The shares of Twitter, Inc. (NYSE: TWTR) hogged the limelight yesterday after Tesla CEO Elon Musk issued yet another (second) deal cancellation notice. It can be remembered that Musk walked away from the $44 billion Twitter takeover deal in July, citing a lack of adequate data related to fake accounts.
The notice sent on August 29, as per the SEC filing, tries to justify Musk’s decision with further reasons. Importantly, this includes the assertion that the elaborate accusations made by the whistleblower could have a precarious impact on Twitter’s performance. The stock of Twitter lost $0.72, or 1.80%, to close at $39.32.
The second letter to Twitter follows a subpoena to a whistleblower—former chief of the social media platform’s security, Peiter Zatko—on the manner in which the microblogging platform manages spam accounts. The chief of Tesla trusts that the accusations made by Zatko about serious security lapses and troublesome processes followed by Twitter will support his narrative. Notably, at the Delaware Court, a five-day trial is scheduled for October 17.
Elon Musk’s team has stated that the second notice to Twitter was sent to reaffirm the contents of the July 8 notice.
As mentioned above, in July, Musk terminated the Twitter takeover deal on a suo moto basis, citing a lack of cooperation from the microblogging site’s management. Musk also alleged that Twitter misinformed regulators about the actual percentage of fake or bot accounts on its platform.
As per a court directive earlier this week, Musk has requested additional data from Zatko regarding the manner in which Twitter evaluates spam accounts. Zatko was directed by the court to respond with necessary details to Musk’s legal team on September 9.
Zatko has also stated in his allegation, which was revealed last week, that Twitter deliberately provided the wrong claims that it has a robust security framework and gave importance to user growth instead of minimizing spam. Zatko’s lawyer has pointed out that his client would respond as necessary to the subpoena.
Musk’s lawyers argue that certain crucial information provided in the allegations made by Zatko was not disclosed to them by Twitter. The whistleblower’s revelations, as per Musk’s legal team, support the Tesla CEO’s decision to call off the deal.
Even though Musk is looking at canceling the agreement, Twitter has requested Chancellor Kathaleen McCormick to direct him to complete the acquisition for the earlier agreed price of $54.20 per share.
The news is expected to keep Twitter’s stock slightly bearish in the short term.
The historical price chart indicates that the stock of Twitter is declining after facing resistance at 45. The next major support is anticipated only near 32. Additionally, the stock is trading below its 50-day moving average while the stochastic RSI is descending towards the bearish zone. Therefore, we are anticipating the stock to remain in a downtrend in the near term.
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