Monday morning, before the stock market opened, Twitter shares dropped sharply after Elon Musk said he wants to stop his $44 billion takeovers of the company.
Before the stock market opened in the U.S., shares of the company fell by almost 9 percent. They then made up some of their losses to trade 7 percent lower. In the meantime, Tesla stock was up about 1% before the market opened.
Musk’s lawyer told Twitter’s board on Friday that Musk wants to back out of the deal. The billionaire doesn’t like how many bots and fake accounts are on Twitter, and he says the company isn’t being honest about how much activity on the site is real.
Twitter, on the other hand, says it has given Musk all the information he needs to judge its claim that spam accounts make up only 5% of monetizable daily active users. This information includes its so-called “firehose,” which is a stream of daily tweets that has not been filtered.
The head of Twitter’s board, Bret Taylor, said that the company would go to court in the Delaware Court of Chancery to make sure the agreement was followed.
On Monday, Musk posted a meme that made fun of Twitter’s management over the botched deal. It shows pictures of Musk laughing and says that the company is trying to “force” him to buy the stock in court.
A Twitter representative didn’t want to say anything about the meme.
Musk is one of the most-followed people on Twitter, with over 100 million people following him. He has used the social media site for everything from communicating with his different businesses to criticizing the platform he wanted to buy.
Richard Windsor, the founder of a research company called Radio Free Mobile, said that Musk’s decision to back out of the deal was probably because he wanted to change the price of Twitter a lot.
Windsor doesn’t own shares in Twitter, but if he did, he says he’d sell them now.
Monday on CNBC’s “Squawk Box Europe,” Windsor said, “There is still a disconnect between the fundamentals and the share price.”
“If you look at what’s happened in the tech industry over the last few months, you could put Twitter’s value between $13 billion and $15 billion, which is about 50 percent less than what its share price is today.”
