A whistleblower’s claims that Twitter Inc. had lax security practices have added enough complexity to the social-media company’s Elon Musk takeover saga that an analyst is caving on his once-bullish stance.
Rosenblatt Securities analyst Barton Crockett downgraded Twitter TWTR, +2.33% shares to neutral from buy Wednesday, writing that he sees “meaningful uncertainties” when thinking about the chances that the deal goes through under the original terms.
Peiter “Mudge” Zatko, Twitter’s former head of security, issued comments to Congress in July saying that Twitter ran some servers on vulnerable software and that its executives lacked incentives to suppress spam activity. CNN and The Washington Post published documents and reports related to his commentary Tuesday.
Twitter said that Zatko was fired for performance and that his statements were “riddled with inconsistencies and inaccuracies.”
The disclosures come as Tesla chief Musk aims to back out of his $44 billion deal for Twitter, citing concerns that the company was untruthful in its public disclosures about the extent of bot activity on the platform. A Delaware judge is expected to decide on the matter in October.
The Zatko information “appears to open up a new avenue for Musk to allege materially inaccurate representations by Twitter, allowing Musk to move on from a fishing expedition on well-hedged spam disclosures,” Rosenblatt’s Crockett wrote. “Musk instead may be able to use the whistleblower’s claims to argue that...
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