Mint, New Delhi
Microblogging and social networking giant, Twitter shares are struggling on exchanges after Elon Musk backed out from his $44 billion deal to buy the company. This has led to a disruptive legal battle between Twitter and the Tesla CEO. On Monday, Twitter shares extended their losses and nosedived nearly 8% in the pre-market. While Twitter shares come under pressure, however, the case is not the same for Tesla shares which recorded buying sentiment.
On Nasdaq, at around 4.46 am ET, in the pre-market, Twitter shares dived by 6.55% and were trading around $34.40. However, in the early deals, Twitter shares slipped below $34 and declined nearly 8%. That said, Twitter was on track for a bearish trading session.
According to a Bloomberg report, shares fell as much as 7.8% to $33.93 in premarket trading Monday, on track to erase $2.2 billion in market value, after Elon Musk backed out of an agreement to buy the social media giant and take it private.
On other hand, Tesla shares climbed nearly 1% on Monday and were trading around $758.85 in the pre-market.
Last week, on Friday, Twitter shares stood at $36.81 lower by 5.10% with a market cap of $28.13 billion. On the contrary, Tesla shares climbed 2.54% to $752.29.
While pulling back from the huge $44 billion deal, Musk alleged that Twitter misrepresented user data with the number of spam bots on the platform much higher than the company has disclosed.
Vital Knowledge founder Adam Crisafulli in the report said, “It’s not a huge surprise to anyone that Musk is trying to abandon the deal.”
As per Crisafulli, Musk’s actions would impact Twitter’s performance till the third quarter of this year.
Crisafulli said, “the problem, though, is that this whole saga was probably quite disruptive over the last few months, which could weigh on Twitter’s performance not only in the second quarter but third quarter too.”
Bloomberg reported that Twitter Chairman Bret Taylor said the company will pursue legal action to close the transaction “on the price and terms agreed by Musk.” The social media platform has hired merger-law heavyweight Wachtell, Lipton, Rosen & Katz and aims to file suit early this week, according to people familiar with the company’s plans, who asked not to be identified because the matter is private.
A market strategist Cabot Henderson said Twitter will require Musk to do the deal even though he says it is terminated, adding, “they have what I would say is a greater than 50% chance that they will win.”
Earlier today, the billionaire tweeted as a reply to Twitter’s legal action against him. Musk made memes of him laughing. He said in the meme, “They said I couldn’t buy Twitter,” followed by, “Then they wouldn’t disclose Bot info,” adding, “Now they want to force me to buy Twitter in court,” and finally ended with, “Now they have to disclose Bot info in court.”
— Elon Musk (@elonmusk) July 11, 2022
— Elon Musk (@elonmusk) July 11, 2022
The market strategist also said that Musk getting away with just paying $1 billion would be a big win for him.
In April this year, Elon Musk entered into an agreement with Twitter to buy the latter for approximately $44 billion. If the deal completes then Twitter would become a privately held company.
However, it would be keenly watched how Musk escapes the Twitter deal and how Twitter makes him buy the platform. Both Twitter and Tesla shares will be in focus.
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