It wasn’t a good financial year to own Commonwealth Bank of Australia (ASX: CBA) shares, as it turns out. FY2022 saw the CBA share price lose a painful 9.5% of its value. Not even CBA’s generous dividends were enough to save investors from an overall loss with this ASX bank last financial year.

Perhaps the only comfort investors can cling to is the fact that the S&P/ASX 200 Index (ASX: XJO) fared even worse. The ASX 200 lost 10.19% of its value over FY2022 in what was a rather poor 12 months for most ASX shares.

But it wasn’t like the other ASX bank shares fared much better. As we covered yesterday, even with a 9.5% loss, CBA ended up being the third-best ASX bank share performer over FY2022. It beat out Westpac Banking Corp (ASX: WBC) and Australia and New Zealand Banking Group Ltd (ASX: ANZ) and only lost to National Australia Bank Ltd (ASX: NAB) and Macquarie Group Ltd (ASX: MQG).

So now that the CBA share price has this miserly year under its belt, what might FY2023 hold in store for CBA shares?

Are CBA shares an FY23 buy or sell?

Well, if we take a look at what the brokers are saying, CBA investors could be in for another tough financial year.

As my Fool colleague Tristan covered last week, there are currently three ASX brokers who are bearish on CBA shares right now.

Broker Citi currently rates CBA shares as a sell. This ASX broker reckons the share price premium that CBA shares currently command puts the bank at risk of further share price falls. It currently has a 12-month share price target of $90.75, which is around 3% below where the shares are today.

But it gets even worse if we look at what the other brokers are expecting. Morgan Stanley and Macquarie currently have share price targets of $79 and $78 respectively. Both came with underperform and underweight ratings as well.

Both of these brokers are pencilling in higher loan losses for CBA’s books, as well as sluggish credit growth going forward. Morgan Stanley is also worried that rising costs due to interest rate rises will hamper the bank’s bottom line.

So all in all, not exactly a rosy outlook on CBA from three of the ASX’s biggest brokers. No doubt shareholders will be hoping these brokers are too pessimistic on CBA shares for FY2023. But we shall have to wait and see what the new financial year brings us.

At the current CBA share price, this ASX 200 bank has a market capitalisation of $159.03 billion, with a dividend yield of 4.01%.

The post Down 9%, can CBA shares bounce back in FY23? appeared first on The Motley Fool Australia.

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More reading

• What were some of the key lessons for ASX investors in FY22?
• ASX 200 midday update: Zip scraps Sezzle merger, Lake Resources’ short seller attack
• ‘Gems in the chaos’: The outlook for ASX 200 shares in FY23
• The ASX sector set to pay out ‘massive record dividends’: fund manager
• 5 things to watch on the ASX 200 on Tuesday

Motley Fool contributor Sebastian Bowen has positions in National Australia Bank Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Macquarie Group Limited and Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to record a small gain. At the time of writing, the benchmark index is up 0.2% to 6,617.6 points.

Four ASX shares that are climbing more than most today are listed below. Here’s why they are rising:

Eagers Automotive Ltd (ASX: APE)

The Eagers Automotive share price is up over 2.5% to $10.84. This morning the auto retailer released a half-year market update. According to the release, the company expects to report a statutory net profit before tax from continuing operations of $246 million. This is ahead of its guidance range of $225 million to $240 million.

Viva Energy Group Ltd (ASX: VEA)

The Viva Energy share price is up 3% to $2.82. This follows the release of the fuel retailer’s second quarter and first half update. Viva reported total group sales volumes growth of 5.2% on the same period last year during the first half. This was driven predominantly by strong diesel sales, which exceed pre-pandemic levels.

Woolworths Group Ltd (ASX: WOW)

The Woolworths share price is up 2.5% to $37.28. Investors may have been buying this supermarket operator’s shares in response to a bullish broker note out of Goldman Sachs this week. According to the note, the broker has reiterated its buy rating and added the company’s shares to its conviction list. Goldman is forecasting a sales “CAGR of 6.6% and underlying NPAT of 14.1% over FY22-24e.

