Topline
Hindenburg Research tweeted on Wednesday it was siding with Twitter in its battle with Elon Musk, now taking a long position on the stock and claiming the platform giant’s suit against him “poses a credible threat to Musk’s empire.”
Elon Musk’s Tweet (Photo illustration by Jakub Porzycki/NurPhoto via Getty Images)
Key Facts
Twitter shares sank 11% after Musk terminated the buying agreement, alleging lack of transparency on spam and bots from the app.
But in its suit filed Tuesday Twitter accused Musk of getting out of the deal because his personal wealth has fallen.
Hindenburg, a short-seller firm, said on Wednesday it took a long position of Twitter shares, and warned that Twitter’s lawsuit “poses a credible threat to Musk’s empire”
Previously in May, Hindenburg had taken a short position of Twitter shares saying “Musk Holds All The Cards” and suggesting the purchasing price could lower if he walked away from the deal.
Hindenburg founder Nate Anderson, told the Financial Times Musk has wasted his leverage with compulsive tweets, giving Twitter a strong case in this lawsuit.
Key Background
Musk is the world’s richest person, according to Forbes, with a net worth of $225.2 billion. He also carries big numbers on Twitter, with -around 100 million followers, which is where the feud with the social media app has unfolded the past few months. Musk bought 9.2% shares of the company earlier this year, gaining a seat at the board, which led him later to offer to buy the company. Twitter agreed to the offer in April, after consideration of a hostile takeover. But on Friday, Musk alleged Twitter didn’t show pertinent information to prove that less than 5% of its users are fake, which is why Musk says he decided to terminate the agreement. Twitter counters that the bot claims were part of a “fishing expedition” Musk used to get out of the deal.
Further Reading
Twitter Sues Elon Musk For Trying to Cancel Acquisition (Forbes)
Twitter Board Adopts Poison Pill to Fend Off Elon Musk’s Takeover Bid (Forbes)