Twitter is facing the “worst case scenario” as Musk moves to renegotiate the agreement.
A new degree of disarray will be imposed upon the company after months of public conflicts have harmed its brand and staff morale. Elon Musk’s attempt to terminate his Twitter acquisition will likely drive the social network into a protracted court battle and send its stock price plummeting.
According to Dan Ives, managing director and senior stock research analyst covering the tech sector at Wedbush Securities, this was Twitter’s worst-case scenario and it has now happened. Ives cautioned that Musk’s attempt to leave the company may make it seem like “damaged goods” in the eyes of further investors or possible buyers. On Friday, shares of Twitter fell by almost 6% in after-hours trade. When the market reopens on Monday, according to Wedbush Securities, the stock might plunge to between $25 and $30, a loss of more than 30% from where it ended up on Friday before Musk’s filing. Twitter’s board pledged to “pursue legal action” in a news release on Friday night to uphold the terms of the $44 billion agreement Musk made in April to buy the social network and take it private. He must complete the purchase, and unless there is a significant change to the business, which legal experts believe is challenging to demonstrate. The board of Twitter said it was certain the company would win in court, but experts warn — and employees and other staff members worry — that Musk’s letter sets the setting for a volatile era that might present significant financial concerns for the business and its employees. However, Friday’s filing opens a new front in the takeover of the social network, which wields enormous influence over news coverage and politics. The billionaire has been threatening to back out of the deal for weeks. A legal dispute has been sparked by Musk’s attorneys’ repeated accusations that Twitter has withheld information that would have allowed his team to validate the number of bots or spam accounts on the social network. The business asserts that it has fulfilled all of the requirements of the contract and has provided access to its “firehose,” a vast data stream that includes more than 500 million tweets each day. According to legal experts, Musk’s case doesn’t match the requirements for him to be able to back out of the agreement. Even if Twitter succeeds in getting the transaction back or recovering the $1 billion breakup fee, a legal struggle presents fresh difficulties. Twitter might be required to disclose important business indicators, which would raise concerns on Wall Street about the company’s general health after it posted its first profit in 2018 during a significant financial reorganization. Professor Donna Hitscherich of Columbia Business School predicted that Musk’s declaration would inevitably prompt inquiries into the reasons behind his loss of interest. The majority of the workforce has been preparing for Musk to formally attempt to walk away after weeks of threats. There has been a broad lack of belief that the agreement will be implemented as written. Many employees and executives, however, claim that the arrival of Musk’s discussions has increased scrutiny of Twitter, which has only served to aggravate them. Any stock decline would have an impact on staff compensation, adding to the dismay of employees and staff members who have already reacted negatively to the idea of the richest man in the world taking over their business. Twitter has removed key executives and implemented a hiring freeze since Musk announced his purchase. According to an employee, Twitter normally values openness and transparency, but because of the deal’s delicate nature, more information has been kept under wraps. If the deal is challenged in court, such tensions can increase. The employee claimed that a clown emoji may best describe their response to the turns and twists. Following the attack on the U.S. Capitol on January 6, 2021, Twitter imposed a ban on former president Donald Trump. Musk has stated he would lift that ban, citing the “risk of further incitement of violence.” Conservatives applaud Musk’s proposals because they allege the corporation censors political discourse, while liberals criticize them because they believe his self-described absolutist views on free speech might lead to abuse and false information spreading like wildfire on the platform.
Regardless of how the sale turns out, a Twitter executive claimed that there have been internal discussions about conservatives’ problems with the platform and that staff members are striving to fix them. The public scandal, however, is not likely to go away. Ives claimed that Musk inserted himself into a political tempest and that there would now be numerous twists and turns once more.