What happens to Twitter if Elon Musk leaves?

Shares of Twitter plunged more than 11 percent yesterday to one of their lowest points since 2020, with investors fretting over whether Elon Musk might successfully pull out of his $44 billion acquisition of the social media company. . Twitter’s lawyers at Wachtell wrote to Musk’s lawyers, saying that his efforts to back out of the deal were “invalid” and that he had “intentionally, intentionally and materially violated” the contract. If that’s the case, it’s likely to be settled in Delaware, where Twitter is expected to file a lawsuit as soon as this week.

But one thing is for sure: Musk has left Twitter worse off than it was when he said he would buy it, write Kate Conger and Mike Isaac of The Times. This is why:

Musk laid out the company’s waning business and financial outlook. Twitter has operated at a loss for seven of the nine years it has been a public company. He received no rival offers while Musk tried to buy it. His board determined that Musk’s offer of $54.20 a share was the best he could get, suggesting he didn’t see a way to reach that price on his own.

And since Twitter accepted Musk’s offer, its shares have lost more than a third of their value. The tech-heavy Nasdaq index, by contrast, has fallen about 12.5 percent in the same period.

Things got worse for Twitter after Musk signed the deal. Parag Agrawal, the CEO of Twitter, told employees in May that the company had failed to meet its business and financial goals. He ousted the heads of product and revenue and instituted a hiring slowdown. The company’s trajectory is unlikely to change while uncertainty over the deal baffles advertisers, Twitter’s main source of revenue. Within the company, employee morale has suffered, leading to disagreements and burnout, according to six current and former employees.

“His commitment to Twitter severely affected the company,” said Jason Goldman, a member of Twitter’s founding team who also served on its board of directors.

Musk angered his 100 million followers against the company. Amid his memes targeting Twitter, he criticized the product, saying it wasn’t as cool as other apps. His criticism of the fake accounts has shaken confidence in the company, just as it prepares to moderate heated discussions about the upcoming election in Brazil and the midterm elections in the United States this fall. In May, Musk said he would “reverse the permanent ban” of former President Donald J. Trump from Twitter, encouraging right-wing users who have long accused the company of censoring them.


The Department of Justice investigates whether the PGA Tour violated antitrust rules while battling a new rival, LIV Golf. Players’ agents have received inquiries about the PGA Tour’s actions in recent weeks. Greg Norman, CEO of LIV Golf, whose main shareholder is Saudi Arabia’s sovereign wealth fund, said the PGA Tour is trying to maintain an “illegal monopoly.” The PGA Tour denies any wrongdoing.

London’s Heathrow airport asks airlines to stop selling tickets for the summer. In an open letter to passengers, Heathrow chief executive John Holland-Kaye said the airport would introduce a capacity cap from today until 9/11. Staff shortages have reduced the airport’s ability to serve vacationers.

Gap CEO Sonia Syngal leaves the struggling retailer. Bob Martin, a former Walmart executive, will serve as interim CEO and is tasked with helping increase sales at Gap and fix problems at Old Navy. Gap is among a number of chains that have been stuck with excess inventory as consumer spending last year shifted toward leisure activities such as dining and travel.

Bill Ackman’s SPAC is returning $4 billion to investors after failing to complete a deal. Two years after forming the largest special purpose acquisition company in history, or SPAC, Ackman has come to the conclusion that he won’t be able to make a deal. In a letter to shareholders yesterday, Ackman said many “high-quality, profitable” companies, given recent market conditions, are no longer interested in going public.

Peloton will stop its in-house production of bikes. The company, once a darling of home workouts during the pandemic, said today it would partner with Taiwanese manufacturer Rexon as part of its bid to cut costs and streamline operations. The move will allow the company to move up or down more easily based on demand.

The Federal Reserve’s efforts to curb inflation by slashing interest rates are rapidly changing the housing calculus. As borrowing costs rise for would-be homebuyers, more people are giving up on their dreams of homeownership, further driving up rental prices that have been rising since the pandemic began. As a result, residential real estate companies are struggling. Online real estate service Redfin saw its shares fall yesterday after it reported that home purchase deals were falling through fast, and an analyst downgraded his rating on the company’s shares.

