Welcome back to closing bell on cheddar news. Everyone
, let's turn to a story that we've been covering
closely here for months now on closing bell Elon musk
attempting to walk away from the$44 billion deal to
buy twitter that he agreed to in the spring as
the Tesla ceo claims that twitter breached the deal by
failing to report the true number of fake accounts on
his platform. Well, there are still many unknowns
as to how this all shakes out but it will
almost surely set up a lengthy court battle as twitter
may try to enforce the agreement signed by both sides
. News senior reporter Michelle castello joins me with the
latest Michelle. Always good to see you As the
Twitter filing this 241 page lawsuit against Musk in a
Delaware Court on Tuesday and I know you've had some
time to parse through it. So what are some
of the main accusations inside? Well, there's a
lot so too I, this is a story that
keeps on going now this lawsuit, twitter is actually
under obligation to do a deal that is in the
best interests of their shareholders so they have to sue
musk if he is going to back out of the
seal because the shareholders did approve this deal of must
taking over. So when you look through it,
what twitter is trying to say basically is that musk
is having for lack of a better term, better
buyer's remorse. He initially tweeted when the deal came
through that he wanted to buy twitter because of a
boat problem and then now is is leaving the deal
because of a problem they've post they posted that he's
violated his non disclosure obligations and of course the famous
poop emoji tweet that he responded to Ceo parag Agarwal
has made it into the documents. A lot of
people are laughing about this. They are saying that
that constitutes a disparaging remark against twitter. Um so
we are definitely getting to that state but basically most
tweets have become receipts in this case and the company
is saying he's having buyer's remorse because of two things
. One share prices have dropped. So 44 billion
isn't a good deal but you know you made the
offer when you made the offer and the second part
is also that Tesla stock has dropped quite considerably.
So his financing on the other side is in Jeopardy
. Yeah, it is quite interesting there um just
how much we've seen both of these shares drop your
right Michelle. So I know you were talking there
a bit about how musk has responded kind of egging
on twitter per usual on of course twitter but what
exactly as he said, he's a little bit mum
from the, from the latest filing but he did
tweet saying, oh the irony because of this whole
situation. So must big defense really is that he
should be allowed out of the Deal because twitter lied
about the number of bots on their platform that they've
been lying about it and they were hold withholding very
important information for him to be able to buy the
company. So a lot of people think that must
argument might not stand up in court, but you
can see why he's arguing because he's up for a
billion dollars if he backs out of this deal,
unless he can prove that the company materially lied about
their stats. The weird thing about this whole thing
, when I've talked to a couple of sources is
because this is going to a court case, we're
going to get more information on twitter. A lot
of these documents that must wanted will have to be
legally revealed, which could put more deals in jeopardy
, if people find things that are a little unsettling
, like for example, what the actual number of
bots on the platform is twitter is still sticking with
the fact that it's about 5% interesting. So Michelle
, I know in your wheel house you actually spoke
to several advertising agencies about their own thoughts on twitter
, how it makes money since the whole mosque takeover
started. What did they say? Are they confident
in advertising on twitter? So interestingly enough, a
lot of the people I spoke to said must buying
twitter has not really affected whether or not they want
to do deals with twitter, they know what the
platform is, they know it's great for advertising,
especially when it comes to awareness campaigns and for the
fact that um this idea of twitter being, having
issues with bots has been an ongoing issue that everyone
is aware of and the company has done a lot
to address that issue. What has affected twitter deals
though overall is unrelated to musk. So a lot
of people want what they call performance marketing, basically
when you see something online, you're more likely to
buy it. And a lot of the budgets have
shifted towards that as brands get a little bit more
conservative with their dollars because of an impending recession.
They're not really interested in awareness at this time,
making the public aware of their products, they want
to make sure that their ads actually sell things and
their big complaint is twitter just hasn't proven to be
a good performance vehicle. So the idea was twitter
was going to lose money from advertising regardless of this
musk situation. So it isn't really great news if
they go forward with their strategy of being an advertising
first revenue vehicle, which is why I think you
see the shareholders and the board really pushing for must
to take over because it might be the one way
to save the company interesting. So what do you
think happens next in this saga, Michelle, it
feels like every day there's a new headline that does
seem to baffle people um in some sort of way
. Well we're definitely gonna have to keep an eye
on that Delaware court, which has had a lot
of um because a lot of companies incorporate in Delaware
, I think they've done big cases on lift and
Mcdonald's, it's a small city, a small court
, but they have had big business cases that have
come through there. Um there is a chance that
this will be a settlement more than forcing musk to
buy it. We'll just have to stay tuned.
You can be sure that twitter is going to push
for a ruling a shorter hearing or a shorter trial
than um than a longer one because they want to
get the market moving, twitter is reporting next friday
. So we'll get a little bit more sense from
the company there, although they aren't doing their traditional
earnings call after their report. The report should be
out at eight a.m. Eastern time friday. And what
about users? Right, because that was always my
biggest question ever since musk said he was going to
buy this company months ago, will users actually stick
around on the platform? So with these latest developments
, how have we seen? Users react well,
you know what, I think that users are kind
of glued to this saga because there's so many twists
and turns, some people, people love Elon musk
, they think that he, his subscription model might
actually be a way to save twitter, it might
actually clear the box, the other people believe that
musk was trolling them all along, that he had
no intention of buying twitter, so it's really mixed
what we're seeing out there in the public, but
we're all gonna have to stay tuned. This is
definitely a fascinating case. You know, twitter has
had several suitors in the past. People have tried
to buy twitter Back in 2019. Even Disney was
looking at Twitter salesforce, it is a trove of
data for a lot of people must have had a
little bit of a different idea. He wasn't really
as advertising interested. So we're gonna have to stay
tuned and see, but the public is definitely glued
to the case. Who knows if they're glued to
Twitter though. It has been so interesting the tweets
that we've seen from musk throughout this saga, we
will wait to see if any more come down the
pipeline that shadow News Senior reporter Michele Castelli. Oh
, Michelle, thank you.