Make Twitter Great ...

Reckless behaviour creates uncertainty and billion dollar losses

So after markets closed last night it was announced that Twitter is now indeed suing Elon Musk for breaking the deal to acquire the social media platform for $54.20 per share (a number now engraved in our collective memories) or $44 billion. And they’re not suing to get $1 billion break-up fee, no, they want Musk to consume the deal according to its original terms. Pay up and proceed, so to speak. They are seeking a speedy ruling and that will likely be this September. The onus will now be on Musk and his legal team to prove that a material adverse event on Twitter’s side forced him to abandon the purchase. Not an easy one, for Musk.

Although the idea to acquire and shake-up the platform was neat, the deal started to unravel almost the moment it got announced. Musk had a hard time raising the funds in a stock market that was rapidly sliding into correction territory. Investors must also have have sensed it, the stock never got higher than $51.70 and started trending downwards not long thereafter. No one really believed it would happen. You can see where the share price sits now on the image above and you can then also figure how much was lost by both Twitter shareholders and those trading the stock thinking there was an attractive buy-out coming. That’s why the Twitter board recommended the sale, not because they were overjoyed to open the door for the controversial Musk. The Twitter board has a fiduciary duty to deliver shareholder value, Musk’s offer was exactly that.

However not just Twitter shareholders lost their shirts, another group lost billions too, the Tesla shareholders (full disclosure; I own some shares):

Musk had to liquidate some of his Tesla stock to fund the deal, during an already volatile time. And just when most thought that the collapse of the Twitter deal would perk the Tesla stock up again, the spectacle of the upcoming lawsuit put further pressure on it this week. Sure, all great trading opportunities for the short-term folks, but bad for business and terrible for shareholder confidence.

So Musk has effectively gone on a rampage, recklessly destroying shareholder value across the board, not to mention depriving lots of investment bankers and lawyers of million dollar paydays. He has not made any friends, even Trump - possibly eyeing a return to tweeting - threw him under the bus yesterday. But in a very telling way Elon Musk has acted precisely like Trump by promising grandiose things and then failing to deliver. ‘Make Twitter Great Again’ would have been an interesting sub-title to the offer he made only a few months ago and which has now fallen apart spectacularly. Shareholders (of both Tesla and Twitter), employees, Twitter users and audiences, and in fact pretty much anyone else wondered what has just happened. Now it is off to a court in Delaware where the show continues.