Twitter’s shares were rocked on Wall Street on Monday when Elon Musk openly mocked the social network after it abandoned plans to buy the platform for $44 billion and the group braced itself for a legal battle. The company’s stock fell about 7% to $34.24 at the start of the New York session.
It was already down 5.10% on Friday and 29% overall since April 25, when the group’s board of directors accepted the takeover bid from the entrepreneur, who is already CEO of Tesla and SpaceX.
Also read: Elon Musk vs. Twitter, (possible) end of story
But after several months of twists and turns, the entrepreneur said in a letter to Twitter on Friday that he was terminating that agreement because the company had failed in its commitments by not disclosing the proportion of fake accounts and spam. The microblogging service claims that the number of inauthentic accounts is less than 5%, a number disputed by the multi-billionaire, who believes it is much higher.
To justify his waiver, Elon Musk also cites several recent Twitter decisions such as the hiring freeze, which he says contradicts the company’s commitment to continue normal operations. However, the reasons given by the entrepreneur do not justify breach of contract, argue several specialists.
The two camps are now locked in a legal standoff that could cost Elon Musk a few billion dollars if he were to lose.
According to several American media, Twitter has joined the services of the New York law firm Wachtell, Lipton, Rosen & Katz. The same firm had represented the California group shortly after Elon Musk’s bid in April, when the board initially decided to oppose the project before submitting to it. When asked by AFP, Twitter declined to comment.
Also read: The four lessons from the Elon Musk Twitter fiasco
For his part, Elon Musk on Monday shared his first reaction on Twitter since announcing his retirement by posting a picture with several photos in which he looks hilarious. “They said I couldn’t buy Twitter. Then they refused to reveal the information about the fake accounts. Now they want to force me to take over Twitter in court. Now they are forced to reveal the information about the fake accounts,” we can read alongside each snap.
Shortly after, he posted a photo of actor Chuck Norris winning at chess, accompanied simply by the phrase “Chuckmate,” a pun on “checkmate” and the actor’s name.
“Extreme Danger” for Twitter
Dan Ives of Wedbush Securities said: “This is an ‘extremely dangerous’ situation for Twitter and its board of directors as the company faces Musk in a Game of Thrones-style legal battle to salvage the company’s transaction, or at least the settlement in “We don’t see any other bidder standing out right now as the court case begins,” added the analyst.
However, Morningstar analyst Ali Mogharabi believes that at the level where the stock is currently trading, “other parties may be interested in Twitter.” There is always the scenario that Elon Musk buys the site, but at a renegotiated lower price, he adds in a note.
For his part, according to CFRA’s Angelo Zino, there is an 80% chance that Twitter will not fall into the hands of Elon Musk and remain listed, while the chance that the company will be delisted is 20% New Bought York market and bought for a lesser amount.
“Business prospects and stock value are in a precarious position,” notes Angelo Zino, who points to “an uncertain advertising market, suffering employees and concerns about the status of fake accounts and strategic direction.”
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