist Michael Wilson, wrote that the broad S&P 500 index was not priced into a steady decline for both corporate quarterly reports and other macroeconomic factors.

Bloomberg writes that it is among those most pessimistic about future developments, with many other strategists believing that the bottom may have been reached.

The risk of a major economic recession has increased. This is another reason why the stock premium is so low and why stock prices are still high, in our opinion, the analysis indicates.

Wilson envisages that the S&P 500 could drop to 3,400 points, which in this case would equate to an additional 16 percent decline.

The S&P 500 stood at just over 4,000 points before opening on Monday and has fallen six straight weeks.(Conditions)Copyright Dagens Næringsliv AS and/or our suppliers. We would like you to share our cases using a link that leads directly to our pages. All or part of the Content may not be copied or otherwise used with written permission or as permitted by law. For additional terms look here.