Short-seller named Hindenburg Research announced on Wednesday that it has acquired a position in Twitter Inc (TWTR.N) shares and expressed concern that the social media company's legal action against the richest man in the world, Elon Musk, might endanger his businesses.
Following the announcement, Twitter's shares increased by almost 6% to $35.90. A day earlier, the business had sued Musk for breaching a $44 billion agreement and requested a Delaware court to require him to complete the merger at the agreed-upon $54.20 per Twitter share.
Musk, the CEO of Tesla Inc. and SpaceX, announced on Friday that he was ending the partnership because Twitter had broken the terms by refusing to provide information about phoney or spam accounts on the platform.
Hindenburg did not go into detail regarding the threat the lawsuit provides to Musk, but legal professionals have stated that based on the evidence that is now available to the public, Twitter would seem to be in the lead.
"We have accumulated a significant long position in shares of Twitter. Twitter's complaint poses a credible threat to Musk's empire," Hindenburg said in a tweet.
We have accumulated a significant long position in shares of Twitter.
— Hindenburg Research (@HindenburgRes) July 13, 2022
Twitter’s complaint poses a credible threat to Musk’s empire.
The legal dispute is the most recent chapter in a multi-month saga that started when Musk invested in Twitter in April and then made an offer to buy the company.
Then, in May, after assembling investors to finance a portion of his transaction, he decided to postpone the takeover until Twitter demonstrated that spam bots make up less than 5% of its total user base.
In May, Hindenburg, which at the time held a short position, warned that if Musk backed out of the deal, the price of his offer may drop.
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