Twitter (TWTR) shares plunge after Musk nixes deal

July 11, 2022 10:01 AM PDT | By Mridul Gogoi

Image source: © Grejak | Megapixl.com

© Jcjgphotography | Megapixl.com

Investors bracing for more upheavals

As Twitter is now getting ready to take Musk head-on at the legal turf, investors fear more disruptions ahead, with a US$1 billion breakup fee on the line.

According to Twitter Chairman Bret Taylor, the company will pursue a legal course to close the transaction “on the price and terms” Elon Musk agreed to.

Twitter has hired merger-law goliath Wachtell, Lipton, Rosen & Katz, planning to file the suit this week.

Twitter has denied Musk’s claims, saying bots are less than 5% of the total subscribers. Twitter executives maintained that their estimates were accurate.

Market strategists talking to Bloomberg said it would be a huge win for the Tesla chief executive to walk away by paying US$1 billion.

Investors will closely look at Twitter’s quarterly earnings later this month, on July 28. The company’s first-quarter earnings reported a revenue of US$1.2 billion but missed analysts’ estimates amid a slowdown in advertising.

Bottom line:

From the beginning, the Twitter deal was embroiled in controversies, with many volleys exchanged between Musk and Twitter executives, including its CEO Parag Agrawal. The bone of contention was the fake accounts on Twitter, which drew a lot of flak from the Tesla executive. Many saw this legal war coming from the exchanges between Musk and Twitter.

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