In April, Tesla’s billionaire boss, Elon Musk, struck a deal to take Twitter under his ownership. It’s no news that this soap opera has been very gripping to the neutral public, for all the back and forth that has been going on in the case.
In the beginning, Musk seemed to be very excited about his new project and it looked like it had great potential; several investors even trusted him and bought shares of the social network. That illusion seems to have disappeared because a lot has happened in the case between Elon Musk and Twitter since that month.
On May 17, the Tesla owner withdrew from the agreement because he claimed that Twitter did not provide him with all the necessary information and did not receive all the data regarding the number of spam accounts on the platform. At the time, he even accused the company of violating securities laws.
This did not go down well on Twitter’s side and for that reason, last Tuesday, the platform sued Elon Musk in Delaware Chancery Court for breaching its agreement to buy the company for $44 billion. Twitter makes clear that Musk engaged in “bad faith” behavior because it has sunk the value of the social network.
The company also made clear that it had made an effort to explain its calculations of bot accounts on the platform to Musk’s team, while the CFO was proposed to discuss any other issues with Musk personally. Elon Musk denied the possibility of participating and was unwilling to check notes from the due diligence sessions.
A type of “disregard” was generated by Twitter towards Elon Musk. However, the lawsuit filed seeks to force the multimillionaire to buy Twitter because of the previous agreement signed in April. If the outcome of the lawsuit is favorable to Twitter, Musk may have to pay a settlement of more than $1 billion. He may even be forced to terminate the agreement and buy Twitter for the agreed price of $54.20 per share.
The case would appear to have taken a 180-degree turn. Some time ago, it appeared that Twitter was being evasive to avoid disclosing its spam account calculations. Now, after the complaint and all the arguments presented by the platform, the complexion of the case has completely changed.
As Rosenblatt analyst, Barton Crockett says, “Musk’s reluctance to engage largely ends our skepticism about Twitter, and instead makes us skeptical about Musk. As a result, we now see the advantage on Twitter’s side in this fight.”
Against this backdrop, shares of the social network appear to be undervalued at a price of $44.46. With the imminent resolution of the case between Twitter and Elon Musk, it is speculated that the price will change and modify its value by about 22%.
Do you think it is a good time to invest in Twitter’s stock? When and how do you think the situation between the owner of Tesla and the social network will end?
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