Elon Musk has sent a third termination notice to Twitter ahead of a stockholder vote. Musk had called off the deal citing alleged fake accounts on the social media platform.
Twitter meanwhile is not impressed with Musk’s notice. In its response, the microblogging site said, “As was the case with both your July 8, 2022 and August 29, 2022 purported notices of termination, the purported termination set forth in your September 9, 2022 letter is invalid and wrongful under the Agreement.”
It added, “Twitter has breached none of its representations or obligations under the Agreement, and following the receipt of the approval of Twitter’s stockholders at its September 13, 2022 special meeting, all of the conditions precedent.”
Musk has accused Twitter of not providing him with adequate information. He has also alleged that it breached the contract by firing key executives. Now, Musk has sent a notice to Twitter over the payment to the company’s former security head Peiter “Mudge” Zatko, who is a whistleblower.
Twitter has reportedly paid $7 million to Zatko which Musk says is a breach of contract. Musk’s lawyers said Twitter did not take Musk’s approval before making the payment nor was this payment disclosed to him.
Drama over Musk’s Twitter Acquisition
Notably, it was Musk who was keen to buy Twitter initially despite the company’s board turning down his offer. As part of the agreement, any party that walks out of the deal needs to pay a penalty of $1 billion.
Musk offered $54.20 per share for Twitter which was a steep premium to the microblogging company’s then prevailing stock price. However, many now believe that Musk has buyer’s remorse and is looking to renegotiate the deal. Twitter however has sued Musk for “specific performance” and wants him to acquire the company.
Twitter had missed earnings estimates in Q2 2022. The company blamed the poor ad market and Elon Musk’s flip-flops on acquiring the company for the slowdown. The second quarter earnings season was quite bad for social media companies.
Even Facebook parent Meta Platforms has fallen after its earnings release as it reported the first YoY fall in revenues. It also predicted a YoY fall in its third-quarter revenues. However, after the over 50% fall in 2022, some analysts see Meta stock as undervalued and last month JMP advised investors to buy Meta Platforms stock.
Alphabet’s ad revenue growth also slowed down in the June quarter. It is now betting on healthcare to revive its fortunes and has led a $1 billion investment round in its healthcare subsidiary Verily.
Social Media Stocks Have been Volatile in 2022
Twitter stock crashed after Musk walked out of the deal to buy the company. However, Digital World Acquisition Corp (NYSE: DWAC), the SPAC (special purpose acquisition company) that is taking Donald Trump’s TMTG (Trump Media & Technology Group) public, rose after the announcement.
DWAC has since plunged as the company has been struggling to garner votes to extend its timeline. A lot of Trump supporters have been buying DWAC stock even as the overall sentiments towards SPACs have been quite negative.
TMTG has launched Truth Social, a Twitter lookalike. However, the app hasn’t gained much traction and Google has blocked it over moderation concerns.
Trump hired former Congressman David Nunes as the company’s CEO even though he did not have any experience in running similar companies.
The subscriber growth of Trump Social has been far from satisfactory and even Trump has just about 4 million followers there, which is way below the nearly 90 million Twitter subscribers he had before his account was banned.
Meanwhile, the takeover battle between Musk and Twitter is far from over. Watch out for more action in the typical “Musk way” as the mercurial billionaire tries to walk out of the deal.
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This article was written for Business 2 Community by Mohit Oberoi.
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