Twitter Spent $33 Million on Elon Musk Deal in Q2
Musk, after waiving his rights to due diligence in the Twitter agreement, complained that he suddenly needed verification of Twitter’s estimate that fake and spam accounts are less than 5% of its total user base. On July 8,after his repeated requests and also claimed the company made “false and misleading representations,” and that as a result, Musk was nixing the pact.
Twitter’s lawyers accused Musk of having buyer’s remorse — after a sharp drop in the price of Tesla stock, which represents the majority of his net worth — and alleged that the mega-billionaire has “ , creating business risk for Twitter and downward pressure on its share price,” per the company’s lawsuit., as revenue declined 1% and the company swung to a net loss in the period. The company blamed the worse-than-expected results on uncertainty introduced by Musk’s bid and advertising “headwinds.”
In the 10-Q, Twitter also disclosed that on June 28, a stockholder filed a lawsuit in the U.S. District Court for the Southern District of New York against the company and the board of directors, alleging that “certain disclosures regarding the Merger in the revised preliminary proxy statement filed on June 21, 2022 are materially incomplete and misleading” and thus violating the Securities Exchange Act of 1934.
More specifically, the lawsuit alleges that the preliminary proxy statement “should provide additional information and metrics related to projections and financial analyses described in the preliminary proxy statement.” Twitter said it “intends to defend itself vigorously in this litigation.”
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