Zip Co Ltd (ASX: ZIP)

The Zip share price is up over 4% to 52.2 cents. Investors have responded positively to news that the buy now pay later (BNPL) provider is scrapping its merger with rival Sezzle Ltd (ASX: SZL). While the decision is mutual, Zip will pay Sezzle a break fee of US$11 million. Management believes this will “allow Zip to focus on its strategy and core business in the current environment.”

The post Why Eagers Automotive, Viva Energy, Woolworths, and Zip shares are rising appeared first on The Motley Fool Australia.

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More reading

• ASX 200 midday update: Zip scraps Sezzle merger, Lake Resources’ short seller attack
• Zip share price jumps 6% after merger deal with Sezzle is cancelled
• Sezzle share price plunges 35% as Zip merger scrapped
• Why Goldman Sachs added Woolworths shares to its conviction list
• Own Zip shares? BNPL player shuts down finance app to focus on profitability

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended ZIPCOLTD FPO. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Regional Express Holdings Ltd (ASX: REX) share price is slightly in the green today after emerging from a trading halt.

The company’s shares are currently swapping hands at $1.215 each, a 0.41% gain. For perspective, the Flight Centre Travel Group (ASX: FLT) share price is down 1.81% today, while Qantas Airways Ltd (ASX: QAN) shares are down 3.08%.

Let’s take a look at what is happening at Regional Express.

Media speculation response

Regional Express shares entered a trading halt briefly today, pending further news The company then emerged from the freeze with a response to recent media speculation.

The airline revealed it is hoping to acquire Cobham Aviation Services’ fly-in, fly-out (FIFO) operations.

In a statement authorised by company secretary Richard Kwan, Regional Express said:

Rex discloses that it is one of the interested parties involved in the acquisition process.

No agreement has been reached for the acquisition of Cobham.

This follows media speculation in the Australian Financial Review that Rex is “one of the last parties standing” for Cobham’s FIFO business.

In June, Regional Express advised weekly services have increased by up to 67% in eleven regional cities.

Regional Express said it will inform the market if the acquisition goes ahead.

Share price snapshot

Regional Express shares slipped 2% in the past year, but they have dropped nearly 12% year to date.

In the past month, the company’s share price has gained 8%. In the last week, Regional Express shares have climbed more than 2%.

For perspective, the S&P/ASX 200 Index (ASX: XJO) has shed nearly 10% in the past year.

The airline has a market capitalisation of about $133.9 million based on today’s share price.

The post Regional Express shares hold steady amid response to fly-in fly-out takeover speculation appeared first on The Motley Fool Australia.

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• Why this smaller ASX travel share is locking horns with Qantas over regulation
• These 2 ASX travel shares are tying the knot for the next 10 years
• Why is this ASX travel share flying higher today?

Motley Fool contributor Monica O’Shea has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Sayona Mining Ltd (ASX: SYA) share price is in the red for a second consecutive day as its shares positively fly off the shelf.

At the time of writing, the Sayona share price is 13.2 cents. That’s 5.71% lower than it was at yesterday’s close and 12% lower than it ended last week.

For context, the broader market is trading higher today. The All Ordinaries Index (ASX: XAO) is currently up 0.13% while the S&P/ASX 200 Index (ASX: XJO) has gained 0.27%.

So, what’s going on with the emerging lithium producer today? Let’s take a look.

What’s going on with the Sayona Mining share price?

Shares in Sayona have caught the market’s attention on Tuesday despite the company’s silence.

The stock is currently among the most traded on the market. More than 106 million Sayona shares have swapped hands so far today. And it’s not alone in being noticed.

Let’s compare the Sayona Mining share price’s performance today to its ASX 200-listed lithium peers.

The ASX 200’s most traded share so far today is lithium producer Core Lithium Ltd (ASX: CXO). Nearly 23 million Core Lithium shares have traded so far today while the stock has slipped around 6% at the time of writing.

Lithium shares Allkem Ltd (ASX: AKE) and Liontown Resources Ltd (ASX: LTR) have joined Core Lithium in the red – down 5.2% and 4.29% respectively.

