In a crazy turn of events, the US government is considering a national security review of Elon Musk’s Twitter (TWTR) takeover deal.
The review could potentially block the deal, saving Musk $44 billion.
I would say that Musk has been playing up this angle for quite some time.
It’s no coincidence that he started meddling in the Russian-Ukraine dialogue just recently.
Hatching a plan to tick off the US government enough for them to decide a perceived pro-Putin supporter cannot control the reigns of the biggest public discourse forum in the world would signify a massive victory for Musk.
We know Twitter isn’t worth $44 billion.
Snap issued terrible earnings which meant the new valuation of SNAP went from $19 billion to $13 billion company in one day.
Things are so bad at SNAP that they chose to not offer guidance for the 2nd straight quarter.
Musk has also voiced how he plans to reinstate former US President Donald Trump and fire 75% of the Twitter staff on the first day on the job.
He is doing his best to “achieve” a national security review which is executed by the Committee on Foreign Investment in the US (CFIUS).
CFIUS carries out security reviews if a "transaction threatens to impair the national security of the United States," according to federal regulations.
It’s also not a shocker that Musk recently threatened to stop supplying the Starlink satellite service to Ukraine.
If Musk is perceived to not be working for Ukraine, in the political world today, this means he can be labeled a pro-Russian, pro-Putin, anti-democratic, anti-American figure worthy of tech deals getting banned.
Ironically enough, he does the dirty work for the Chinese Communist Party because he operates a gigafactory in Shanghai which produces the most Tesla’s per factory.
Musk later backed down from his threat to stop deploying Starlink and agreed to continue to suffer losses operating the service.
Musk has been providing the service for free but has said SpaceX loses $20 million a month servicing Ukraine.
I must say that Musk has a serious pathway to wriggle himself out of this $44 billion deal.
If the deal is blocked, Twitter would be valued at around $15 billion-$20 billion range, possibly $25 billion is a stretch.
It would be a devastating blow for the Twitter management and shareholders.
Management would need to change instantly because of the brand damage and loss of credibility. Musk has attacked the management and staff at Twitter non-stop throughout this process.
A major restructuring is in the cards no matter what.
Job morale at the firm is at an all-time low as Twitter employees experience depression through a threat of possible termination upon Musk’s purchase.
The fiasco is essentially what Musk wanted in the first place and I could argue that the free PR he is receiving is worth at least $100 billion from start to finish.
Musk understands the more digital footprints he plants all around the internet, the richest man in the world will get many articles published about him. Just do a Google search of Musk and he’s everywhere.
Whether it is about spaceships or social media, Musk has launched himself front and center into almost every discourse including sensitive geopolitics to solving world hunger. He even said one time he wants to buy soccer club Manchester United.
About social media tech stocks, this is highly negative news for the valuations of other social media stocks like Meta (META), but this is great news for Tesla stock if Musk doesn’t need to sell Tesla stock to pay for the Twitter deal.
Musk still needs another $10 billion in financing to cover the balance of the deal to finish the deal.
