SAN FRANCISCO – For years, Twitter was a runner-up social media company. It never grew to the size and scale of a Facebook or Instagram. He just got confused.
Then Elon Musk, a powerful user of the service, came in. He offered $ 44 billion to buy Twitter and stated that the company could perform much better if it were in the lead. He despised Twitter executives, ridiculed its content policies, complained about the product, and confused its more than 7,000 employees with its statements. Because Mr. Musk revealed the company’s lack of business and financial prospects, Twitter shares fell more than 30 percent.
Now, as Mr. Musk, a billionaire, tries to withdraw from the hugely successful deal, he is inexorably leaving Twitter worse off than he was when he said he would buy it. With every tweet and public mockery, Mr. Musk has eroded confidence in the social media company, slammed employee morale, scared off potential advertisers, highlighted its financial hardships, and leaked misinformation about how Twitter works.
“His commitment to Twitter was a serious tribute to the company,” said Jason Goldman, a member of Twitter’s founding team who has also served on its board of directors. “Employees, advertisers and the market in general cannot be convicted in a company whose path is unknowable and which will now go to court to complete a transaction with a bad faith actor.”
The precarious situation underscores why Twitter will sue Mr. Musk as early as this week to force the termination of the deal. The court battle is likely to be long and immense, and involves months of costly litigation and high-risk negotiations by elite lawyers. One resolution is far from certain: Twitter could win, but if it loses, Mr. Musk could leave paying a breakage fee. Or both parties could renegotiate or agree.
On Monday, the damage inflicted by Mr. Musk, 51, was evident. Twitter shares fell more than 11 percent to one of their lowest points since 2020, as investors anticipated the next legal battle. Since Twitter accepted Mr.’s takeover bid. Musk, on April 25, its shares have lost more than a third of their value, as investors have become increasingly skeptical that the deal will be made on the agreed terms. (In contrast, the highly technological Nasdaq index fell 12.5 percent during the same period).
Twitter declined to comment Monday. In a letter to Mr. Musk on Sunday, the company’s lawyers said his decision to terminate the deal was “invalid and unlawful” and that Mr. Musk “consciously, intentionally, voluntarily and materially breached” his agreement to buy the company. Twitter would continue to provide information to Mr. Musk and working to close the transaction, adds the letter.
Mr. Musk did not return feedback requests. On Sunday, the billionaire, who has cited the number of fake accounts on the Twitter platform as the reason he can’t buy the company, tweeted a photo of him laughing at the situation.
Of all the remains that Mr. Musk is leaving on Twitter, the highlight being the brutality with which he exposed the company’s dwindling financial and business prospects. Twitter has been running at a loss for seven of the nine years it has been a public company. During the deliberations on the offer of Mr. Musk, the company did not receive any serious interest from other suitors, according to people with knowledge of the situation. The Twitter board determined that Mr. Musk’s $ 54.20 per share was the best he could get, and he suggested he saw no way to achieve that price on his own.
“The board’s lack of conviction in the company’s long-term future will linger on employees, partners and shareholders, regardless of the outcome with Elon,” Mr. Goldman.
In recent months, the Twitter business has deteriorated. Parag Agrawal, chief executive of Twitter, said in a note to employees in May that the company had failed to meet its business and financial goals. To address the issues, it kicked out product and revenue heads, instituted a slowdown in hiring, and began an effort to attract new users and diversify into e-commerce. In April, the company stopped offering a financial vision of the future to investors, awaiting the acquisition.
That trajectory is unlikely to change as uncertainty about the deal baffles advertisers, Twitter’s main source of revenue.
“Twitter will have trouble in the near future to reassure restless advertisers and their users that they will be stable,” said Angelo Carusone, chairman of the Media Matters for America monitoring group.
In what was an implicit investigation into Twitter’s top executives, Mr. Musk said he could have done much better with the company. In a presentation to investors in May, he said he planned to quintuple the company’s revenue to $ 26.4 billion in 2028 and reach 931 million users that same year, up from $ 217 million by the end of the year. past.
Mr. Musk emphasized Twitter’s helpless financial direction in a letter filed Friday with the Stock and Securities Commission. The company’s “business outlook and financial outlook” had taken a break, his lawyers wrote, especially given Twitter’s recent “financial performance and revised outlook” for next fiscal year.
Mr. Musk, who has more than 100 million followers on Twitter, has also hit the product, saying it’s not as appealing as other apps. He has repeatedly stated, without evidence, that Twitter is invaded with more non-authentic accounts than it has revealed; these accounts can be automated to generate toxic or fake content. (The company has said that less than 5 percent of its platform accounts are fake).
His comments about the fake accounts have weakened confidence on Twitter, just as the company prepares to moderate heated political discussions about the upcoming elections in Brazil and the midterm elections this fall in the United States, disinformation experts said.
In another critique on Twitter and the way he monitors content, Mr. Musk promised to disable the company’s moderation policies in the name of free speech. In May, he said he would “revoke former President Donald J. Trump’s permanent ban” from Twitter, allowing Trump to return to the social network. This irritated right-wing users, who have long accused the company of censoring them, and renewed questions about how Twitter should handle debates over the limits of free speech.
Within the company, employee morale has been damaged, causing fights and attrition, according to six current and former employees.
Some of those who remain said they were relieved that Mr. Musk seemed to have decided not to own the business. Others shared nihilistic memes on the company’s Slack or openly criticized Twitter’s board and executives for entertaining Mr. Slack’s offer. Musk first, according to internal messages seen by The New York Times. The mood among the executives was one of grim determination, two people with knowledge of their thinking said.
Evan Williams, founder of Twitter, tweeted Friday that he wanted Mr. Crossings to end. Musk.
“If I was still on the board, I would ask if we can let this whole ugly episode be wanted,” Mr. Williams in response to the announcement that Twitter intended to sue Mr. Musk and force the deal. “I hope this is the plan and this is a ceremony.”
Manu Cornet, a Twitter employee, illustrated the mood with a cartoon showing a shattered company that had been hit from a shelf by Mr. Neglected Elbow. Musk. Its caption: “Break it, buy it!”
Ryan Mac and Isabella Simonetti contributed to the report.