Twitter SEC filing moves Elon Musk deal forward as the Tesla CEO raises doubts

Yahoo Finance Live anchors discuss the ongoing uncertainty over Elon Musk’s Twitter deal.

Video Transcript

- Elon Musk is tweeting again this morning on his deal with Twitter, saying he cannot move forward with the deal unless the company shows proof of its claim that less than 5% of accounts are fake or spam accounts. And there was also some back and forth with the CEO of Twitter on Twitter as well. Amidst all of this, Twitter did file its proxy statement, saying it's going to have a shareholder meeting to vote on the deal. Has not set a date for that, considering that Musk has now put it on hold. But there are some really sort of juicy tidbits within this proxy statement that I found.

First of all, if the merger is not completed, the company says in the statement the price of our common stock may decline significantly. I mean, we all know this. But it's interesting that they are acknowledging it in the proxy. And something else, we've been pointing the finger at Elon Musk for all the back and forth here, maybe we should be blaming Jack Dorsey. There's a little revelation here in this filing.

On April 5, Mr. Musk contacted Mr. Dorsey to ask Mr. Dorsey his perspectives on Twitter in connection with the announcement of Musk joining the Twitter board. As part of the discussion, Dorsey shared his personal view that Twitter would be better able to focus on execution as a private company. So it looks like Dorsey was sort of nudging him in that direction.

- Which also explains some of the timing around Dorsey's departures as well that we had seen, and then prioritization of Square, or Block, as his main kind of priority at this point in time. But what this continues to signal-- and we've had this conversation time and time again-- is Elon Musk does not want the smoke for $44 billion.

So he does not want the problem of having to monetize or figure out who the real people are on Twitter and not going after this company, perhaps, for $44 billion and pulling back, perhaps, this potential purchase, even at the same time that Twitter this morning is saying, hey, yeah, we're still going to put this in front of the shareholders at the end of the day. And them moving forward with a vote, I think that's just the signal for Twitter, like, hey, yeah, we're just trying to get this done.

- We're committed to this now.

- What I do find fascinating, essentially you have Elon Musk here questioning the validity of Twitter's financial statements, not just for the past year, but going back many years--

- But again, the time to do that is before you agree to buy the company.

- Well, he is possibly causing here-- whether he gets the company or not-- a potential restatement of the company's prior year financials. If those fake accounts are close to 20% like he thinks, I mean, you have to question all of the company's financials since they went public.

- What is it based on? We have no idea what his suppositions are based on. The company has always made clear in the statements that it was an estimate. And to your point, for years the company has said this. Speaking of smoke, this is a smoke screen. This is an excuse. It is so transparent that it's an excuse. One of his whole reasons for buying the company was to get rid of the bots. He knew the bots were there. This is an excuse either to get out of the deal entirely or to try to negotiate a lower price. I don't know what's going to end up happening on that front. But it is just patently transparent.

- Well, speaking of lower price, I'll just quickly add too, Brent Thill, who was on yesterday on the show talking about Twitter, he said in the worst case scenario, if this deal does not go through, you could see Twitter shares crash to $22. That's huge.

- And then do you get a shareholder lawsuit on your hands against Elon Musk because of what he has done to this company? He single handedly has destroyed-- I mean, and maybe, right or wrong-- in other words, if it's valid that it should be trading lower because of the fundamental business, fine. But he single handedly triggered a wipeout in value of this company if, indeed, that's what happens. And so you have to think that there are going to be shareholder lawsuits--

- Absolutely.

- --in the wake of something like that. One more small thing to mention when it comes to Elon Musk. SpaceX employees are doing a private placement. We don't know if he's included in that private placement. This is according to Bloomberg, that they are valuing this private placement-- in other words, a sale of shares on the part of employees of the company is going to value the company at around $125 billion. There is an employee tender that's going to be going on at $70 each. Again, we don't know if Musk himself is selling shares to try to raise some more cash to get this deal done. But it is an intriguing thing that's happening at the same time all this other stuff is happening.

- All right. We can't track shares of SpaceX here at least right now premarket. But shares of Twitter premarket, they are down by about 1.3%. We'll continue to keep an eye on TWTR.