Looming Musk-Twitter legal battle hammers company shares
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FILE - Elon Musk attends The Metropolitan Museum of Art's Costume Institute benefit gala celebrating the opening of the "In America: An Anthology of Fashion" exhibition on May 2, 2022, in New York. Twitter's stock slid more than 6% before the market open Monday, July 11, 2022, after billionaire Elon Musk announced late Friday that he will abandon his $44 billion offer to buy Twitter and the company said it will sue the Tesla CEO to uphold the deal.(Photo by Evan Agostini/Invision/AP/File)
NEW YORK (AP) — Shares of Twitter slid more than 6% at the opening bell Monday after billionaire Elon Musk said that he was abandoning his $44 billion bid for the company and the social media platform vowed to challenge Musk in court to uphold the agreement.
Musk alleged Friday that Twitter has failed to provide enough information about the number of fake accounts it has. However, Twitter said last month that it was making available to Musk a “ fire hose ” of raw data on hundreds of millions of daily tweets when he raised the issue again after announcing that he would buy the social media platform.
Twitter has said for years in regulatory filings that it believes about 5% of the accounts on the platform are fake but on Monday Musk continued to taunt the company, using Twitter, over what he has described as a lack of data.
Musk agreed to a $1 billion breakup fee as part of the buyout agreement, though it appears Twitter CEO Parag Agrawal and the company are settling in for a legal fight to force the sale.
“For Twitter this fiasco is a nightmare scenario and will result in an Everest-like uphill climb for Parag & Co. to navigate the myriad challenges ahead around employee turnover/morale, advertising headwinds, investor credibility around the fake account/bot issues, and host of other issues abound,” Wedbush analyst Dan Ives, who follows the company, wrote Monday.
The sell-off in Twitter shares pushed prices below $35 each, far from the $54.20 that Musk agreed to pay for the company. That suggests, strongly, that Wall Street has serious doubts that the deal will go forward.
“This is going to be a long and ugly court battle (Twitter has already hired counsel) ahead in which the fake account/bot issue will be scrutinized for all to see and casts a dark cloud over Twitter’s head in the near term,” Ives said.
