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Twitter stock falls as Musk mocks lawsuit threat

Twitter shares tumbled as Elon Musk issued a mocking, defiant commentary about a looming court battle after he ditched a $44 billion buyout.

Tesla founder Elon Musk, now making a hostile takeover bid for Twitter, got himself in hot water in 2018 over statements he made on the social media platform
Tesla founder Elon Musk. - Copyright AFP WANG Zhao
Tesla founder Elon Musk. - Copyright AFP WANG Zhao
John BIERS

Twitter shares tumbled Monday as Elon Musk issued a mocking, defiant commentary about a looming court battle after he ditched a $44 billion buyout of the social media giant.

About 60 minutes into trading Monday, Tesla shares sank 7.0 percent to $34.24.

After weeks of threats, Musk on Friday pulled the plug on the deal, accusing the company of “misleading” statements about the number of fake accounts, according to a letter from his lawyers included in a US securities filing.

In his first public remarks since the announcement, Musk took to Twitter late Sunday night to troll the company after it said it would sue to enforce the deal.

“They said I couldn’t buy Twitter. Then they wouldn’t disclose bot info. Now they want to force me to buy Twitter in court. Now they have to disclose bot info in court,” Musk wrote in a tweet, with each of the four statements accompanied by pictures of Musk laughing with increasing glee.

A second tweet showed an image of martial arts star Chuck Norris behind a chess board, which Musk captioned, “Chuckmate.”

Musk’s termination of the takeover agreement he inked in April sets the stage for a potentially lengthy court battle with the company, which initially opposed a transaction with the unpredictable billionaire entrepreneur.

The original merger agreement contained a $1 billion breakup fee.

Twitter has defended its fake account oversight and said it will sue to force Musk to complete the deal.

The social network says the number of fake accounts is less than five percent, a figure challenged by the multi-billionaire who believes the number to be much higher.

According to several US media reports, Twitter has hired prominent New York law firm Wachtell, Lipton, Rosen & Katz. Twitter declined to comment to AFP.

– Still a chance at deal? –

The latest back-and-forth follows weeks of public squabbling between the sides after Musk amplified the fake accounts issue, with some analysts speculating that he was getting cold feet about a deal announcement that had aroused criticism from progressive advocacy groups concerned about Musk’s political agenda.

Musk’s norm-defying conduct has come as little surprise to longtime watchers of the Tesla boss, who are accustomed to a constant stream of statements that flout or test convention and sometimes provoke a crackdown from regulators.

Some market watchers predicted the deal would fall apart shortly after it was announced, but others still saw a way forward on Monday even in the wake of the latest happenings.

“While the two parties likely are facing a lengthy battle of which the final decision remains very uncertain, we believe Twitter may have the stronger case,” said Morningstar analyst Ali Mogharabi. “We also think that a scenario remains where Musk and Twitter reach a new, lower-price agreement.”

But Mogharabi lowered his estimate for Twitter shares to $47 from Musk’s bid price of $54.20, saying, “we expect Twitter will likely face distractions that set back its efforts to grow revenue and expand margins.”

For analyst Dan Ives at Wedbush Securities, “this is a ‘code red’ situation for Twitter and its Board as now the company will go head to head against Musk in a Game of Thrones court battle.”

“We see no other bidders emerging at this time while legal proceedings play out in the courts.”

AFP
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With 2,400 staff representing 100 different nationalities, AFP covers the world as a leading global news agency. AFP provides fast, comprehensive and verified coverage of the issues affecting our daily lives.

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