The electric car and space travel tycoon is already accumulating resources to respond in case a Delaware court forces him to consummate the purchase of Twitter for a millionaire sum. A five-day trial next October will settle one of the costliest disputes in recent Wall Street history.
A group of nine judges has on their shoulders to resolve one of the most mediatic corporate lawsuits that have been reported in recent years: the failed agreement by which Elon Musk promised to pay 44,000 million dollars for the social network Twitter.
The legal battle is as wide as it is long and will be resolved in a matter of five days from October 17.
“An eternity for this type of process,” considers Juan Pablo Coy, an expert in financial and stock market law and a former high-level official in the supervisory entity of the Colombian stock market.
On July 8, Elon Musk announced that he was no longer interested in the business. Four days later, Twitter filed a lawsuit with which it tries to show that Musk does not have sufficient arguments.
“Twitter committed fraud”: Musk’s response in court
The counterclaim with which the considered richest man in the world will go to trial next October, filed on August 4accuses the social network of conduct ranging from fraud to hiding and misrepresenting information, as well as having deceived its team on key aspects.
“Twitter’s omissions or misrepresentations distort the value of the company and made Musk agree to acquire it at an inflated price,” summarizes the 165-page document filed by the lawyers of the also founder of the PayPal payment system, Tesla and SpaceX.
What he intends with his counterclaim is to convince the judges that he has all the arguments to give up the business, since he says that Twitter breached its obligations by providing him with erroneous information about his false accounts or ‘spam’.
For years, Twitter has calculated that these fake accounts, also known as ‘bots’, represent 5% of its more than 200 million “monetizable” daily active users, which are those whose activity on the platform can profit economically.
Musk claims to have evidence that 29% of those users do not see ads and therefore do not generate income; 41% hardly do and generate less than 10% of the company’s quarterly profits. And he finds that just 7% of the most active users seem to generate almost half of the quarterly income.
“Twitter users are classified as fake or spam based on a sample of just 100 accounts per day (less than 0.00005% of daily users),” he says in one of the sections of the lawsuit, in which it also reiterates that the mogul’s initial goal was to start charging subscription fees.
Is Elon Musk preparing to lose?
In just days, the billionaire owner of Tesla has sold about $6.9 billion worth of shares in the electric vehicle maker, saying the funds could be used to finance the Twitter deal if he loses the legal battle.
“In the (hopefully unlikely) event that Twitter forces this deal to close and some equity partners don’t show up, it’s important to avoid an emergency sale of Tesla stock,” he told his more than 100 million followers in a tweet. August 9 tweet.
And it is.
In the (hopefully unlikely) event that Twitter forces this deal to close *and* some equity partners don’t come through, it is important to avoid an emergency sale of Tesla stock.
— Elon Musk (@elonmusk) August 10, 2022
“We see it very difficult for Elon Musk to get ahead in this process (…) there is a fear on his part because that is why he is filling himself with cash flow to be able to comply,” Juan Pablo Coy explained to France 24.
Since being sued by Twitter, the CEO of Tesla has not only prepared himself financially, but has also moderated his speech: recently, the eccentric businessman assured that he could complete the agreement, as long as he receives information from spam accounts and accounts. false that finally satisfies him.
With Reuters, AP, EFE