Together, they make up the three worst-performing S&P/ASX 200 Materials Index (ASX: XMJ) stocks right now.

Shares in Pilbara Minerals Ltd (ASX: PLS) are also worth a mention. The company is currently the ASX 200’s third most traded stock.

Thus, it appears to be a bad day for ASX lithium shares in general. And it’s worth noting there has been plenty of turbulence in the sector recently.

In fact, Sayona Mining was just one lithium stock to see its share price plummet last month. The company’s shares fell 32% in June after it suffered a major sell-off event.

The post Why is the Sayona Mining share price tumbling 6% today? appeared first on The Motley Fool Australia.

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• How did the Sayona Mining share price perform in FY22?
• Why did the Sayona Mining share price crash 32% in June?
• Why Regis Resources, Sayona, Woodside, and Xero shares are pushing higher
• Why BWX, Sayona Mining, Tyro, and Woodside shares are sinking
• Why have ASX lithium shares had such a lousy month in June?

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Costa Group Holdings Ltd (ASX: CGC) share price is continuing its steep descent after plunging 8% yesterday.

At the time of writing, the horticulture company’s shares are down 2.64% to $2.58 apiece.

What happened to Costa shares?

Following the company market update on Monday, investors drew ire, sending the Costa share price to a 52-week low.

The negative reaction spurred a large number of shares being traded – more than 16 million in total for the day.

Subsequently, this sparked a please explain letter from the stock exchange operator, ASX Ltd (ASX: ASX).

Costa didn’t respond until the next day (early this morning) to the request regarding its ASX price query.

Management stated that it “wasn’t aware of any information that its earnings for H1 FY22 are likely to come as a surprise to the market.”

It expects the unaudited results for both the international and domestic produce segments to be ahead when compared to the prior corresponding period (H1 FY21).

Furthermore, unaudited Group EBITDA before movement in biological assets and material items is forecasted to be up 10%-15% on H1 FY21.

Costa acknowledged a recent broker report regarding a revision of its earnings. It said that while the analyst’s view is subjective, “this would not materially impact on analyst consensus.”

Since then, the particular broker has provided a further update following the recent share price movement.

Costa share price summary

It has been a difficult past couple of months for the Costa share price, tumbling by 25% from its year-to-date high of $3.455.

The company’s shares have suffered from a number of broker downgrades amid the extreme volatility on the ASX.

When looking at year to date, its shares are down roughly 15%.

Based on today’s price, Costa commands a market capitalisation of $1.34 billion.

The post Costa Group shares down, responds to ASX query. What happened? appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Tuesday
• Why Costa, Domino’s, EML, and Novonix shares are dropping
• Why is the Costa share price sinking 12% to a two-year low?
• ASX 200 midday update: EML crashes amid CEO exit, Costa and Domino’s sink on broker downgrades
• Top broker names 3 of the best ASX 200 shares to buy in FY23

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended COSTA GRP FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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S&P/ASX 200 Index (ASX: XJO) energy retailers were centre stage last month when the Australian Energy Market Operator (AEMO) capped energy prices across much of Australia.

And now some of their peers could be pushing back against fees expected to be charged by the market operator.

Let’s take a closer look at the battle that might be about to heat up between energy retailers and the AEMO.

ASX 200 energy retailers suffered in June

Here’s how ASX 200 energy retailers performed amid the chaos last month:

• The AGL Energy Limited (ASX: AGL) share price slumped nearly 6% in June
• The Origin Energy Ltd (ASX: ORG) share price plunged 16% last month

Much of the latter’s tumble was due to the withdrawal of the company’s financial year 2023 guidance amid volatility in energy markets.

Meanwhile, AGL pushed back the expected restart of its Loy Yang A Unit 2 and announced its former suitor Brookfield Asset Management had sneakily snapped up 2.5% of its shares.

Energy retailers could fight against AEMO fees

Six energy retailers have considered waging a legal battle against AEMO fees following last month’s cap on wholesale power prices, the Australian Financial Review (AFR) recently reported.

The unnamed companies have reportedly looked to dispute a bill that will see them indirectly compensating electricity generators. According to the publication, they would likely claim generators are being offered too much compensation.