Rents could keep going up for a while. The price of new leases increased 14.1 percent in the year to June, according to the Apartment List listing service. Although that’s slightly less than the 17.5 percent increase for all of 2021, it’s still an unusually fast pace of growth compared with the usual 2 to 3 percent annual increase before the pandemic, report Jeanna Smialek and Conor Dougherty of The Times. “A lot of people are seeing now that they’re going to re-sign their lease that’s hundreds of dollars more than last month, thousands of dollars more than last month,” said Nicole Bachaud, an economist at housing website Zillow. “We are going to continue to see pressure on rental prices; to what extent remains to be seen.”

The pandemic accelerated a real estate trend that had been developing for a long time. For many years, the US has been unable to build apartments at a rate that matches growing demand as the mass millennial generation has aged. And the supply in the works now may not match the needs, as new developments lean toward luxury buildings, while what is really missing is affordable housing. As borrowing costs rose, new home construction slowed dramatically. It fell 14.4 percent in May to the lowest rate in more than a year, and early data suggests apartment building is also taking a hit.

Potential buyers are thinking twice. Redfin said that roughly 60,000 home purchase deals across the country fell through in June, the highest rate since March and April 2020 when the pandemic began, accounting for nearly 15 percent of the homes that were contracted for. Slowing competition is making buyers more inclined to act on inspection and appraisal contingencies they may have previously given up in the rush to close, said Taylor Marr, an economist at Redfin. “That gives them the flexibility to cancel the deal.”


Mark MacGann, former Uber lobbyist turned whistleblowerwho helped the company win over government officials in Europe, Africa and the Middle East, and now says the company knowingly broke the law and misled drivers and others about the benefits of the company’s gig economy model. Uber has said that MacGann, who left the company in 2016, is not giving an accurate picture of how the company performs today.


Lawmakers in Washington are rushing to draft new rules to regulate cryptocurrencies. One missing: A rule to cover your own behavior. The Office of Government Ethics recently issued new guidance that regulators and other government personnel who hold cryptocurrencies should not be involved in policymaking when it comes to those digital assets, even if their holdings are minimal. But questions about legislators’ conflicts of interest when it comes to cryptocurrencies are not likely to be addressed anytime soon.

Lawmakers, unlike others in government, face no cryptocurrency trading restrictions. And that includes some of the proponents of cryptocurrency legislation, such as Pennsylvania’s Patrick Toomey, the top Republican on the Senate banking committee, who has reported on cryptocurrency holdings. The OGE’s guidance reflects the understanding that there must be some distance between the personal fortunes of officials and the policies they shape. That same instinct has fueled a growing movement to limit lawmakers’ ability to trade stocks.

Pressure is building to bar lawmakers from trading individual stocks. They already have to disclose their operations, thanks to the STOCK Act of 2012, but there is growing support for halting operations while in office. House Speaker Nancy Pelosi, who initially resisted trade limits and whose husband, Paul Pelosi, is an active trader, tasked Zoe Lofgren of California, chair of the House Management Committee, to create new rules. Lofgren held a public hearing in April, and bills sponsored by both Democrats and Republicans are circulating. But there is no deadline for action and apparently no resolution in sight.

Progress on a broader trade review appears stalled. A spokesman for Sen. Jon Ossoff, a Democrat from Georgia, who has proposed an outright ban on stock trading, said only that “discussions continue,” including about what types of investments might be restricted. This suggests that cryptocurrency holdings could get a pass even if a trade ban from Congress moves forward.

As for Toomey, he told DealBook that he opposes an outright investment ban for members of Congress, adding that he sees no conflict stemming from cryptocurrency investments. “Should a legislator’s spouse be prohibited from buying green bonds if her husband or wife votes to combat climate change?” she asked her. “Should veterans serving in Congress be barred from having a say in the policies of the Department of Veterans Affairs?”


offers

Politics

the best of the rest

We would like your opinion! Email your ideas and suggestions to dealbook@nytimes.com.

Leave a Comment

Your email address will not be published.