Twitter (TWTR) Rejects Musk's Fraud Accusations

August 5, 2022 7:43 AM EDT

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Tesla (NASDAQ: TSLA) CEO Elon Musk condemned Twitter (NYSE: TWTR) for fraud, arguing the social media company provided misleading information about the condition of its business and key data related to the platform users before he agreed to purchase the company for $44 billion.

In a counter lawsuit, the Tesla boss said he decided to end the merger agreement after he learned about “troubling facts” about Twitter’s business, including the company’s restatement of its monetizable daily average users just days after the deal was signed. He alleged that Twitter misrepresented the information about the true number of false and spam accounts on the platform.

“Twitter’s own disclosures to the Musk parties show that although Twitter touts having 238 million ‘monetizable daily active users,’ those users who actually see ads (and thus, would reasonably be considered ‘monetizable’) is about 65 million lower than what Twitter represents,” Musk said in a court filing.

In response, Twitter’s board chairman Bret Taylor published a tweet saying Musk’s allegations “are factually inaccurate, legally insufficient, and commercially irrelevant.” Taylor also provided a link to Twitter’s 127-page response, adding the company is looking forward to the upcoming trial in Delaware, scheduled for October 17.

The social media giant also said Musk’s claims about being misled are implausible and added that Tesla’s CEO shouldn’t be allowed to back out of the deal solely due to his concerns over the number of spam and bot accounts.

“According to Musk, he—the billionaire founder of multiple companies, advised by Wall Street bankers and lawyers—was hoodwinked by Twitter into signing a $44 billion merger agreement,” Twitter said.

“The billionaire comes up with representations Twitter never made and then tries to selectively wield the confidential data he received from Twitter “to conjure a breach of those purported representations,” the company added.

This morning, Susquehanna analyst Shyam Patil cut the rating on Twitter shares to Neutral from Positive with a $45 per share price target.

By Senad Karaahmetovic

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