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As Elon Musk attempts to terminate his $44 billion deal to purchase Twitter, both parties are staring down what could be a long legal battle in the Delaware courts where corporate cases are often heard. And things could get ugly — potentially more so for the social media company.
"It's a code red for the company," Daniel Ives, a tech analyst and managing director for Wedbush Securities, told Insider. "Employees could leave in droves."
Legal experts have said Musk is attempting to walk away from the deal based on a claim — regarding the company's number of spam accounts — that doesn't quite meet Deleware's threshold for what would be a "material adverse effect" that allows a buyer to exit a deal.
But outside of the legal leg Musk has to stand on, Twitter and its employees will not come out of what could be a long, drawn-out court battle unscathed, Ives said.
As the company's metrics are further scrutinized, the public company will be "viewed as damaged goods," he said.
"It throws the company into a tailspin," Ives said. "I think Twitter's gonna be bruised through this. It's gonna have to navigate this."
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