Twitter stocks plummeted on Monday. All because billionaire Elon Musk withdrew from the purchase of the social network on Friday, and the case is to go to court. This process will be a legal war similar to “Game of Thrones” – said Dan Ives, expert at Wedbush Securities.
Twitter, following the news of Elon Musk’s decision, found itself in an “extremely difficult situation”, which is both the war with the head of Tesla and SpaceX, and the loss of investor confidence related to Musk’s accusations and the chafing of advertisers – said Dan Ives, quoted by AFP. Twitter shares on Monday at around 5 p.m. Polish time depreciated over 7 percent.
Twitter plans to sue Musk this week and force him to finalize the takeover, Reuters Agency said, citing people who knew the case. Legal experts say social media authority has a strong hold in the dispute, but may opt to renegotiate or settle instead of a lengthy court battle.
Why is Elon Musk withdrawing from purchasing Twitter?
Elon Musk He wrote in a letter to Twitter on Friday that he was ending an agreement to buy a social network because of “false and misleading” information about the company. Since then, the billionaire has been openly mocking Twitter on social media. Twitter’s executive director Parag Agrawal has repeatedly stated in recent weeks that the number of fraudulent accounts on his platform is less than 5 percent.
The AFP agency said many experts believed that the reasons Musk pulled out of the deal did not justify breaking the deal. There have also been opinions for many weeks that all the confusion with the Twitter takeover plan, the company’s accusations of understating the number of fake accounts and withdrawing from the transaction may be Musk’s maneuver to lower the price of Twitter, or give up his purchase without paying the agreed price initial penalty.
“We believe Elon Musk’s intentions to complete the acquisition stem more from the recent market sell-off than Twitter’s ‘failure’ to meet his demands,” wrote Brent Thill, an analyst at Jefferies.
The sharp sell-off of Twitter stocks put them below $ 35, while Elon Musk in late April this year. offered to take over the site at $ 54.20 per share. Jefferies’ forecasts show that in the absence of a deal, there would be no surprise if the value of Twitter shares plunged to $ 23.5.
According to some experts, the billionaire did not have the right to demand that Twitter modify the method of counting fake accounts if the one used by the service so far was sufficient to submit reports to the SEC, i.e. the US Securities Commission, on its basis.
Both parties to the agreement have agreed to pay damages of up to $ 1 billion if the transaction was not finalized for reasons not provided for therein.
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