Twitter facing a ‘disaster scenario’ as Elon Musk says he is terminating $44B acquisition

Response to Elon Musk saying he was terminating his $44B acquisition on Twitter (NYSE:TWTR) was swift, Friday, with the social-media firm being seen as wounded and staggering and sure headed to courtroom in opposition to the Tesla (TSLA) chief government.

“This can be a catastrophe situation for Twitter and its board,” mentioned Wedbush Securities analyst Dan Ives. “Now, the corporate will battle Musk in an elongated courtroom battle to recoup the deal and/or the breakup payment of $1B, at a minimal.”

Shortly after U.S. inventory markets closed, officers representing Musk mentioned in a submitting with the Securities and Change Fee that Musk was terminating his acquisition plans due principally to an incapability to come back to a decision over the matter of Twitter’s (TWTR) variety of faux, spam or bot accounts. Musk has argued for weeks that Twitter (TWTR) was capable of totally confirmed that the variety of such accounts equaled lower than 5% of the corporate’s whole consumer base.

“Twtter has failed or refused to supply this info,” mentioned Musk’s representatives of their SEC submitting. “Typically Twitter has ignored Mr. Musk’s requests, typically it has rejected them for causes that look like unjustified, and typically it has claimed to conform whereas giving Mr. Musk incomplete or unusable info.”

Twitter (TWTR) shares fell greater than 5% in Friday’s common buying and selling session, to finish the week at $36.81–or greater than 31% lower than the $54.20-a-share worth of Musk’s authentic buyout settlement in April. Following Musk’s termination announcement, Twitter (TWTR) share fell greater than 6% in Friday’s after-hours buying and selling session.

And there may very well be extra blood spilled when U.S. inventory markets open on Monday.

Ives mentioned that he believes Twitter’s (TWTR) inventory will commerce within the $25 to $30-a-share vary on Monday as Musk’s authentic $44B price ticket for Twitter (TWTR) “by no means made a lot sense to the Road.” Ives mentioned that for now the deal has “a Twilight Zone ending with Twitter’s board again in opposition to the wall.”

On Thursday, Twitter (TWTR) tried to alleviate Musk’s considerations by saying its efforts present that bots make up lower than 5% of its whole consumer accounts.