Several lawsuits have already been filed against the Tesla billionaire.
(Photo: Getty Images)
Elon Musk has done great things. Not only did he build up the e-car manufacturer Tesla and make it big, but he also revitalized the entire field of e-mobility. With SpaceX he reinvented commercial space travel. However, as the richest person in the world with an estimated fortune of $265 billion, he seems to have lost his grip on reality.
In April, he signed a legally binding deal to buy short messaging service Twitter for $44 billion. If the deal had been closed directly at the time, Musk could have been celebrated financially for it.
>> Read here: Elon Musk wants to burst Twitter purchase – “disaster for Twitter”
But the forces on the stock markets have shifted. Tech stats have been penalized. Twitter rival Snap has lost 65 percent of its value since the beginning of the year. Paying $44 billion for Twitter today seems way too much.
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But: a deal is a deal. Apparently not for Mr Musk. He has his lawyers say that Twitter has concealed the extent of spam accounts on the platform.
A lengthy process could paralyze Twitter
The problem with spam accounts was already public knowledge and well documented at the time of purchase in April. It is obvious that Musk is looking for an excuse to get out of a purchase that is no longer financially lucrative for him.
In fact, Musk is breaking the contract. The details will probably be decided in court. A lengthy process could paralyze Twitter or even mean the demise of the platform — even if Musk ended up paying a hefty sum in compensation.
Elon Musk scraps Twitter deal
So far, Musk has been forgiven a lot in the US and especially in Silicon Valley. Now the mood threatens to change.
Again and again he has openly violated US stock exchange rules. He has been fighting a number of petty wars with the SEC for years. It must be clear: rules apply to everyone. Even for the richest person in the world.
Specifications violated from the outset
Musk violated several guidelines when initiating the Twitter deal. He had secured more than nine percent of the shares in various steps. Strict regulations apply to larger holdings in US companies: if they exceed the five percent threshold, this must be made public within ten days by way of a mandatory notification.
However, Musk exceeded that deadline. Even that was wrong. Several lawsuits are already pending against him.
Who will do business with Musk in the future when legally binding contracts no longer apply? With Twitter’s recent backlog, Musk is simply discrediting himself in the business world.
More: Musk aims for a billion Twitter users – and brings job cuts into play