Elon Musk Twitter

The uncertain future of Twitter after the chaotic break with Musk

Elon MuskTwitter
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Courted and then shunned by the world’s richest man, Twitter appears well-positioned to win a court battle with Elon Musk over a break fee of at least $1 billion, but the company won’t come out unscathed.

The outcome of the saga left observers baffled. It was “one of the craziest business stories ever,” said Dan Ives, an analyst at investment firm Wedbush.

“I think it started as a circus show and it’s ending as a circus show,” Ives told AFP.

Musk, founder of electric car company Tesla, sent a letter to Twitter on Friday saying he was pulling out of a controversial deal he made in April to buy the platform for $54.20 a share, or a total of 44,000 million dollars.

However, such merger deals are “designed to prevent buyers from backing down and deciding to walk away,” says Ann Lipton, a Tulane University law professor who specializes in corporate litigation.

Musk, who also chairs SpaceX aerospace, accused the social network of delivering “false or misleading statements” about the number of fake accounts on its platform.

His lawyers also pointed out that Twitter fired employees and stopped hiring, a practice that they consider contrary to the company’s obligation to continue operating normally.

Those arguments may hold water, but they don’t warrant getting out of business altogether, says Lipton, who calls the move “touchy.”

“It is not enough, unless he can show that the statements (about fake accounts) are not only false, but call into question the fundamental foundations of the agreement,” he explains.

“It gives every impression that Musk is legally wrong.”

twitter would die

This opens up the possibility that the billionaire is in fact trying to renegotiate a lower price.

This tactic has been used successfully before, as when two years ago LVMH, the global luxury giant, broke a deal to acquire Tiffany before getting a discount.

However, experts don’t see how Musk and Twitter can agree on a different price at this point, given that the platform’s shares have lost more than a quarter of their value since the end of April.

“Both have a lot to lose,” warns Lipton.

If Twitter wins in court, the unpredictable businessman will have to pay at least a billion dollars in damages.

In a worst-case scenario, he could be forced to honor his commitment and buy Twitter at a price that has become exorbitant, while his fortune has been melting by tens of billions of dollars in recent months.

Although that would be a victory for the shareholders, the company would be left in the hands of Musk and his libertarian vision of absolute freedom of expression, a position that is not shared by many of the employees, users and advertisers on whom the model depends. business the platform.

“Twitter is worse now than it was six months ago, but in the long run, it will be better off without it,” says Carolina Milanesi, an analyst at Creative Strategies.

“It’s like a toy that a spoiled child wants, but doesn’t really know what to do with it, so he gets bored and doesn’t give it the attention it deserves, and forgets it in a corner (…) Twitter would die slowly and painfully,” he predicts. Milanese.

Battle on all fronts

Any court proceedings are expected to take months, especially considering Musk will “draw it out,” Lipton predicts.

“Twitter is in a strong position,” he says.

However, Musk “will try to ridicule them, which will be distracting and demoralizing for their employees,” he anticipates.

With more than 100 million followers on the platform, Musk has already harassed Twitter with highly critical tweets, ridicule and outlandish suggestions for use, all celebrated by thousands of fans.

For Twitter, “it will be a battle on all fronts, retaining employees, keeping an eye on the competition coming after your business, brand issues, getting investors to believe the numbers,” says Ives, an analyst at Wedbush.

Unlike its Silicon Valley neighbors, Twitter has never been a money-making machine capable of translating its users’ attention into astronomical ad revenue.

“These months have been a huge distraction for Twitter, keeping it from focusing on its core business,” says eMarketer’s Debra Williamson.

“If Musk is able to undo the deal, Twitter will still be left with the same problems it was in before he came on the scene,” he predicts.

“Your user growth is slowing. And while ad revenue continues to grow marginally, Twitter is now grappling with a slowing economy that could cut ad spending across all social platforms.”

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