People seem to be discounting the fact that Elon still owns 9% of the company and is one of the largest shareholders. He just wants a chance to renegotiate as he know if he actually walks away he will lose around $5B.
Though it's important to note that his lawyers are well aware that this will never fly and therefore the actual court case is them trying to find an edge case where Twitter actually broke the contract (that's the shoddy talk about Twitter apparently rate limiting the data analysis). Which is still a hard sell, but there's at least a chance they'll get away with it.
But it would certainly be a major bargaining chip for Elon.
No execs want to go to jail for fraud. These execs are worth 50m+. Losing money is insignificant. Going to jail is a very huge deal
Anyway, this is just my unprofessional opinion, but for him to be able to prove intentional deceit is already going to be quite hard. Conditional on him managing that, he'd need to use a number he - by his own statements - hardly believed to clear the incredibly high bar of MAE in Delaware. I think it's very unlikely that he will be able to exit the deal this way.
To address your edit: I don't see how he'd manage to prove fraud without already providing enough evidence to send execs to jail. Also, the SEC would be the one prosecuting people anyway - he has nothing to bargain with. Lastly, this does not change the fact that the bot number, no matter how made up, will very likely not be sufficient to get out of this deal.
He took over twitter. Fire the execs. Opening up all emails.
You can bet at least one person out of 6000 employees disagree with how twitter counts bot number.
Pick that email, point out that execs discarded a concern raised by employee.
Change the calculation of bot number to be higher. Report to SEC in public earning. Allude that the previous number was just plainly wrong.
Sue the execs for fraud... since SEC accepts the new number and approach which is materially different from the old number.
To be honest, just opening up all emails is already bad enough for execs.
Yes; he is.
> he’s claiming that Twitter lied in public filings not related to the deal.
He explicitly claims that they are deeply related to the deal.
"Due process" is the legal steps that have to be followed in a court case (especially a criminal one). You can waive due process - if you're not going to make the government work through all the steps, because you know that it's not going to get you any benefit in the end, say.
Musk waived due diligence, not due process.
It’s just not a valid reason under the contract.
- he was buying the company in order to solve the bot problem, and it being worse just makes that more important.
- if Twitter is overreporting their real users then their revenue per user is actually higher and they’re a better business.
So my question is: what did he learn between the point when he decided to buy all those shares at a high price and the point where he started making a stink about bots? He hasn't made any claims based on new information. Did he just spend a massive amount of money on Twitter stock with zero idea of how much it should actually be worth, and only have second thoughts after signing a deal to buy the company? There's no scenario where his actions look economically sound, so the implausible-on-the-face-of-it "do it for the lulz" argument seems like one of the last best guesses available.
[0] the internet ad space is filled with players, and generally a low-trust industry for obvious reasons, so this claim strikes me as extremely dubious, but here we are
Or Musk is, was, and always will be, a financier, and is doing all this because at some point it made sense to his broader financial plans - dumping Tesla stock near its peak and minimizing the fallback.
Then there was you know, an economic collapse, shortly after this started going into motion. Maybe, I don't know, the financial collapse had some impact on the cost/benefit and changed the course?
Why do people always throw out the simplest most obvious solution in favor of conspiracy and cult-of-personality worship ("do it for the lulz")?
1) Musk wanted to offload Tesla (which he himself said was overvalued). Twitter was as good a reason as any to do so.
2) Economic collapse made the deal unfeasible.
3) When you owe the bank a billion dollars its the banks problem, Musk knows the deal is worthless and is more then happy to let the courts settle it to optimize his personal costs.
He disclosed his share in early April and then signed the deal in late April. TWTR today is about where it was from January-April pre-news-of-his-investment, so the value of his initial Twitter investment actually looks pretty stable even post-"economic collapse" (the Dow, for instance, is down 10% over this period, hence the square quotes - obviously no picnic, but did people think the crazy 2020 runup wouldn't lead to a correction?). TWTR has already largely corrected from it's 2020/2021 peak, other than that it fairly steadily went up to be almost double what it was worth 5 years ago, still seems like a solid buy if you're trying to diversify your Tesla holdings that grew way more quickly than that.
TSLA is down 37% meanwhile from April 4 peak before the Twitter drama started. If that's because of the deal, and if that's weighing on his plans now, clearly even in the most rational case he wildly mis-judged that one.
And in getting out of some TSLA he also got INTO a bunch of TWTR (unless possibly he already sold that at the peak?). Which he now seems determined to tank the value of.
But heck, since Twitter is still valued about where it was before, but Tesla has fallen, "getting out of some Tesla stock for something more stable" seems to still make a lot of sense. He thought it was worth buying at this share price before, he even made an offer to pay a big premium (against a higher price driven by the news of his move, of course), so... what of that was unforseeable or seems dramatically different.
If he wanted to sell some Tesla, here's a simple way:
1) Tweet something: "Batteries are overpriced! I will start or buy a battery company, but I need a warchest to do it!"
2) Sell some Tesla stock
3) Don't do the battery thing. If you really need to justify yourself, just pretend some private discussions convinced you not to do it in the end.
This has the nice benefit of not being on the hook for tens of billions of dollars while accomplishing the same goal.
If you don't have an especially clear answer to how that revision would harm Twitter's bottom-line numbers, my understanding is that you'd have essentially no hope of convincing the Delaware Chancery Court that a "material adverse event" had occurred. And that's, of course, before you get to the fact that the numbers we're talking about are hedged in the SEC filings.