[gnicholas]

I can imagine the following happens at trial:

1: Musk's team provides evidence that 18% of users are bots

2: TWTR's stock drops the next day

3: Musk argues that the drop in the stock value demonstrates just how material his team's revelation/accusation is, suggesting that the misstatement was material

4: TWTR argues that the stock dropped not because of any material misstatement, but simply because it changes shareholders' estimates of the likelihood of a settlement that is favorable to either party

[tptacek]

A change in Twitter's stock price presumably wouldn't matter; what you'd need to see is a 40%+ drop in Twitter's profitability or revenue.

[roflyear]

None of what you said has anything to do with MAE

[gnicholas]

What is your take on what would constitute an MAE? I haven't followed the transaction as carefully as some, but I have seen some coverage of it, including from fellow lawyers. I've not heard anyone claim that news regarding the number of bots has nothing to do with MAE.

[roflyear]

IDK seems most lawyers covering this are saying that bots are a stretch for MAE, unless the bots somehow suddenly start to impact Twitter's revenues ...

[seanhunter]

Have you read the merger agreement that Elon signed? Bot’s aren’t even mentioned. For anything about bots to be relevant to the deal Musk’s team don’t have to show that their were more bots but that Twitter’s statements about how they measure bots were incorrect and that the difference caused by those incorrect statements caused a materially adverse change. Since Twitter’s statements about bots are very specific and caveated (they label a small random sample, and estimate how many bots there are in the overall population using the number of bots they see in the sample, they use “significant judgement” and the number could be higher than what they say) it’s really hard to see Elon prevailing on this question.

Matt Levine has a customarily excellent analysis here https://www.bloomberg.com/opinion/articles/2022-07-18/elon-w...

[gnicholas]

It seems like he overlooks the possibility that the bot issue would turn up evidence that Twitter's executives knew that it wasn't quite following the described protocols.

But more generally, my point was that Musk could allege something that could create an MAE, and then the stock would drop and they'd end up arguing about whether the drop was due to the evidence, or due to the evidence's impact on people's belief that the deal would go through.

[fzzzy]

tptacek's point is that a MAE has nothing to do with the stock price, only revenue or profitability.

[leereeves]

If advertisers discovered that there are more bots on Twitter than they were told (and consequently that the audience of real humans is smaller than they were told) future revenue would probably decrease.

[gnicholas]

Sorry for not being clearer. I wasn't suggesting that the stock price dropping was an MAE. I was suggesting that the thing that caused the stock price to drop could arguably be an MAE. That's the whole point of my comment — there would be an argument about causation between the revelation/accusation, the stock price, and anticipated impact on revenue (as a sibling commenter pointed out).