End of Elon Musk’s Twitter Saga? Lawsuits, Price Falls, & Distrust
The Saga of Elon Musk’s Twitter purchase may have ended last Friday, July 8. In a filing with the SEC, Musk’s legal team conveyed his wishes to terminate the merger agreement with Twitter. In an attached letter, Musk cited the reason being that Twitter was in “material breach of multiple provisions of that agreement.”
In detail, Musk has been dissatisfied with the lack of transparency and cooperation on Twitter’s side to divulge accurate figures of Twitter spam accounts. “For nearly two months, Mr. Musk has sought the data and information necessary to make an independent assessment of the prevalence of fake or spam accounts on Twitter’s platform,” said Musk’s attorney.
In response to the termination, Twitter’s current chairman, Bret Taylor, has threatened to sue Elon Musk to enforce the merger agreement. Taylor expressed that Twitter is committed to closing the transaction.
The Twitter Board is committed to closing the transaction on the price and terms agreed upon with Mr. Musk and plans to pursue legal action to enforce the merger agreement. We are confident we will prevail in the Delaware Court of Chancery.— Bret Taylor (@btaylor) July 8, 2022
Elon Musk, on the other hand, treated the whole situation lightly by posting memes. However, Musk can be seen indirectly criticizing Twitter’s behavior by chiming in and agreeing in the replies to tweets about the platform being unreliable and problematic. Specifically, reports about Twitter providing inaccurate figures to the public and how that is a problem business-wise.
As a result of this turn of events, Twitter’s stock plummeted immediately on the same day Musk’s merger agreement termination was made public. The price has plummeted to as low as $32 at the time of writing. This is in contrast to its mostly-stable stock price of around $36 prior to July 8 and a far cry from Musk’s buying price at $54.20 per share.
There has been plenty of speculation regarding Musk’s sudden termination of the agreement. One narrative speculates that Musk is only using the bots as an excuse to walk away from Twitter because Tesla shares and Musk’s net worth have already fallen significantly.
Another narrative is that Musk is walking away because the market value of Twitter has fallen since announcing his intent to purchase the platform.