The Musk-Twitter contract has hit a major roadblock

The Musk-Twitter contract has hit a major roadblock ...

Well, he said, he did not care about the economy.

Tesla (TSLA) - Get Tesla Inc ReportCEO Elon Musk said his desire to acquire Twitter (TWTR) - Get Twitter, Inc. Report "was "not a way to make money."

"I''m ignorant of the economics at all," he said.

Because so far the economics haven''t looked particularly good, it may be for the greatest.

One day before Musk paid $44 billion to purchase the microblogging site, shares of the electric vehicle manufacturer were selling for $1,022.37.

Tesla''s stock market fell to an 8-month low, briefly falling below $700 a share as the company grapples with issues at its Shanghai facility and a weakening stock market.

Twitter''s stock was expected to sell for $45.08, down from $55.20, which Musk paid.

The world''s richest man, who has described Twitter as a "de facto town square," owns 9.5 percent of the company.

"But given the enormous amount of wealth provided by Tesla''s overvalued stock, Musk is considerably less wealthy and has less resources to adopt his strategies," said David Trainer, the CEO of New Constructs.

Andrew Burton/Getty Images

A Death Spiral?

The trainer, who has described Muskas as a "modern day snake oil salesman," said that given the difference between $54.20 and Twitter''s current stock price, the market is warning that the transaction will not be done at $54.20.

"Perhaps Twitter is forced to accept a lower price, and Musk will have to spend less money, but now, given Tesla''s stock, he has less money," he adds.

This spiral, according to Trainer, "could become a death spiral for the transaction - not dissimilar to the death spiral we are seeing in the Terra/LUNA cryptocurrency meltdown."

"As markets recede and reconcile to fundamentals, the speculative forces artificially boosting stocks are decreasing," says the spokesman. "This trend stutters the calculus on any deals that are going forward."

"The agreement, according to George Geis, is a fun thing to keep an eye on, because the terms continue to change," says a law professor at the University of Virginia.

"I understand that the Elon Musks team is now attempting to raise up to $6 billion in preferred stock so that he can avoid borrowing against some of his Tesla stock," he said.

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"But that would still make a significant equity contribution, which might be $20 billion under the current structure, and he would seemingly still have to sell a lot of Tesla stock."

''''He Wants This Company''''

Geis said thedeal breakup fee is only $1 billion, and that the Twitter price has remained steady even as the Nasdaq continues to plummet.

"Some argue that Twitter is only being pushed up by Musk''s bid and that he may free-fall if he walks away," he adds.

"It''s always dangerous to make predictions about what Elon Musk will do," Geis said.

"But I think hell will bring in some cash to reorganize his equity commitment and negotiate a lower deal price, even if it means paying the $1 billion he might come out far ahead, and execute on a new agreement," he said.

"He wants this company," says the author.

Musk is attempting to obtain funding for the transaction, and a total of 19 corporations have pledged $7.1 billion to assist him in his quest to take over Twitter.

Binance, the world''s largest crypto exchange by trading volume, was signed on as an equity investor in Musk''s takeover offer, which is putting $500 million in to the project.

Hindenburg Research, a research firm that is shorting Twitter''s stock, said in a research report that "we are also supportive of Musks'' efforts to take Twitter private and see a significant possibility the deal will conclude at a lower price."

"Naturally, a lower deal price with a less excessive leverage will put Twitter and Tesla on more solid financial standing," Hindenburg said.

''''Risks to Both Enterprises''''

In the face of a volatile market, both Twitter and Teslas future are on the verge of being held on a solid of more equity-backed margin loans, according to a report, "or potentially more sales of Tesla equity."

According to a recent time2play study, a Musk purchase of Twitter might be a challenge, stating that 16.3% of users surveyed indicated they would leave the platform completely if the acquisition was completed.

According to reports, such an exodus might cost the outlet $828 million, according to the report, due to reports of revenues from 2021.

"Musk has demanded that Twitter add an edit button and eliminate the dangers of bots on the platform," according to the report. "Musk has made several moves that, in theory, would reach worldwide acceptance." "Today, a vocal cohort of Twitter users fears the Tesla chief has more nefarious intentions."

Musk has said that he will reverse the prohibition on former President Donald Trump, who was kicked off the site after theJan. 6, 2021 revolt, "due to the possibility of further incitement of violence."

According to time2play, reintroduceing Trump back to Twitter would wreak havoc on 24.2% of users.

Trump''s own request to be reinstated ran aground this month when a federal judge dismissed the former president''s lawsuit seeking to overturn the restriction.

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