Fox Business

What's behind market activity post Senate Dems' passage of social spending, tax bill?

Mon, 08 Aug 2022 18:48:47 GMT

UBS Managing Director and Senior Portfolio Manager Jason Katz explained why he believes markets weren’t tumbling on Monday after the Senate passed the Democrats' social spending and taxation bill following a marathon "vote-a-rama" session that lasted more than 15 hours.

Despite the bill’s passage, which includes more than $400 billion in spending and more than $700 billion in taxes, U.S. stocks moved higher on Monday morning.

Speaking on "Varney & Co." on Monday, Katz argued that he believes markets are "really absorbing the job numbers in terms of how the Fed may react to it," calling it "really good news." He also noted that, while the runway for a soft landing may have shortened, "a crash landing is probably avoidable."

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On Friday it was revealed that U.S. job growth unexpectedly accelerated in July, defying fears of a slowdown in hiring even as the labor market confronts the twin threats of scorching-hot inflation and rising interest rates.

Employers added 528,000 jobs in July, the Labor Department said in its monthly payroll report released Friday, blowing past the 250,000 jobs forecast by Refinitiv economists. The unemployment rate, meanwhile, edged down to 3.5%, the lowest level since the COVID-19 pandemic began more than two years ago.

The expectation now with a strong jobs report is that the Fed will continue to take aggressive action to try and curb inflation, which remains at four-decade highs, according to the data for June released last month — which, at the beginning of the year, reduced investor appetite to hold assets perceived as higher risk.

It was revealed last month that the U.S. economy experienced two consecutive quarters of negative GDP, which constitutes the technical definition of a recession.

The Federal Reserve has been moving to tighten policy at the fastest pace in three decades. Policymakers already approved a 75-basis point rate increase in both June and July. Markets experienced turbulence during the first half of the year as investors ingested economic data and priced in several rate hikes by the Federal Reserve as the central bank tries to curb persistent inflation.

Katz argued on Monday that markets aren’t overreacting given "there’s a perception out there that this spending bill is not as onerous as ‘Build Back Better' was."

"The 15% minimum corporate tax rate isn’t the 28% we all feared when the Democrats took control," he said.

Democrats initially tried to advance a "Build Back Better" bill worth more than $3 trillion last year. The new version of the bill, called the "Inflation Reduction Act," is significantly scaled back from that.

Katz added that the bill doesn’t present a change to "carried interest," noting that there are people who believe that will "motivate these private equity funds to deploy capital and the economy."

The portfolio manager also pointed out that the bill includes a 1% tax on corporate buybacks for most publicly-listed companies.

"There’s those that argue it doesn’t have a material impact on corporate earnings," he told host Stuart Varney. "I would argue otherwise."

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"I’ll tell you this: I think one of the biggest reasons for the rally today is there’s a scramble in corporate boardrooms to get those buybacks in now before that tax goes up," he said.

Fox News’ Tyler Olson and FOX Business’ Megan Henney contributed to this report.

Disney World prices surge 3,871% over 50 years, chart shows

Mon, 08 Aug 2022 16:47:30 GMT

Data from a chart posted online indicates that ticket prices for Walt Disney World have gone up by at least 3,871% since it first opened in 1971.

An animated chart posted on TikTok by the user piechartpirate shows the increases over the passage of time, showing how it greatly outpaces increases in wages, rent, and gas prices.

The chart not only shows the years that go by as the prices at the Orlando, Florida, attraction changed, it also notes when various financial crises occurred, such as the 1973 oil crisis, 2008 global financial crisis, and the COVID-19 pandemic. For almost the entire time, prices climbed upward, at steep rates.

The chart made one TikTok user nostalgic.

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"I remember going to Disney for spring break in 1989," they commented. "My FL resident ticket was $19."

Another user, however, noted that the market has supported the increases, with lines remaining long at Disney World despite the higher price of admission.

"Basic supply and demand," they said.

The account belongs to Sjoerd Tilmans of SJ Data Visualizations, a UK-based firm. The chart, which appears to have been posted in October 20121. Naturally, it does not account for price increases since it went up, and there have been reported increases for 2022 and already for single-day tickets for 2023.

