The looming Musk-Twitter legal battle hammers the company’s stock

NEW YORK — Shares of Twitter fell more than 7% on Monday after billionaire Elon Musk said he was dropping his $44 billion bid for the company and the social media platform pledged to take Musk to court. the courts to enforce the agreement.

Musk alleged on Friday that Twitter failed to provide enough information about the number of fake accounts it has. However, Twitter said last month it was providing Musk with a “fire hose” of raw data on hundreds of millions of daily tweets when he raised the issue again after announcing that he would buy the social media platform.

Twitter has said for years in regulatory filings that it believes about 5% of accounts on the platform are fake, but on Monday Musk continued to taunt the company, using Twitter, over what he described as a lack of data.

Musk agreed to a $1 billion severance fee as part of the takeover deal, although it appears Twitter CEO Parag Agrawal and company are preparing for a legal battle to force the sale.

“For Twitter, this fiasco is a nightmare scenario and will result in an Everest-like climb for Parag & Co. to navigate the myriad challenges ahead regarding employee turnover/morale, advertising headwinds, investor credibility around fake accounts/bot issues, and a host of other issues abound” , wrote Wedbush analyst Dan Ives, who tracks the company, on Monday.

The sale of Twitter shares pushed prices to almost $34 each, a far cry from the $54.20 Musk agreed to pay for the company. This strongly suggests that Wall Street seriously doubts the deal will go ahead.

Tech industry analysts say Musk’s interlude leaves behind a more vulnerable company with demoralized employees.

“With Musk officially withdrawing from the deal, we believe the business outlook and stock valuation are in a precarious position,” wrote CFRA analyst Angelo Zino. advertising market, a damaged employee base, and concerns about the status of fake accounts/strategic direction. »

ABC News

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