Elon Musk’s Legal Battle Over Twitter Acquisition
In a significant ruling, the U.S. District Court in Northern California denied Elon Musk’s attempt to dismiss a lawsuit related to his acquisition of Twitter, now known as X. The lawsuit, filed by former Twitter shareholders, accuses Musk of manipulating the company’s stock price before purchasing it in October 2022.
Impact of Musk’s Actions on Twitter’s Stock Value
The lawsuit highlights the dramatic fluctuations in Twitter’s stock value leading up to the acquisition. From a high of $71.69 in July 2021, the stock plummeted to $43.42 by March 2022. This decline may have incentivized Musk to perceive the acquisition as a bargain. Musk’s use of his Tesla stock as collateral for a $12.5 billion loan to finance the deal, which subsequently dropped by about 37%, is also believed to have motivated his actions.
Judge Stephen Breyer focused on Musk’s public statements, particularly his tweets, in his decision. Musk’s tweet about the acquisition being “temporarily on hold” is viewed as a strategic effort to devalue the company. Judge Breyer found these statements potentially misleading, especially given Musk’s waived rights to due diligence in the acquisition process.
Legal Scrutiny of Musk’s Tactics
Musk’s approach to the Twitter takeover has come under intense scrutiny. The lawsuit points out Musk’s pattern of allegedly misleading statements, including claims about the proportion of fake accounts on Twitter and his ability to back out of the deal. While the court acknowledged some of Musk’s comments as mere opinions, others were deemed false or misleading, particularly those implying Musk had a right to specific data from Twitter before proceeding with the acquisition.
Investors claim that Musk’s actions and statements caused them significant financial harm. They argue that Musk’s delay in disclosing his growing stake in Twitter, as required by the Securities Exchange Act, allowed him to save approximately $143 million, while they missed out on potential profits.
Hot Take: Elon Musk’s Legal Battle Sparks Controversy
Elon Musk’s legal battle over the acquisition of Twitter has sparked controversy, with the court’s ruling shedding light on the impact of Musk’s actions on Twitter’s stock value and the scrutiny of his tactics. This case highlights the potential consequences of influential figures’ public statements and decisions on the financial landscape.
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