Fox Business reached out to Disney for comment on the chart but they did not immediately respond.

The chart shows that prices began rising at a more drastic rate in the early 1980s. In an email to Fox Business, Tilmans explained why that could be the case.

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"One thing I found out later is that WDW changed their pricing structure in 1982, they stopped charging for the rides in that year," he said. He also noted that he posted a new version of the chart on Instagram that only starts with 1983.

The chart also does not indicate what the basis is for figures used to compare wages, rent, and gas prices. In an email to Fox Business, Tilmans said he based those amounts on "averages for the USA." He used gas prices from creditdonkey.com, rent prices from ipropertymanagement.com, and wages from the U.S. Social Security website at ssa.gov.

Palantir shares drop by 15% after lowering their expected revenue forcast

Mon, 08 Aug 2022 15:57:59 GMT

Palantir Technologies Inc lowered its annual revenue forecast to below market estimates after the data analytics software company reported a surprise quarterly loss on Monday, sending its shares down 15%.

The company had to temper its revenue forecast as the timing of some government contracts remained uncertain, Chief Executive Alexander Karp said, calling the uncertainty "frustrating."

The large size of the government awards and the long-drawn procurement procedure make the contracts so unpredictable, Chief Financial Officer David Glazer said. Meanwhile, the company also forecast third-quarter revenue below Street estimates.

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Palantir was co-founded by billionaire entrepreneur Peter Thiel in 2003 to help with U.S. counter-terrorism operations, but has since diversified to commercial business, and now derives almost half its sales from the private sector.

But the company's international business, which makes up roughly 40% of its sales, was hit by foreign exchange headwinds, Glazer said.

RBC Capital Markets Rishi Jaluria said it could be tough for Palantir to sell big deals with long sales cycles to corporations as businesses are increasingly scrutinizing their IT budgets amid macro uncertainty.

Palantir expects total revenue for the full year between $1.9 billion and $1.902 billion, or a growth of about 23%, compared with the 30% or more growth forecast earlier. Analysts had expected revenue of $1.96 billion.

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On an adjusted basis, the company lost 1 cent per share in the second quarter, which was in part due to Palantir's investments in SPACs, according to Glazer. Analysts on average had expected a profit of 3 cents per share, according to Refinitiv data.

Quarterly revenue rose 26% to $473 million.

Stuart Varney: This is what you get when you stick with capitalism

Mon, 08 Aug 2022 15:55:16 GMT

During his latest "My Take," "Varney & Co." host Stuart Varney discussed the greatness of the bull market that started 40 years ago this week, arguing this is what you get when you "stick with capitalism."

STUART VARNEY: Forty years ago this week, the great bull market began. What a run it’s been!

It was on August 12th. 1982, the Dow closed at 776.69.

For years, stock prices had gone nowhere. Investors were more interested in bonds. And why not? Triple "A" rated corporate paid more than 10%.

But then, things changed.

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Interest rates started to fall, and kept on falling. Inflation came down, and until recently, virtually disappeared. Newly created 401(k)s and IRA's pumped enormous amounts of new money into stocks.

And gradually, the market rallied. True there were gut-wrenching selloffs with the crash of '87, the financial crisis of '08 and the pandemic shock in 2020. But by January of this year, the Dow had moved to 36,799.65.

47 times higher than 40 years ago.

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I don't know whether the great bull run is over. But the landscape has changed.

Interest rates are going up.

Inflation has come back.

The Federal Reserve is going to stop printing money, and that’s not good for stocks.

And, like it or not, socialism, the exact opposite of prosperity, has made an unwelcome return...

But let’s not dwell on the negatives...we've all had a great run. One hundred million Americans have a stake in the stock market. And we are collectively much more prosperous than 40 years ago. That’s what you get when you stick with capitalism.

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SoftBank reports record $23B quarterly loss as tech downturn hits

Mon, 08 Aug 2022 13:51:46 GMT

Japanese technology investor SoftBank Group Corp. on Monday reported a record quarterly loss of more than $23 billion after its Vision Fund investments suffered from the global selloff in technology shares.

The April-June loss was about 1 1/2 times the previous record set just three months earlier in the January-March quarter.

The weak results reflect the fall in technology shares around the globe recently, sparked by interest-rate increases and China's crackdown on tech companies.

