Elon Musk, seen here in Texas in April 2022, appears to be in a weaker position from a legal standpoint as he tries to stop buying Twitter, but it can still wreak havoc on the social network as he goes.
Courted and then abandoned by the richest person in the world, Twitter seems well positioned to win a court battle with Elon Musk for a $ 1 billion breakout fee and more, but the company will not come out unscathed.
The entire saga has left observers baffled by what Wedbush analyst Dan Ives described as “one of the craziest business stories ever made.”
Musk, the founder of electric car company Tesla, sent a letter to Twitter on Friday saying he was withdrawing from the controversial deal he made in April to buy the platform for $ 54.20 per share, or $ 44 billion. dollars in total.
Musk, who also runs SpaceX, has accused the social media giant of “false and misleading representations” about the number of fake accounts on its platform.
These arguments may be valid, but they do not deserve to be withdrawn from the agreement, Lipton says, dismissing them as “delicate.”
“It looks a lot like Musk is legally wrong.”
This leaves the possibility that the billionaire is trying to renegotiate the price down.
But experts don’t see how Musk and Twitter could agree on a different price right now, as the platform’s shares have lost more than a quarter of their value since late April.
If Twitter wins in court, the mercurial entrepreneur will have to pay at least a few billion dollars in damages.
But while that would be a victory for shareholders, it would still leave Twitter in Musk’s hands, and his libertarian view of absolute freedom of speech is not aligned with that of many of the employees, users, and advertisers on whom the platform business model.
“It looks like a toy that a spoiled child wants, but doesn’t know what to make of it, so he would get bored, not give it the attention it deserves, and forget it in a corner … Twitter would die slowly and painfully “, he predicted.
Any court proceedings are expected to last for months, mostly because Musk will “drag him down,” according to Lipton.
But Musk, followed by more than 100 million people on the platform, “will try to embarrass them; it will be a distraction and demoralization for employees,” he argues.
For Twitter, “it will be a battle on all fronts: keeping employees, competitors chasing their business, brand issues, investors believing in numbers,” says Ives, Wedbush analyst.
“The last few months have been a big distraction for Twitter, preventing it from focusing on its business fundamentals,” notes Debra Williamson of eMarketer.
“Its user growth is slowing. And while advertising revenue continues to grow marginally, Twitter now faces a slowed economy that could squeeze advertising spending across all social platforms.”
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