Shares of Twitter slid more than 11% on the first day of trading after billionaire Elon Musk said 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.
The Tesla and Space-X CEO agreed to buy Twitter for $54.20 a share back in April.
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 had raised the issue again after announcing that he would buy the social media platform.
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Twitter has said for years in regulatory filings that it believes about 5% of the accounts on the platform are fake.
On Monday, Musk continued to taunt Twitter via Twitter, over what he has described as a lack of data.
He posted a meme of himself laughing about Twitter not disclosing how many bots and fake accounts were on the site, pointing out that the company would now have to disclose the information in court.
Then later Musk tweeted an image to the social platform of actor and martial arts expert Chuck Norris sitting across from the viewer as an opponent in a chess match. The image of Norris has only one chess piece left on the board.
"Chuckmate," the Space-X CEO wrote in reply to his own tweet.
— Elon Musk (@elonmusk) July 11, 2022
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. The company indicated it will file a lawsuit in the Delaware Court of Chancery arguing Musk must close the agreed-upon deal, according to The Wall Street Journal.
This may be just the opening salvo in one of the oddest courtroom battles concerning the takeover of a company in history. But is it legally possible to force Musk to purchase a company he doesn't want to own?
"What are they going to do if there is a judgment and he says, 'Well, I'm still not going to buy it'?" Zohar Goshen, professor of transactional law at Columbia Law School told The Journal. "They don't really have tools to force him to go through with it. You don't put people in jail because they don't buy something."
Analysts say if Musk doesn't purchase the company after the dust settles, it will be facing a host of challenges in an uncertain digital advertising market.
"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 close to $34 each, almost $20 less per share than Musk agreed to purchase the company. That suggests, strongly, that Wall Street has serious doubts that the deal will go forward, The Associated Press reported.
Tech industry analysts say Musk's interlude leaves behind a more vulnerable company with demoralized employees.
"With Musk officially walking away from the deal, we think business prospects and stock valuation are in a precarious situation," wrote CFRA Analyst Angelo Zino. "(Twitter) will now need to go at it as a standalone company and contend with an uncertain advertising market, a damaged employee base, and concerns about the status of fake accounts/strategic direction."