How a $44B deal turned into a ‘horror show’ that’s just beginning

Elon Musk is trying to kill his own plan to take over Twitter (TWTR) for $ 44 billion and shape it to his liking. The deal collapsed on Friday when Tesla (TSLA) and SpaceX’s CEO announced via a Securities and Exchange Commission filing that it was terminating the buyout.

So where did the bond that Twitter never asked for go wrong? It depends on who you ask. Musk says he walked away because Twitter refused to disclose information about how many bots and spam accounts it has on its platform and how the company calculates those figures.

Twitter, meanwhile, is believed to be transmitting data on more than 500 million tweets to Musk in response to his request, according to The Washington Post.

Musk’s decision to dive out of the deal is probably not just about clashes. The wider market has collapsed since its Twitter bid, and the CEO now has to reckon with a likely hasty decision to buy his favorite social media platform. Musk now finds himself in the unenviable position of an all-but-guaranteed legal battle with Twitter that could cost him a $ 1 billion breach fee – or even more than damages.

“Ultimately, the problem is you have a man who makes emotional decisions about many things, apparently, in his life and then he has to deal with the consequences. And it’s clear what happened here, ”Bob O’Donnell, president of TECHnalysis Research, told Yahoo Finance.

From free speech to clashes

Musk’s grip on Twitter’s bot numbers seems to be driven by his own experience with spam accounts and crypto-currency-related schemes.

Musk, a wonderful Twitter user with 100.8 million followers, tweet regularly about cryptocurrencies. So scammers thought they could make fake accounts claiming to be the CEO and use it to lure unsuspecting users to fall for crypto schemes, steal their money or personal data.

Elon Musk arrives at the In America: An Anthology of Fashion theme With Gala at the Metropolitan Museum of Art in New York City, New York, USA, May 2, 2022. REUTERS / Andrew Kelly

Elon Musk arrives at the In America: An Anthology of Fashion theme With Gala at the Metropolitan Museum of Art in New York City, New York, USA, May 2, 2022. REUTERS / Andrew Kelly

It will definitely irritate someone like Musk who uses his Twitter account as his main method of communicating with investors and fans.

For years, Twitter reported that spam accounts account for less than 5% of daily monetizable active users (dMAU). But Musk has repeatedly claimed the number was a dramatic underestimation, saying as many as 20% of Twitter’s user accounts could be fake.

Musk initially said he wanted to buy Twitter to reduce the amount of moderation on the platform and address the bot issue. But the free speech topic quickly took a hit for complaints about clashes as the stock market began to slip amid fears of rising inflation and the potential for a recession.

Tesla’s stock stumbles

While much of the Twitter conversation has focused on free speech and bots, Wedbush analyst Dan Ives points out that the saga has hurt Tesla shares, which make up the majority of Musk’s wealth.

Since Musk initially announced its 9.2% stake in Twitter on April 4, Tesla’s shares have fallen from $ 1,145 to $ 705.11 as of Monday afternoon – a 38% drop. Twitter share fell 11.3% on Monday with market close.

“Many investors will continue to view this as a buyers remorse situation with a market that has changed dramatically since April and the false account reveals the scapegoat who has changed into a life of his own,” Ives said in a research note said.

Musk is on his way to a courtroom match

Now that Musk says he’s pulling out of the deal, he’s probably on his way to a court battle with Twitter executives who are dying to keep Musk with the $ 44 billion account for the company, regardless of whether he wants it.

Twitter has already said it plans to continue with the deal. Even if it does not force Musk to buy the social network, he may still have to pay a $ 1 billion break-in fee, and possibly more damages.

“It’s been a circus show for this deal from the beginning and ends in a July horror show for Twitter,” Ives told Yahoo Finance on Saturday. “Musk has blown Twitter in the wind and Monday will be a painful day as the Street adjusts to a nasty legal battle ahead with [Twitter] no longer has the Musk agreement. [There are] a few dark days ahead and for Musk he does not come out smelling [like] rose. It is a black-eyed moment for him how this fiasco was handled. “

All this is to say that as we now move on to the next chapter in the Musk Twitter saga, there are probably thousands of pages left.

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