Shares of Uber Technologies Inc. and DoorDash Inc., two U.S. companies in which SoftBank has invested, fell more than 40% during the April-June quarter. SoftBank said its Vision Fund 1 has fully exited its position in Uber.

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SoftBank rushed to plow its money into tech startups last year, seeing new opportunities in businesses such as finance and health that were changing in the pandemic era. Chief Executive Masayoshi Son and his team invested $38 billion from SoftBank's Vision Fund 2 into 183 companies last year, according to SoftBank's filings.

On Monday, Mr. Son said he got overexcited during the period when tech valuations were booming. "When we were turning out big profits, I became somewhat delirious, and looking back at myself now, I am quite embarrassed and remorseful," he said.

In May, as the losses from those investments began to emerge, Mr. Son said he was switching to a defensive policy.

He said Monday that SoftBank's Vision Funds approved about $600 million in investments in the April-June quarter, down from a peak of $20.6 billion in the same quarter a year earlier. He said the caution would continue, even though the market's decline may make some companies a bargain.

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"Now seems like the perfect time to invest when the stock market is down so much, and I have the urge to do so, but if I act on it, we could suffer a blow that would be irreversible, and that is unacceptable," he said.

SoftBank said it turned some of its older investments into cash to shore up its finances. It said it raised $10.49 billion using its shares in Chinese e-commerce company Alibaba Group Holding Ltd. SoftBank used what it calls prepaid forward contracts, in which it gets cash upfront from its lenders and promises to settle the contract later either with cash or with Alibaba shares.

SoftBank reports its results in yen. The net loss in the April-June quarter was Yen3.16 trillion, equivalent to $23.4 billion at the current exchange rate. That compares with a net loss of Yen2.1 trillion in the January-March quarter. For SoftBank's full fiscal year ended March 31, it reported a loss of Yen1.71 trillion, a record annual figure, equivalent to $12.7 billion at the current rate.

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SoftBank's shares have been steady recently and rose 0.7% on Monday in Tokyo trading, which ended before the release of the results.

Papa John's John Schnatter says company has lost its way after abandoning 'conservative values'

Mon, 08 Aug 2022 13:50:34 GMT

Papa John's founder and ex-chairman John Schnatter had strong words for his former company, claiming that they have abandoned the "principles" he followed when he ran it, and that they have suffered as a result.

In an interview with the Right Side Broadcasting Network at CPAC in Dallas, Texas, last week, Schnatter said he "built the whole company on conservative values" that have since been ignored.

"I think they've really lost their way," Schnatter said. "It used to be an operational-driven company. Now it’s a lawyer, PR-driven company. They don’t run their company on principles and values."

Schnatter went on to claim that the pizza company's performance has taken a hit as a result.

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"They’re losing traffic, they’re losing customers. I think the traffic count’s less than what it was when I was there six years ago. Over 40% of the stores are losing money," he said.

Schnatter said that under his leadership, Papa John's – now known as "Papa Johns" – was rated by the American Customer Satisfaction Index as "the highest quality in the pizza category" 18 times in 19 years.

"They now are down with Little Caesar's," he said, taking a shot at a competing brand. "So the thing has really got away from them."

He added: "If you don’t have that quality, you don’t have that service, and you don’t have that culture, you’re asking for, you know, a bad day at the office."

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Schnatter, who is still a shareholder of the company, said that he "built the whole company on conservative values," which he said included "two of the most critical attributes: truth and God."

Schnatter stepped down as company chairman in 2018 after it was reported that he used the N-word during a conference call. Now he claims he was a victim of "cancel culture" and "had a giant target on my back" because he exemplified the American dream.

"We used to say the pledge of allegiance to the country before meetings. We ran our business on principles. We had the highest quality, we had the best service, we had the best culture, we were voted the best place to work in Kentucky," Schnatter said. "Papa John’s debunked every single element on the Left’s ideology. so unbeknownst to me I had a giant target on my back just by being the American dream and the folks around me living the American dream."

Fox Business reached out to Schnatter for additional comments and to Papa Johns for a response to Schnatter's claims, but neither immediately responded.

