Elon Musk’s Twitter takeover circus would always offer thrills and spills. But if Friday’s chaotic sequence of events is anything to go by, most market spectators will not leave their seats soon.

Tesla’s chief executive said in a tweet early Friday morning that he was putting his $44bn bid for Twitter “temporarily on hold”. The news triggered a 20 per cent tumble in the stock in pre-market trading. Two hours later, Musk put out another tweet, saying he was “still committed to acquisition.” Cue both chortles and exclamations from traders.

The share price had a wild ride, down only 8 per cent by Friday morning trading. But it languishes 24 per cent below Musk’s $54.20-a-share take-private bid. One can only speculate on Musk’s intentions, including a desire to renegotiate the offer price.

He has good reasons to do so. Since making his Twitter bid public on April 14, technology stocks have sold off heavily. The Nasdaq Technology index has dropped more than 14 per cent. Tesla shares — which Musk planned to use as collateral to fund his Twitter bid — have shed a quarter of their value.

On most measures such as price to sales or against forward earnings, the offer price values Twitter at the midpoint of five-year ranges, so hardly a bargain.

Walking away from the transaction altogether could be costly. Musk says he wants to confirm Twitter’s findings that spam and fake accounts make up less than 5 per cent of its users. This sounds like posturing prior to claiming a material adverse change, enabling escape from a $1bn break fee. Proper due diligence, waived by Musk, should have revealed this.

More likely, a renegotiation will follow. Since Musk unveiled his bid, Twitter has reported another set of weak earnings. Top executives have resigned. If Musk walks away, Twitter shares will crater. Hindenburg Research, the short selling firm, puts a no-deal Twitter stock price at $31.40. With little negotiating leverage, Twitter’s board may have no choice but to bow to a lower offer.

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