Twitter Denies Musk's Fraud Accusations

Tesla (NASDAQ:TSLA) CEO Elon Musk has accused Twitter (NYSE:TWTR) of fraud, arguing that the social media company provided misleading information about the state of its business and key data on platform users before agreeing to buy the company for $44 billion.

Tesla's boss said in the countersuit that he decided to end the merger deal after learning "disturbing facts" about Twitter's business, including that just days after the deal was signed, the company re-stated the average number of monetizable daily users. He alleged that Twitter misrepresented information about the actual number of fake and spam accounts on the platform. "Twitter's own disclosures to the Musk parties indicate that while Twitter says it has 238 million 'monetizable daily active users,' the users who actually see ads (and thus could reasonably be considered 'monetizable') are approximately 65 million lower than Twitter represents," Musk said in a court filing. In response, Twitter's executive chairman Bret Taylor tweeted that Musk's claims were "factually incorrect, legally insufficient, and commercially irrelevant." Taylor also provided a link to Twitter's 127-page response, adding that the company is looking forward to the hearing scheduled for October 17 in Delaware. The social media giant also said Musk's claims that he was misled were unreasonable, adding that Tesla's CEO should not be allowed to back out of the deal solely because of concerns about the number of spam and bot accounts. "According to Musk, the billionaire founder of numerous companies advised by Wall Street bankers and lawyers was tricked by Twitter into signing a $44 billion merger deal," Twitter said in a statement. "The billionaire comes out with representations that Twitter never made," the company added, "and then selectively uses confidential data he received from Twitter to try to claim that these purported representations were violated. This morning, a Susquehanna analyst downgraded Twitter shares from Positive to Neutral and set a price target of $45 per share.