Welcome to "#SocialStocks," The Fly's weekly recap of Wall Street's reactions to social media stock news.
MUSK/TWITTER: Earlier this week, Tesla (TSLA) founder Elon Musk, who has agreed to acquire Twitter (TWTR), said in a regulatory filing that he reiterated his request for certain data and information necessary to facilitate his evaluation of spam and fake accounts on Twitter's platform and reserving his rights resulting from the company's refusal to provide such data and information in material breach of Twitter's obligations under its merger agreement. The letter to Twitter from Musk's lawyers states in part: "We are in receipt of correspondence sent on Twitter's behalf dated June 1, 2022, responding to Mr. Musk's request for the data and information described in my letters dated May 25, 2022 and May 31, 2022. Mr. Musk does not agree with the characterizations in Twitter's June 1 letter. Twitter has, in fact, refused to provide the information that Mr. Musk has repeatedly requested since May 9, 2022 to facilitate his evaluation of spam and fake accounts on the company's platform... Based on Twitter's behavior to date, and the company's latest correspondence in particular, Mr. Musk believes the company is actively resisting and thwarting his information rights (and the company's corresponding obligations) under the merger agreement. This is a clear material breach of Twitter's obligations under the merger agreement and Mr. Musk reserves all rights resulting therefrom, including his right not to consummate the transaction and his right to terminate the merger agreement."
Not long after the filing was made public, Reuters reported that Twitter plans to continue to cooperatively share information with Musk and still believes that the deal is in the best interest of its shareholders. Musk, however, tweeted that waiving due diligence "DOES NOT mean you have to accept a fraudulent disclosure," referring to "understated bots."
Meanwhile, Reuters' Krystal Hu and Greg Roumeliotis reported Tuesday that the Tesla founder's efforts to arrange new financing that will limit his cash contribution to his acquisition of Twitter have been put on hold because of the uncertainty surrounding the deal. Additionally, the Washington Post's Elizabeth Dwoskin said Wednesday that Twitter's board plans to comply with Musks' demands for internal data by offering access to its full "firehose," the stream of data comprising more than 500M tweets posted each day.
TEXAS: Earlier this week, Texas Attorney General Ken Paxton announced he has launched an investigation against Twitter for potentially false reporting over its fake bot accounts in violation of the Texas Deceptive Trade Practices Act. Attorney General Paxton issued a Civil Investigative Demand, or CID, to investigate whether Twitter's reporting on real versus fake users is "false, misleading, or deceptive" under the Texas Deceptive Trade Practices Act, the AG announced after shareholder and prospective buyer Elon Musk disclosed a letter this morning sent by his lawyers to the company claiming "a clear material breach of Twitter's obligations under the merger agreement" related to his request for certain data and information necessary to facilitate his evaluation of spam and fake accounts on the platform.
PRODUCT DROPS: In other Twitter news, the company said in a blog post that it is testing a new shopping feature, known as Product Drops, that lets brands tease products before they go on sale, and customers can sign up for reminders before the release through in-app alerts. "With Product Drops, when a merchant Tweets about an upcoming launch, you'll see a "Remind me" button at the bottom of the Tweet," the company said in a blog post. "With one tap, you can request to be reminded of the Drop. On launch day, you'll get an in-app notification in your Notifications tab 15 minutes before and at the time of the drop, so you can be among the first to shop on the merchant's website and (hopefully) beat out other shoppers. When you click on the notification, you'll see a "Shop on website" button to purchase the item on the merchant's website." For now, only shoppers in the U.S. who use Twitter in English on iOS devices will be able to see and engage with Product Drops, Twitter said, noting that it is testing the feature with "select managed partners."
META/CRAYTA: Meta Platforms (FB) CEO Mark Zuckerberg announced the launch of the company's Crayta social world and game-building environment on Facebook Gaming. The Fly notes that Roblox (RBLX) offers a metaverse gaming product that may be seen as competing with Crayta.
PINTEREST/THE YES: Last Thursday, Pinterest (PINS) announced that it signed a definitive agreement to acquire THE YES, an AI powered shopping platform for fashion that enables users to shop a personalized feed based on the user's active input on brand, style, and size. Subject to the satisfaction customary closing conditions, the transaction is expected to close in the second quarter of 2022.
Tesla
+10.96 (+1.53%)
+0.32 (+0.80%)
Ticker changed to META
+1.31 (+0.67%)
Roblox
+1.66 (+5.28%)
+0.87 (+4.36%)
Snap
+ (+0.00%)