Advantage Elon Musk? How a delay in the Twitter trial could benefit Tesla's CEO
Delaware Chancery Court Judge Kathaleen McCormick on Thursday suspended the legal battle between Elon Musk and Twitter Inc. TWTR until October 28 to allow the two sides to reach a conclusion. okay.
What happened: Looking back at the development, Future Fund analyst Gary Black suggested the postponement was to Musk's benefit. Postponing the trial date gives Musk more time to raise funding, Black said.
Financial firms, including major Wall Street banks, are under pressure amid market uncertainties precipitated by a rising rate environment. Bond yields soared, creating difficulties in the credit market, which, in turn, made it difficult for banks that pledged debt financing to resell the debt.
See also: Tesla shares will remain under pressure after deal announcement on Twitter, analyst says - unless Elon Musk does not provide clarification
Second, the fund manager noted that the trading window for the stock sale has been closed for Musk until Tesla Inc. TSLA reports earnings on Oct. 19. If the billionaire needs to unload shares to close any funding shortfall, he can only do so after the earnings release, Black added.
It also gives Musk time to get more equity investors to invest in Twitter, Black said.
Musk-Twitter Diverge: McCormick mentioned in the ruling that Musk is optimistic the deal will close on or around October 28, but Twitter isn't confident enough. Lawyers for the social media platform said they oppose the stay motion, saying Musk's deal would not ensure the deal closes quickly enough.
Reacting to Twitter's decision, Musk's lawyers argued in a filing that there was no need for an expedited trial to order the Tesla CEO to which he already does.
"Yet Twitter won't take a yes for an answer. Surprisingly, they insisted on continuing the litigation, recklessly jeopardizing the deal and playing with the interests of their shareholders, a Musk's team said in the filing.
Also Read: How to Buy Twitter Stock (TWTR)
The team also argued that continuing with the lawsuit is not only a huge waste of court and judicial resources, but will also undermine the parties' ability to close the deal. The lawsuit will be a distraction for Musk and his team from working to secure the necessary funding and prepare for a company transition, he added.
"In effect, a lawsuit would keep the merger transaction in limbo longer, casting a cloud of unnecessary uncertainty over the company," Musk's lawyers said.
Twitter Stock Under Pump: Black said Twitter shares could drop further with more time until the deal closes. The stock, which has risen sharply in recent sessions ahead of Musk's stimulus deal, fell 3.72% to $49.39 on Thursday, according to data from Benzinga Pro. It fell 1.90% in after-hours trading.
Meanwhile, Tesla closed down 1.11% at $238.13.
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Delaware Chancery Court Judge Kathaleen McCormick on Thursday suspended the legal battle between Elon Musk and Twitter Inc. TWTR until October 28 to allow the two sides to reach a conclusion. okay.
What happened: Looking back at the development, Future Fund analyst Gary Black suggested the postponement was to Musk's benefit. Postponing the trial date gives Musk more time to raise funding, Black said.
Financial firms, including major Wall Street banks, are under pressure amid market uncertainties precipitated by a rising rate environment. Bond yields soared, creating difficulties in the credit market, which, in turn, made it difficult for banks that pledged debt financing to resell the debt.
See also: Tesla shares will remain under pressure after deal announcement on Twitter, analyst says - unless Elon Musk does not provide clarification
Second, the fund manager noted that the trading window for the stock sale has been closed for Musk until Tesla Inc. TSLA reports earnings on Oct. 19. If the billionaire needs to unload shares to close any funding shortfall, he can only do so after the earnings release, Black added.
It also gives Musk time to get more equity investors to invest in Twitter, Black said.
Musk-Twitter Diverge: McCormick mentioned in the ruling that Musk is optimistic the deal will close on or around October 28, but Twitter isn't confident enough. Lawyers for the social media platform said they oppose the stay motion, saying Musk's deal would not ensure the deal closes quickly enough.
Reacting to Twitter's decision, Musk's lawyers argued in a filing that there was no need for an expedited trial to order the Tesla CEO to which he already does.
"Yet Twitter won't take a yes for an answer. Surprisingly, they insisted on continuing the litigation, recklessly jeopardizing the deal and playing with the interests of their shareholders, a Musk's team said in the filing.
Also Read: How to Buy Twitter Stock (TWTR)
The team also argued that continuing with the lawsuit is not only a huge waste of court and judicial resources, but will also undermine the parties' ability to close the deal. The lawsuit will be a distraction for Musk and his team from working to secure the necessary funding and prepare for a company transition, he added.
"In effect, a lawsuit would keep the merger transaction in limbo longer, casting a cloud of unnecessary uncertainty over the company," Musk's lawyers said.
Twitter Stock Under Pump: Black said Twitter shares could drop further with more time until the deal closes. The stock, which has risen sharply in recent sessions ahead of Musk's stimulus deal, fell 3.72% to $49.39 on Thursday, according to data from Benzinga Pro. It fell 1.90% in after-hours trading.
Meanwhile, Tesla closed down 1.11% at $238.13.
© 2022 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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