Twitter shares have risen 8 percent after Hindenburg Research, better known as a short seller, said it had amassed a “significant” stake in the social media company that is in a legal battle with Elon Musk.
The move comes after Tesla CEO revealed last week that he wanted to withdraw from a $ 44 billion deal to acquire Twitter, which led the San Francisco-based group to launch a lawsuit to try to force -to complete the transaction.
“Musk has wasted much of his influence, largely through ill-advised and compulsive tweets,” Hindenburg founder Nate Anderson said in an interview with the Financial Times. “Twitter has a strong case.”
The New York firm, best known for betting against companies, closed its short position on the social media platform in May. Hindenburg said at the time that there was a significant risk that the deal between Twitter and Musk would be reduced to a price of less than the $ 54.20 per share initially agreed.
“At first we published our short when the stock price was about $ 48. We closed it and it was a very good short. Now we think it’s a long long,” Anderson said.
Twitter declined to comment.
We have accumulated a significant long position in Twitter stocks.
Twitter’s complaint poses a credible threat to Musk’s empire.
– Hindenburg Research (@HindenburgRes) July 13, 2022
The news comes a day after Twitter filed a strong lawsuit against Musk in Delaware chancellery court in an attempt to force him to comply with his agreement to buy the social media company.
Musk said Friday that he planned to withdraw from the deal, alleging that Twitter breached the merger deal by not sharing enough information about fake accounts.
Twitter rejected Musk’s claims as made in “bad faith” to escape a high price deal during a market crash and argued that it was Musk who repeatedly breached the merger agreement.
In particular, the Twitter lawsuit accused Musk of repeatedly violating the obligation not to disparage the company and its employees, featuring images from numerous tweets from Tesla’s CEO alluding to or joking about the deal, or ridiculed Twitter and its leadership.
“Instead of assuming the cost of the market crash, as required by the merger agreement, Musk wants to pass it on to Twitter shareholders,” the complaint said.
“It tracks the contempt it has shown for the company that Musk, as its aspiring administrator, would have been expected to protect. Since the signing of the merger agreement, Musk has repeatedly despised Twitter and the deal, creating a commercial risk for Twitter and downward pressure on the price of its shares. “
Anderson noted that Musk had initially said he was pursuing the deal in part to help address the number of bots on the Twitter platform, a point Twitter also made in its complaint.
The false accounts were “the worst pretext Musk could have chosen to terminate the deal,” Anderson said, adding, “It was clearly and very publicly a reason he entered into the deal in the first place.”