Yahoo Finance's Alexis Keenan discusses Elon Musk's countersuit against Twitter.
BRIAN SOZZI: All right, turning now to the latest with Elon Musk as his battle with Twitter heats up while Tesla looks to attract more retail investors with a 3 for 1 stock split. To break all this down, we have Yahoo Finance's Alexis Keenan and Pras Subramanian. Let's start here, Alexis, with you. What is the latest in this battle?
ALEXIS KEENAN: Hi, Brian. So we're getting to see Twitter's reply to Musk's counterclaim, his countersuit against Twitter. So much about this is about Twitter's spam bot platform representations.
We can see a lot here in this court filing that was filed yesterday. And what it alleges-- this is Musk now going back after Twitter saying that the company has committed fraud, breach of contract, and also violations of Texas's Securities Act. In this filing-- this is just Twitter saying this, though, so we're relying on what Twitter says about Musk's counterclaim. Musk is saying that he can go ahead and end the $44 billion merger agreement because Twitter misrepresented in its SEC filings its estimates for the fake number of monetizable daily active users that the company has long said are estimated under 5%.
Now, what's new here in these documents is Musk is saying that, according to his estimates, that that number is double. He said that he negotiated for this contract relying on those statements to be true, those SEC statements. And instead, though, he said that there are numerous misrepresentations by Twitter that's really distorting the company's value in terms of its ability to command advertising revenue.
Here's a quote from this document that Twitter is representing. They say Musk's argument here saying he negotiated not only for representations about the truthfulness of these SEC filings but also for significant information rights to the company's books and records, saying that Musk fully expected Twitter would hide nothing from its would be owner. Now, for Twitter's part here, they counter, saying that all of its SEC statements are true and that under the contract, Musk has no right to more data on these spam bots or fake accounts. The company says that it never represented that its monetizable daily active users were the sole determinant of its ad revenue.
They also acknowledge, though, that the company can terminate the agreement or that Musk terminate the agreement only under the condition that it suffers what's called a material adverse effect. Now, that is what is known-- that's a legal term for a significant change in Twitter's operations and Twitter's company that would change its underlying value. And that is what the Delaware Chancery Court is going to have to sort out here. But we're going to see a lot more about what Musk thinks about the number of these spam bots and his arguments here that he's at least putting forth a valid argument, which, of course, Twitter does not agree with.
JULIE HYMAN: Yeah, that's going to continue to be really interesting. Well, it wouldn't be Musk if he wasn't doing 15 things at once. So yesterday also, we had the shareholders meeting. And, Pras, there they got the split approved. But there were some other headlines that came out of that shareholder meeting as well.
PRAS SUBRAMANIAN: Yeah, that's right, Julie. They passed that 341 stocks but also re-elected two board members. But yeah, a lot of it was Musk's commentary on a number of things, riffing on production, inflation, and also the Cybertruck. I want to hit a couple of these things here.
So on production, he said that Tesla passed the 3 million mark in terms of cars produced overall a pretty big mark because 10 years ago, they were only making the Roadster. He says that in the next 10 years, he sees 100 million cars being produced and that he ideally sees that the company will have 12 factories around the world. And hopefully, he did say that the next step might be in North America and teased Canada as the next location.
On inflation, he elaborated more on what he had said last week about how he saw prices actually coming down. He says that the car maker's auto visibility and pricing for components and things like that says the US is likely past peak inflation, and then he said broader, he said that the US might be in for a relatively mild recession is what he says. But he says that take these with a grain of salt because economic prognostications are always fraught with disaster.
Lastly, the Cybertruck, probably one of the most highly anticipated cars that Tesla has ever made. He says that they're on track for 2023 production midway through the year but that the specs and pricing likely to change. He apologized for that, but he said three years ago, when the car was introduced, the world was a different place. Inflation wasn't necessarily around. So he says that-- and he called it a bit of bad news, but he said that this truck is still on track for 2023.
BRIAN SOZZI: Pras, this thing's going to be priced at the same price as that new GMC electric Hummer, all right? Let's get real. Huge production costs to make this happen but something we will continue to monitor. Alexis, Pras, thanks so much.