As soon as Elon Musk said he was seeking to revoke his $44 billion buyouts of Twitter, Twitter shares fell in premarket activity on Monday. A roughly $1.8 billion loss in market value was caused by the social media platform’s shares falling more than 6 percent. Nearly 4% of Tesla, where Musk is the CEO, plummeted. The board of Twitter was informed by Musk’s council on Friday that the agreement is to be terminated.
Affirming that the corporation is not being transparent about how much activity on the site is genuine, the billionaire has expressed concern about the volume of bots and phony accounts on Twitter. Despite Twitter’s assertion that just 5% of its monetizable daily active users are spam accounts, the company claims it has provided Musk with all the information he needs to evaluate it.
The agreement will be enforced by legal action, according to Twitter board chair Bret Taylor, which will be filed in the Delaware Court of Chancery. On Monday, Musk reacted by publishing a meme making fun of Twitter’s management for the failed transaction. With wording saying the business is attempting to “compel” Musk to purchase it in court, it includes pictures of Musk smiling.
A Twitter spokesman refused to comment on the meme. According to attorneys, the two sides might expect a drawn-out legal struggle. A $1 billion breakup fee for leaving might potentially be imposed on Musk. With more than 100 million followers, Musk is one of the most well-liked Twitter users. He has utilized the social media platform for anything from business communications for his many firms to criticizing the same platform he once sought to purchase due to complaints about its content policies and bogus accounts.
Richard Windsor, the creator of the research firm Radio Free Mobile, said that Musk’s intention to “greatly renegotiate” the $54.20 sum he had agreed to pay for Twitter was probably the cause of his withdrawal from the agreement.
The Twitter stock had a value on Friday that was 32% lower than the sum Musk and company had agreed upon. Windsor said that even if he does not currently own any Twitter stock, he would sell it right now.
Windsor said on Monday on CNBC’s “Squawk Box Europe” that there was still a gap between the share price and the underlying factors. “If you look at some of the developments in the technology industry over the last several months, you might place Twitter’s worth between $13 [billion] and $15 [billion] which is around about 50% below even where the share price is now.”
Source: NBC News