The drama continues between Twitter (NYSE: TWTR) and Elon Musk over the buyout deal that the billionaire is trying to walk away from. The social media company is suing Musk in an effort to force him to close the acquisition at the originally agreed price of $54.20 per share, a deal that would value it at $44 billion.
Now, though, the stock has fallen into the high $30s, and trades about 28% below Musk's bid price. That gap might tempt some investors with the promise of a tidy profit should litigation force Musk to proceed with the purchase. However, there are three big reasons why I'm avoiding the stock altogether.
The size of Twitter's user base sits at the center of the disagreement between the parties. Musk says he's trying to bail out on the buyout because Twitter allegedly misled him about how many bots and spam accounts are being counted in Twitter's monetizable user base. Specifically, Musk is challenging Twitter's estimates that spam accounts make up less than 5% of its 237.8 million monetizable daily active users (mDAUs).
For further details see:
Why I'm Not Touching This Social Media Stock With a 10-Foot Pole