1. The chance that Musk would buy Twitter, non-zero before his purchase announcement and somewhat circulating as a market rumor and thus perhaps part of speculation upholding the stock, would go to zero.

2. Musk's departure could be read by some as a vote of no-confidence in management by a capable businessman, and that after some conversations with management about strategy.

The market is not rational, so anything could happen, which is why you should always assume the worst if you are a cautious individual.

More information. It takes the usually remote possibility of a generous takeover offer off the table. Musk turned down a position on the board, signaling he thinks the company would be better off private. It arguably shows questionable judgement of the board.

Aside from the other reasons mentioned, don't forget hundreds of algos programmed to automatically sell once the price reaches certain low levels - which is bound to happen once large blocks of stock get offloaded.

People will bail who bought on the good news PLUS people will bail who hear the bad news but didn't buy with good news.

Because we're in a deep recession. Twitter and other sp500s are going to slide down regardless of what Musk does. He is offering a choice: "I jump the ship and it sinks a bit faster, or I give you a generous evacuation plan and deal with the leaks myself."

Because there is going to be panic selling since everyone knows it will go down if they say no.