Then Elon Musk, a power user of the service, broke in. He offered $44 billion to buy Twitter and said the company could perform much better if he were in charge. He disparaged Twitter executives, mocked its content policies, complained about the product and confused its more than 7,000 employees with his remarks. As Mr. Musk revealed the company’s lack of business and financial prospects, Twitter’s stock fell more than 30%. Now, as Mr. Musk, a billionaire, tries to back out of the blockbuster deal, he inevitably leaves Twitter worse off than when he said he would buy it. With every tweet and public taunt, Mr. Musk has eroded trust in the social media company, damaged employee morale, scared off potential advertisers, highlighted its financial difficulties and spread misinformation about how Twitter works. “His commitment to Twitter has had a profound impact on the company,” said Jason Goldman, a member of Twitter’s founding team who has also served on its board. “Employees, advertisers and the market at large cannot have faith in a company whose path is unknown and which will now go to court to complete a transaction with a bad actor.” The precarious situation underscores why Twitter is set to sue Mr Musk as soon as this week to force the deal through. The litigation is likely to be protracted and protracted, involving months of costly litigation and high-profile negotiations by elite lawyers. A solution is far from certain – Twitter might win but, if it loses, Mr Musk could walk away paying a breakup fee. Or the two sides could renegotiate or compromise. On Monday, the damage Mr. Musk, 51, has caused was evident. Twitter stock fell more than 11% to one of its lowest points since 2020 as investors awaited the upcoming legal battle. Since Twitter accepted Mr. Musk’s takeover offer on April 25, its stock has lost more than a third of its value as investors grow increasingly skeptical that the deal will go through on the agreed terms. (By contrast, the Nasdaq tech index fell about 12.5% over the same period.) Twitter declined to comment Monday. In a letter to Mr Musk’s lawyers on Sunday, the company’s lawyers said its move to terminate the deal was “void and unfair” and that Mr Musk had “knowingly, willfully, willfully and materially breached” the his agreement to purchase the company. Twitter will continue to provide information to Mr. Musk and work to close the transaction, the letter added. Mr. Musk did not respond to requests for comment. On Sunday, the billionaire, who cited the number of fake accounts on the Twitter platform as the reason he can’t buy the company, tweeted a photo of himself laughing at the situation. Of all the debris Mr. Musk leaves behind on Twitter, perhaps the most important is how brutally he exposed the company’s declining financial and business prospects. Twitter has operated at a loss for seven of the nine years it has been a public company. During discussions about Mr. Musk’s bid, the company did not receive serious interest from other suitors, people with knowledge of the situation said. Twitter’s board deemed Mr. Musk’s offer of $54.20 a share the best it could get, indicating it saw no way to reach that price on its own. “The board’s lack of confidence in the company’s long-term future will remain with employees, partners and shareholders regardless of the outcome with Elon,” Mr. Goldman said. In recent months, Twitter’s business has deteriorated. Parag Agrawal, Twitter’s chief executive, said in a memo to employees in May that the company fell short of its business and financial goals. To address the issues, it fired product and revenue heads, instituted a hiring freeze and began an effort to attract new users and diversify into e-commerce. In April, the company stopped providing a long-term financial outlook to investors, pending the acquisition. That trajectory is unlikely to change as uncertainty over the deal worries advertisers, Twitter’s main source of revenue. “Twitter will have a hard time in the near future reassuring scattered advertisers and their users that they will remain stable,” said Angelo Carusone, president of the watchdog group Media Matters for America. In an implicit dig at Twitter’s top executives, Mr. Musk said he could have done much better with the company. In a presentation to investors in May, he said he plans to quintuple the company’s revenue to $26.4 billion by 2028 and reach 931 million users that year, up from 217 million at the end of last year. Mr. Musk emphasized Twitter’s seamless financial direction in a letter filed with the Securities and Exchange Commission on Friday. The company’s “diminishing business and financial prospects” had caused him to stop, his lawyers wrote, especially given Twitter’s recent “financial performance and revised outlook” for the next fiscal year. Mr Musk, who has more than 100 million followers on Twitter, has also slammed the product, saying it is not as engaging as other apps. He has repeatedly claimed, without evidence, that Twitter is flooded with more authentic accounts than it has disclosed. such accounts can be automated to pull toxic or false content. (The company said less than 5 percent of accounts on its platform are fake.) His outcries about fake accounts have eroded trust in Twitter as the company prepares to tone down heated political debate over the upcoming Brazilian election and this fall’s midterm elections in the United States, disinformation experts said. In another criticism of Twitter and how it moderates content, Mr Musk promised to loosen the company’s moderation policies in the name of free speech. In May, he said he would “reverse the permanent ban” of former President Donald J. Trump from Twitter, allowing Mr. Trump to return to the social network. That upset right-wing users, who have long accused the company of censoring them, and renewed questions about how Twitter should handle debates about the limits of free speech. Within the company, employee morale has been shaken, leading to infighting and attrition, according to six current and former employees. Some of those who remain said they were relieved that Mr. Musk appeared to have decided not to own the company. Others shared nihilistic memes on the company’s Slack or openly criticized Twitter’s board and executives for initially entertaining Mr. Musk’s offer, according to internal messages seen by The New York Times. The mood among executives was one of grim determination, said two people with knowledge of their thinking. Evan Williams, the founder of Twitter, tweeted on Friday that he wished Mr Musk’s antics would stop. “If I were still on the board, I would ask if we can just let this whole ugly episode end,” Mr. Williams posted in response to the announcement that Twitter intended to sue Mr. Musk and force the deal to go forward. “Hopefully that’s the plan and that’s the ceremony.” Manu Cornet, a Twitter employee, captured the mood with a cartoon showing a broken company that had been knocked off the shelf by Mr. Musk’s careless elbow. His caption: “You break it, you buy it!” Ryan Mac and Isabella Simonetti contributed reporting.
