Twitter’s market cap has dropped to $9 billion below Musk’s purchase price as concerns about deal emerge

The Twitter logo and trading information is displayed as a trader works on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., May 3, 2022.

Some investors are concerned that the deal won't reach the finish line as shares of the social media company are dropping.

Since hitting its high for the year in late April, the social networking site has lost about 12% of its value. The stock was trading at around $46 as of Thursday, well below the $54.20 that Musk agreed to pay on April 27. The difference is worth $9 billion in market value.

It could take months for the deal to close, and there is no guarantee that it will. Should Musk walk away, he would have to pay $1 billion. The CEO of the company is worth more than 200 billion dollars.

Mark Mahaney, an analyst at Evercore ISI, said in an email that the market is less confident that the deal will go through due to regulatory challenges.

The SEC requires Musk to report a more than 9% stake in the company within 10 days.

The Federal Trade Commission is looking into the timing of Musk's disclosure. Many experts don't expect the acquisition to raise antitrust concerns, but the FTC is reviewing it.

The FTC does not disclose ongoing investigations.

There's a good chance that the deal with Musk will close, but there are other factors contributing to the stock's decline.

If it remained a public company, it would only be worth $20 a share. Regulatory issues are casting a shadow over the deal. Musk's financing of the deal, in part by using his shares in the company, presents greater risk and uncertainty.

Musk might be trying to address the financing concerns. He is in talks to raise equity and preferred financing to eliminate the need for a $6.25 billion margin loan, according to a report. CNBC did not confirm the report.

It could give the Street more confidence that Musk doesn't just go stage left if the pressure gets too much.

There will be more twists and turns.

He said it was a soap opera.

If Musk bows out as inflationary pressures punish the broader tech market, it's possible that Twitter will take steps to shore up its balance sheet. The company confirmed on Thursday that it is pausing most hiring, and that two top executives are leaving the company.

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Musk will be the temporary CEO of the micro-blogging site.