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The company has recently been distancing itself from Schnatter. In addition to rebranding as "Papa Johns" without the apostrophe, the company has changed its logo and introduced redesigned stores.

Pfizer agrees to $5.4B deal for Global Blood Therapeutics

Mon, 08 Aug 2022 11:17:46 GMT

Pfizer Inc. has agreed to buy Global Blood Therapeutics Inc. for $5.4 billion, in a deal that would give the big drugmaker a foothold in the treatment of sickle-cell disease.

Pfizer said Monday it would pay $68.50 a share in cash for Global Blood Therapeutics, which has one of the few approved treatments for sickle-cell disease. The Wall Street Journal reported Friday that the companies were in advanced talks.

The acquisition continues a string of deals for Pfizer, which is flush with cash from sales of its Covid-19 vaccine and drug. It has said it wants to add $25 billion in revenue from business-development moves like mergers and acquisitions by 2030.

Adding Global Blood Therapeutics would bolster Pfizer's rare-diseases business and help it realize a longtime goal of selling drugs to treat sickle cell, an inherited blood disorder that affects about 100,000 people in the U.S. and 20 million worldwide, including many who are Black.

In patients with the disease, red blood cells look like crescents or sickles, rather than a normal disc shape. Due to their shape, the cells don't move easily and can block blood flow, damage organs and lead to strokes.

Researchers have been trying to develop effective treatments, including gene therapies, but the disease has proven hard to treat. A handful of drugs are approved, but most target the complications of sickle-cell disease, rather than its underlying cause. A bone-marrow transplant is the only cure.

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New York-based Pfizer had tried to develop its own sickle-cell drug, but it failed.

In 2019, Global Blood Therapeutics won approval in the U.S. for a sickle-cell drug named Oxbryta. It has two other sickle-cell drugs in development.

"The deep market knowledge and scientific and clinical capabilities we have built over three decades in rare hematology will enable us to accelerate innovation for the sickle-cell disease community and bring these treatments to patients as quickly as possible," Pfizer Chief Executive Albert Bourla said.

Oxbryta produced $195 million in net sales last year for Global Blood Therapeutics, which is based in South San Francisco, Calif.

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If each of the three Global Blood Therapeutics drugs is approved, the franchise has multibillion-dollar sales potential, especially if Pfizer can fold them into its global commercial network and market them worldwide, according to analysts.

"Pfizer will broaden and amplify our impact for patients and further propel much needed innovation," Global Blood Therapeutics Chief Executive Ted Love said.

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The drugs could eventually face competition from gene therapies, however. Swiss drugmaker Novartis AG sells Adakveo, a treatment for pain crises in sickle-cell patients 16 years of age and older.

Pfizer's purchase, together with a recent agreement by Amgen Inc. to buy ChemoCentryx Inc., could help turn Wall Street sentiment on biotech shares. The former highfliers have slumped in recent months due to market turmoil, scientific setbacks and fear of antitrust scrutiny of combinations.

Senate Dems pass social spending, tax bill, working from home disparaged and more: Monday's 5 things to know

Mon, 08 Aug 2022 06:00:28 GMT

Here are five key things that could impact Monday's trading.

MAJOR WIN FOR DEMS: The Senate Sunday passed the Democrats' social spending and taxation bill after a marathon "vote-a-rama" session that lasted more than 15 hours, marking a major win for the Democratic agenda just over three months before Election Day.

Vice President Harris cast a tiebreaking vote to allow the legislation to pass 51-50.

"I mean, it's the largest package ever for climate, it deals with an energy policy to make sense for this country, reduces the cost of energy, reduces health care costs for millions of Americans, and does it in a way that reduces the deficit and has tax fairness in our code," Sen. Ben Cardin, D-Md., told Fox News Digital. "It’s a great day, and we’re very excited about it."

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"This is a night of triumph for them," Sen. Josh Hawley, R-Mo., told Fox News Digital. "Schumer has had the longest 50-50 Senate in history. And he has managed to get virtually all of their signature priorities through."

The passage of the bill is the culmination of more than a year of intra-party negotiations among Democrats trying to pass a party-line bill. They used a process called budget reconciliation, which allows them to get around the Senate filibuster, to do it.