AEMO ordered generators to produce electricity last month. It did so in a bid to keep lights on amid the cap on energy prices. The operator now plans to pay generators for energy produced and compensation for additional losses.

Most of that compensation – reported to be worth millions – will be recovered from energy retailers.

But already struggling retailers – which are generally hedged against power prices – are exposed to such compensation costs, the AFR reported. The publication says the bills will likely land on energy retailers’ desks from November.

The post Own ASX 200 energy shares? Retailers could hit back on AEMO fees appeared first on The Motley Fool Australia.

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More reading

• Top brokers name 3 ASX shares to buy next week
• Why did the AGL share price have a volatile FY22?
• AGL share price lifts as Brookfield caught buying
• Origin share price shrugs off record $17 million fine from Federal Court
• Here are the top 10 ASX shares today

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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It has been yet another dark day for the Kogan.com Ltd (ASX: KGN) share price and the Temple & Webster Group Ltd (ASX: TPW) share price on Tuesday.

In afternoon trade, both ecommerce companies have seen their shares make double-digit declines and tumble to two-year lows.

The Kogan share price is currently down 10% to $2.68, whereas the Temple & Webster share price is down 15% to $3.01.

Why are these ecommerce shares sinking?

Today’s declines are a little bit of a mystery but there are a couple of potential catalysts.

One is that these declines coincide with the launch of Prime Day by ecommerce behemoth Amazon.

This mega sales event could be reminding investors just how much of a force Amazon is and how it could win significant market share from these smaller rivals. Particularly given its superior delivery capabilities and the expansion of its offering since launch to now cover everything from books, clothing, whitegoods, and even furniture.

Anything else?

In addition, the weakness in the Kogan and Temple & Webster share prices mirrors what happened with their ecommerce peers on Wall Street and the LSE overnight.

For example, the likes of ASOS, Boohoo, Mercado Libre, Peloton, Shopify, and Wayfair all recorded significant declines on Monday night. It appears as though investors are feeling bearish about the prospects of online retailing in the current environment.

Following today’s declines, the Kogan share price is now down almost 70% in 2022 and the Temple & Webster share price is down 72% year to date.

The post Why are these 2 ASX ecommerce shares are hitting two-year lows? appeared first on The Motley Fool Australia.

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• These are the 10 most shorted ASX shares
• Why I think the Temple & Webster share price is on sale right now
• Why did the Kogan share price go backwards in FY22?
• Why did the Kogan share price sink 22% in June?
• Best ASX shares to buy in July 2022

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Kogan.com ltd and Temple & Webster Group Ltd. The Motley Fool Australia has positions in and has recommended Kogan.com ltd. The Motley Fool Australia has recommended Temple & Webster Group Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The Ethereum (CRYPTO: ETH) price is down 5.4% since this time yesterday.

The world’s number two crypto by market cap is currently trading for US$1,092 (AU$1,620).

With another round of selling, the Ethereum price is now down 71% in the 2022 calendar year, and down a painful 78% since achieving record highs of US$4,892 on 16 November last year.

Ether’s sliding fortune has not only disappointed crypto investors, it also looks to be crimping interest in participating in the token’s merge.

What is the merge?

The Ethereum merge, formerly called Ethereum 2.0, will transition the blockchain from an energy-intensive proof-of-work protocol to a far less energy-hungry proof-of-stake protocol.

The ongoing process allows people to stake 32 Ether to participate in verifying blockchain transactions, and thus earn a reward. Under the staking system, far fewer computers are involved, which also decreases overall costs and increases speeds.

But as the Ethereum price has been tumbling, it’s also seen weekly deposits of Ethereum 2.0 staking contracts fall to new lows.

Sliding Ethereum price hits staking interest

As the Bitcoinist reported, Ethereum 2.0 staking contracts have tumbled to their lowest value ever.

Glassnode data indicates that the weekly average of 32-Ether deposits in 2021 was around 500 to 1,000 per day. On 3 July this year, that metric tumbled to a mere 122, the lowest level since the launch of the Ether 2.0 staking contracts.

