The value of the company that Musk made a deal to buy fell as a result of his announcement.
He insisted hours later that he was still committed to the acquisition.
Musk can rattle the stock market with a single sentence. He put his $44 billion commitment to buy Twitter on hold because he realized there may be more fake accounts than he thought.
Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of usershttps://t.co/Y2t0QMuuyn— Elon Musk (@elonmusk) May 13, 2022
Musk decided to skip due diligence. He could have thoroughly investigated the company if he hadn't done so. He asked other users to do a study of 100 randomly chosen profiles to see if they were authentic.
It was time for due diligence under the terms of the deal.
Temporarily on hold is not a thing, according to Matt Levine.
Levine noted that when buying a company, you are not supposed to say things that aren't true and that will affect the stock of a public company.
Musk settled a fraud lawsuit with the Securities and Exchange Commission because he said on his verified account that he had secured funding to take the company private.
He is being sued for securities fraud by shareholders because he missed a deadline to declare his stake in the company had risen to 5%. He was able to keep that information hidden so that he could continue to buy stock without an increase in prices triggered by his interest.
According to The Wall Street Journal, the SEC is also looking into that.
While I expect the deal to close, we need to be prepared for all scenarios and always do what
While I expect the deal to close, we need to be prepared for all scenarios and always do what’s right for Twitter. I’m accountable for leading and operating Twitter, and our job is to build a stronger Twitter every day.— Parag Agrawal (@paraga) May 13, 2022
Musk could not be reached for comment.