Twitter headline closed down 11.3% on Monday.
Twitter was hit hard Monday on Wall Street following Elon Musk's decision to withdraw his bid for the company on Friday night. An “invalid and unjustified” decision, according to the platform, which requires the multi-billionaire to respect his commitments.
The company's stock fell 11.3% on the New York Stock Exchange to end at 32.65 US dollars, 40% less than what the entrepreneur had offered when x27;he had announced his intention to get his hands on Twitter in mid-April.
But after several months of procrastination and more or less direct threats, Mr. Musk said in a letter to Twitter on Friday that he was ending that deal.
The company, he believes, has failed to meet its commitments by not disclosing enough information about fake accounts and spam , and minimizing their number.
To justify his renunciation, Mr. Musk also invokes several recent decisions by Twitter such as the hiring freeze, according to him contrary to the obligation for the company to continue to operate normally.
False, Twitter's lawyers officially replied in a letter sent Sunday to Mr. Musk and his legal representatives, and published Monday evening on the website of the American Securities and Markets Authority.
< p class="e-p">Contrary to claims in your letter, Twitter did not breach any of the obligations under the agreement, they write.
The social network therefore demands that the multi-billionaire keep its commitments.
Twitter claims in particular to have transmitted the information requested by Mr. Musk on the number of inauthentic accounts on his platform, which he claims is less than 5% while the multi-billionaire estimates it to be much higher.
The reasons put forward by the entrepreneur do not legally justify a breach of contract, several specialists argue.
The two camps are therefore now engaged in a legal tussle, which could cost Mr. Musk several billion dollars if he were to lose.
Elon Musk was offering to buy Twitter for US$54.20 a share and take the company off Wall Street.
More Earlier in the day, Mr. Musk tweeted his first reaction on Monday since announcing his withdrawal by posting an image containing four photos where he appears hilarious.
They said I couldn't buy Twitter. Then they refused to reveal the fake account information. Now they want to force me to take over Twitter in court. Now they are forced to reveal the fake account information, reads alongside each snap.
According to Dan Ives of Wedbush Securities, this is for Twitter and its board of directors of a situation of "extreme danger" as the company faces Musk in Game of Thrones-style legal battleto salvage the deal or at least recoup the billion dollar breakage damages.
We don't see any other outstanding bidders at this time as legal proceedings will begin in court, the analyst adds.
Morningstar analyst Ali Mogharabi, however, believes that at the level the stock is currently trading, other parties may be interested in Twitter. There is still the scenario that Elon Musk would eventually buy the group, but at a lower renegotiated price, he adds in a note.
Without s' moving forward on the outcome of the legal battle, analysts at ratings agency S&P Global Ratings note that, in any case, it increases uncertainty and reputational risks for the platform.
Slower economic growth was expected to significantly affect Twitter's advertising revenue, which makes up about 90% of its revenue, they also argue.
They plan to lower Twitter's rating by one or more notches if the transaction is confirmed at the original price or if it is canceled. On the other hand, they could decide to leave it at its current level if the two parties reach an agreement and that the reputation of the social network, both with its users and advertisers, is not too damaged.