The big drop in interest appears to be due to the big retrace in the Ethereum price.

At the current prices, less than 17% of the total deposited supply of tokens in the Ethereum 2.0 contracts are in profit. Most of that will have been deposited in, or before, January 2021, the last time the Ethereum price was trading below these levels.

Now what?

With the Ethereum price, and indeed most every leading crypto, down sharply this year, eToro’s market analyst and crypto expert Simon Peters said:

The message for investors at the moment is to hold tight and keep watch of the market. We see regular institutional movement and ongoing growth of the sector as a key indicator that the game is not up. What’s important to remember, however, is that diversifying within the sector, as in any asset class, is essential to spread risk.

The post Could this one metric be why the Ethereum price is down 5% today? appeared first on The Motley Fool Australia.

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More reading

• Why FY22 was the best and worst of years for the Ethereum price
• The Ethereum price collapsed 47% in June. Here’s why
• How did the price of crypto assets perform in June?
• Ethereum price falls after hackers begin laundering $100 million bridge exploit
• What one tech guru thinks of the current crypto market

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Ethereum. The Motley Fool Australia has recommended Ethereum. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The 2022 financial year has just wrapped up, and what a year it was. FY2022 saw a massive increase in share market volatility – to levels investors not seen since the onset of the pandemic back in early 2020. Over the financial year just gone, the S&P/ASX 200 Index (ASX: XJO) ended up losing 10.19%.

So in a year where share markets went backwards, what are some of the lessons we, as ASX investors, can take away?

Here are three:

3 ASX investing lessons from FY2022

Don’t trust the RBA

Perhaps above all, FY2022 has reminded us of how important the Reserve Bank of Australia (RBA) and interest rates are when it comes to ASX shares. For most of last year, the RBA was telling us all that it only intended to start raising interest rates in 2024. Rates would be kept at the all-time lows that we saw last year at least until then.

Well, that didn’t last too long. As every investor would be aware, the RBA has now raised interest rates three times in 2022 thus far, and most rises have been ‘double’ increases of 50 basis points.

Ultra-low interest rates were good news for ASX shares. It’s hardly a coincidence that the volatility we have seen on the markets across FY2022 only really started occurring when it became obvious the RBA was going to jettison its 2024 commitment and start hiking rates this year.

So our first lesson from FY2022 is: don’t assume the RBA’s word is gospel.

Trends don’t last forever

The past decade has been one that has been especially kind to ASX tech shares. To illustrate, the S&P/ASX All Technology Index (ASX: XTX) rose an extraordinary 59.2% in 2020 and another 13% between January and November 2021.

It was a similar story with US tech shares. Back in January 2021, the BetaShares NASDAQ 100 ETF (ASX: NDQ) had a trailing five-year average performance of 22% per annum. So it seemed like a no-brainer to have at least a good chunk of one’s portfolio invested in tech shares.

But FY2022 has turned that on its head. Last financial year saw the All Tech index fall by a painful 35%. Investors didn’t get much of a safe harbour from US tech shares either. FY2022 saw the NDQ NASDAQ ETF fall by around 20%.

Many of the ASX’s most prominent tech shares fell by far more. For example, FY2022 saw Block Inc (ASX: SQ2), one of the largest ASX tech shares on the market, lose almost 49% of its value. Buy now, pay later (BNPL) share Zip Co Ltd (ASX: ZIp) plummetted more than 94%.

So even though a trend can last for years, and make ASX investors buckets of cash, do not ever think that it will go on forever. As we have seen, this assumption can be a painful one to keep.

Volatility can be an opportunity

Volatility can be uncomfortable and painful, but it can also bring us some incredible opportunities. To illustrate, let’s look at the Adairs Ltd (ASX: ADH) share price. Adairs shares have had an incredibly volatile year, with the company remaining down more than 45% over the past 12 months.

But if an investor took advantage of the volatility that saw Adairs drop to $1.65 a share just last month, they would be sitting on a giant of more than 26% today. Similar gyrations like this have occurred with dozens and dozens of ASX shares over FY2022.