But even avoiding the filibuster, Democrats still encountered a major hiccup toward the end of their effort to pass it. A drafting issue would have increased taxes on companies worth less than Democrats' intended $1 billion threshold if they were subsidiaries of a firm worth more than that amount.

Sen. John Thune, R-S.D., introduced an amendment to deal with the issue, which cost $35 billion. But his proposal would have been paid for by extending the state and local tax (SALT) deduction cap for one year. That would have complicated passage of the final bill, because many Northeast Democrats detest the SALT cap.

The Senate passed Thune's amendment. But it changed the way to pay for it by using an amendment from Sen. Mark Warner, D-Va., to replace the SALT cap with "a two-year extension of a so-called loss limitation policy." That amendment passed with Harris' help and cleared the way for final passage.

After the last-second drama, Senate Majority Leader Chuck Schumer, D-N.Y., touted the legislation as a major win for the U.S.

"I am confident the Inflation Reduction Act will endure as one of the defining legislative feats of the 21st century," he said.

Initially called "Build Back Better" at the start of talks last year and proposed to cost more than $3 trillion, party moderates like Sen. Joe Manchin, D-W.Va., pushed back on the massive spending. Manchin eventually broke off talks last December, to the frustration of party progressives and Schumer.

But Manchin agreed on a scaled-back version in recent days titled the "Inflation Reduction Act." Manchin lobbied fellow moderate Sen. Kyrsten Sinema, D-Ariz., to get on board, which she did Thursday after some minor changes.

‘SENSE OF BELONGING’: Author Malcolm Gladwell shared his thoughts on returning to the office during a recent appearance on the "Diary of a CEO" podcast.

The "Blink" and "Outliers" author told the host, Steven Bartlett that people should return to the office to regain a "sense of belonging."

"It’s very hard to feel necessary when you’re physically disconnected," Gladwell said. "As we face the battle that all organizations are facing now in getting people back into the office, it’s really hard to explain this core psychological truth, which is we want you to have a feeling of belonging and to feel necessary."

Gladwell acknowledged the hassle of coming to the office, but insisted it was not in employees’ best interest to work from home.

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"[I]f you’re just sitting in your pajamas in your bedroom, is that the work life you want to live?" Gladwell asked. "Don’t you want to feel part of something?"

Gladwell said he was frustrated with the inability of people in positions of leadership to effectively communicate to their employees the importance of returning to the office.

"If we don’t feel like we’re part of something important, what’s the point?" he said. "If it’s just a paycheck, then it’s like, what have you reduced your life to?"

A growing segment of the population has become accustomed to working from home since the new arrangement was first tried out on a grand scale during the COVID-19 pandemic. Now, according to some estimates, a majority of U.S. workers have cited remote work as a major factor in their job consideration.

Data from Employ Inc. in April found that 65% of workers said that remote work or work-from-home (WFH) options impacted their decision to accept or reject a job offer. As many as 40% of respondents said they would take lower pay if it meant working remotely.

BLS REPORTS ON JULY CPI, WHOLESALE INFLATION: On Wednesday at 8:30 a.m. ET, the Bureau of Labor Statistics is expected to say the consumer price index rose a slight 0.2% month-over-month in July. That’s down sharply from June’s 1.3% spike.

On a year-over-year basis, watch for prices to soar 8.7% in July, easing back from June’s much hotter-than-expected 9.1% surge, the highest inflation rate in almost 41 years (since November 1981).

Factoring out volatile food and energy costs, the core consumer price index is anticipated to rise 0.5%, backing off a one-year high of 0.7% in June. Annually, core CPI is forecast to spike 6.1% in July. That would be the highest since April and snap a 3-month streak of slowing growth after March’s 6.5% spike, the highest in almost 40 years (since August 1982).

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On Thursday, BLS will report wholesale inflation data for July. The producer price index is expected to rise 0.3% month-over-month according to Refinitiv forecasts, well below June’s 1.1% spike and a record 1.6% surge in March (series goes back to December 2009).

Year-over-year, prices paid by wholesalers are anticipated to jump 10.4% in July, trailing June’s hotter-than-expected 11.3% surge which was the second highest on record after an 11.6% spike in March (the final demand index goes back to November 2010).

