Twitter (TWTR) shares slumped lower Thursday as the impact of Snap’s SNAP ad-spend warning rippled through social media stocks and Bloomberg reported that Elon Musk’s planned takeover of the group could be subject to a national security review.
Musk, who agreed to pay $44 billion, or $54.20 per share, for the microblogging platform last spring, has made a number of statements recently that appear to suggest a pro-Russia stance amid that country’s invasion of Ukraine.
Bloomberg also reported that government officials have grown concerned with Musk’s actions in the region following his threat to cut off access to the Starlink satellite service in Ukraine, which he put down to funding costs born by its operator SpaceX.
A perception of close ties with China, the site of Tesla’s (TSLA) biggest and most important gigafactory and world’s largest car market, has only added to concerns with respect to the billionaire’s political connections.
The Bloomberg report suggested that the US government could use the Committee on Foreign Investment in the United States — better known as CIFUS — to review the takeover, given that the group involved in the takeover includes investors from China and Saudi Arabia.
Twitter shares were marked 8.2% lower in pre-market trading to indicate an opening bell price of $48.15 each.
Added pressure on Twitter shares followed a warning from messaging app maker Snap, which posted the slowest rate of revenue growth since the company went public in 2017 over its third quarter, that it would see, little to no revenue growth amid a pullback in global add spending through the final three months of the year.
The Bloomberg report could also mark a late-hour challenge to the Twitter deal, which Musk finally agreed to follow-through on last month after failing in a series of legal challenges to back out of the merger agreement while attacking the company’s transparency on fake accounts and privacy.
Musk told investors on Tesla’s third quarter earnings call that he was “excited about the Twitter situation”, adding that it has “incredible potential.”
“Myself and the other investors are obviously overpaying for Twitter right now, the long-term potential for Twitter, in my view, is, in order of magnitude, greater than its current value,” Musk said.
A separate report from the Washington Post, however, suggested Musk was preparing significant job cuts at the San Francisco-based group, and could reduce headcount by as much as 75% over the coming months.
Citing conversations between Musk and his investor group, the Washington Post reported that Musk could slash Twitter’s workforce to just 2,000 — from the current 7,500 level — in a move that could have huge implications for content monitoring on the website.