This shows that volatility can be taken advantage of, and with lucrative results. But only for the ASX investors with the mindset to ‘be greedy when others are fearful’, as the great Warren Buffett would say.

The post What were some of the key lessons for ASX investors in FY22? appeared first on The Motley Fool Australia.

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More reading

• ASX 200 midday update: Zip scraps Sezzle merger, Lake Resources’ short seller attack
• ‘Gems in the chaos’: The outlook for ASX 200 shares in FY23
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Motley Fool contributor Sebastian Bowen has positions in ADAIRS FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended ADAIRS FPO, BETANASDAQ ETF UNITS, Block, Inc., and ZIPCOLTD FPO. The Motley Fool Australia has positions in and has recommended ADAIRS FPO, BETANASDAQ ETF UNITS, and Block, Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Exciting news dropped over the last couple of days when Elon Musk officially announced he intends to back away from his Twitter (NYSE: TWTR) buyout deal. Musk’s lawyers say the company has refused to give them proper information regarding how many Twitter accounts are bots, meaning it broke its contractual obligations.

The main accusation is that the percentage of spam bots among the monetizable daily active users (mDAUs) is materially higher than the 5% number Twitter purports in its financial documents. Immediately after the announcement from the Musk team, Twitter’s board chair Bret Taylor tweeted (of course) that the company plans to take Musk to court to legally force him to close the deal at the agreed-upon price.

Here are two reasons Elon Musk will be legally forced to close the Twitter deal, and why he might slither out unscathed. 

1. The bots are not a legitimate excuse 

According to the letter Musk’s lawyers released, his main complaint is that Twitter’s bot problem is much worse than the company claims. If true, this would obviously be a huge problem, especially because Twitter’s main business is to sell advertisements to these users. Advertisers wouldn’t be very happy if it turned out a ton of them were fake.

While definitely a concern in a vacuum, it doesn’t seem likely this accusation will enable Musk to break off a signed merger agreement. For one, Musk clearly knew about the bot problem before he made the offer to Twitter — it was one of the reasons he wanted to buy the company in the first place. His account has a history of bots responding to his tweets trying to defraud people with cryptocurrency scams, so it is not like he was unaware of the problem.

Second, this was something a potential buyer is supposed to do before signing a deal. If you sign a contract to purchase a house at a certain price before going to inspect it in person, but then find cockroaches all over the place, you can’t just renege on the deal because you feel stupid. The Delaware Court (where the legal battle is set to take place) will likely rule the same way with Musk unless evidence materializes that a huge portion of Twitter’s active accounts is fake.

2. Historical legal precedent

Speaking of legal rulings, there are prior court cases that can guide us on what the Delaware Court may rule in this case. In 2000, Tyson Foods agreed to buy another food producer called IBP Corporation. When the market and economy went into a downturn in 2001 and 2002, Tyson tried to get out of the deal because it argued it had gotten misleading information about IBP’s business. Sound familiar?

The court argued that Tyson had to go through with the deal. The Tyson-IBP case has been a landmark decision, guiding companies, shareholders, and judges in deciding whether a merger agreement has to go through. With this in consideration, Musk will have to bring some incredibly compelling evidence to convince the Delaware Court to side with him on this case. 

Why Musk still might win

Don’t think this is a cinch for Twitter just yet. Anything and everything can happen in a legal battle, and there’s a reason Twitter’s stock trades below $37 a share when the proposed buyout was at $54.20. Musk’s team could find evidence that Twitter has been defrauding investors for years by lying about its bot problem. How likely is this? I’m not sure. But it definitely isn’t zero.

Investors should also consider Musk’s past history with the law. The Solar City deal, the fake take-private announcement for Tesla, and the one-million robotaxi claim have skirted, if not passed, the line of what is legal or not in the business world. Even if the precedent is for the court to rule against Elon Musk, it might not matter, because the man always seems to get what he wants.

Get your popcorn ready. The troubled Twitter takeout is shaping up to be one of the biggest legal battles in business history.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post 2 reasons Elon Musk’s Twitter break-up is destined to lose in court appeared first on The Motley Fool Australia.

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Brett Schafer has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Tesla and Twitter. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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