Elon Musk, CEO of SpaceX and Tesla, proposed purchasing Twitter for $54.20 per Share. This led regulators to stop trading in the stock.
According to Bloomberg’s Tuesday report, Musk proposed the idea in a letter addressed to Twitter executives. The news caused share prices to rise by as high as 18%. Twitter would be valued at $44 billion if the offer was accepted.
Twitter was battling Musk in court for his refusal to cancel the offer due to a dispute over the platform’s true user count. Musk expressed concern that fake accounts could be as high as 33%, rather than the reported 5%. A lower number of monetizable daily users would justify a lower valuation. The acquisition status was to be determined in a trial scheduled for October 17.
Twitter lawyers had challenged Musk’s reasoning for canceling the $44 billion deal. They produced text messages Musk sent to Michael Grimes (an executive at Morgan Stanley), in which he indicated that he was concerned over macroeconomic conditions resulting from the Russian invasion. Let’s slow down for a few more days. Musk stated that the Putin speech tomorrow was extremely important. “If we are heading into World War III, it won’t make any sense to buy Twitter.”
Twitter reported a loss of $0.08 per share during its second-quarter earnings. This was below the $0.14 gain per share forecasted by analysts. According to a press release, the company stated that the quarter’s poor performance was due to “advertising sector headwinds associated with both the macroenvironment and uncertainty related to the pending purchase of Twitter by an affiliate from Elon Musk”.
Kathaleen McCormick in Delaware, who is overseeing the merger, granted Musk’s attorneys permission to use Peiter Zatko’s whistleblower account for their arguments. Ex-Security czar of the social media company, the former cybersecurity czar claimed that executives didn’t have the motivation or resources necessary to find the true number.
In his whistleblower report, Zatko also claimed that some current Twitter employees work for a foreign intelligence agency. During testimony before the Senate Judiciary Committee, he said that the executives were not willing to make the effort to find the person. Musk sent a tweet with an emoji of popcorn from a movie theater, seemingly to indicate that he enjoyed the flow of the proceedings as Zatko’s live testimony was being broadcast.
Zatko clarified that he did not disclose his whistleblower disclosures to Twitter out of spite or to hurt Twitter. “I believe in the company’s mission and support its success. However, this success is only possible if Twitter users and the public are safe.
Both sides in the merger case deposed Jack Dorsey (the former CEO of Twitter). Musk’s longtime friend, Dorsey called him the world’s wealthiest man, and his mission of “extending the light of consciousness” is the “singular answer” he trusts to lead the social media company.
Twitter joined other tech companies earlier this year in trying to reduce costs by reducing staffing and pausing hiring on several continents. The stock price of the company dropped from $64.98 a year ago to $47.93 Tuesday afternoon. This represents a 26% drop.