Exclude food and energy costs, core producer prices are anticipated to rise 0.4% monthly in July, matching June’s increase. Year-over-year, look for core PPI to jump 7.7% in July, the fourth month of slowing growth after a record 9.6% surge in March (data go back to April 2011).

EARNINGS WINDING DOWN: The pace of second-quarter earnings season slows this week, with only one Dow component (Disney on Wednesday) and 23 members of the S&P 500 scheduled to post results.

These include handful of key media names, including News Corp. on Monday afternoon, with Fox Corp. and Disney reporting on Wednesday.

Close to 90% of the companies in the S&P 500 have reported April-through-June results, with earnings and revenue numbers coming in far ahead of lowered expectations.

JOBS REPORT: U.S. stocks finished Friday close to flat after a surprisingly strong jobs report cast doubt on the Federal Reserve being able to shift away from interest-rate increases anytime soon.

Investors had come to widely believe that the Fed could pivot to cutting interest rates as early as the first half of 2023, given signs of cooling activity across the economy. That would have been a balm for markets, which have tumbled this year as the Fed has swiftly raised interest rates to combat stubbornly high inflation.

But Friday's data showed the labor market was doing anything but cooling. The labor market added 528,000 jobs in July -- more than doubling what analysts had estimated and returning payrolls to their pre-pandemic level.

Meanwhile, the unemployment rate fell to 3.5%, near historic lows. That left investors with a mixed picture: A key pillar of the economy remains strong, which should be good news for markets.

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But strong data means the rate increases that have sent stock and bond prices lower this year aren't likely to go away anytime soon. It also raises questions about whether stocks can continue their recent comeback.

Warren Buffett's Berkshire reports $44B loss as value of investments falls

Sun, 07 Aug 2022 06:53:51 GMT

Warren Buffett’s Berkshire Hathaway reported a $43.76 billion loss in the second quarter as the value of the company's investments plummeted, in what was a tumultuous quarter for the markets.

Berkshire said Saturday that a largely unrealized $53 billion decline in the value of its investments forced it to report a loss of nearly $44 billion, or $29,754 per Class A share. That is down from $28.1 billion, or $18,488 per Class A share, a year ago.

Buffett has long said he believes Berkshire’s operating earnings are a better measure of the company’s performance because they exclude investment gains and losses, which can vary widely quarter to quarter.

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By that measure, Berkshire’s earnings were up significantly to $9.28 billion, or $6,312.49 per Class A share from last year’s $6.69 billion, or $4,399.92 per Class A share.

Analysts covering Berkshire expected the company to report operating earnings per Class A share of $4,741.64.

Berkshire said its revenue grew more than 10% to $76.2 billion in the quarter as many of its businesses increased prices.

Berkshire's many companies still performed well, suggesting the overall economy is weathering the pressure from inflation and rising interest rates.

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It was a rough quarter for shares of three of Berkshire's biggest investments — Apple, American Express and Bank of America.

They all fell significantly during the second quarter, but rebounded during the third quarter, boosting the value of Berkshire’s portfolio since the end of the quarter.

Besides investments, Berkshire owns more than 90 companies outright. Berkshire said operating profits were up at all of its major units, including its insurance companies, major utilities and BNSF railroad.

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Berkshire did report a $487 million pretax underwriting loss at Geico, which reported bigger auto claims losses because of the soaring value of vehicles and ongoing shortages of car parts.

Berkshire is often seen as a microcosm of the broader economy because its collection of manufacturing, retail, insurance, utility and service businesses touches so many different industries, and Berkshire’s profits tend to follow whatever the economy is doing.

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Berkshire said it was sitting on $105.4 billion cash at the end of the quarter, which was little changed from the $106 billion it reported at the end of the first quarter.

The Associated Press contributed to this report.

Elon Musk's real beef with Twitter revealed

Fri, 05 Aug 2022 21:50:09 GMT

Elon Musk accused Twitter of fraud in a countersuit over his aborted $44 billion deal for the social media company, which he claimed held back necessary information and misled his team about the true size of its user base.

The countersuit by the billionaire and Tesla CEO alleges that Twitter committed fraud, breach of contract and violation of a securities law in Texas, where Musk lives.

Musk's counterclaims were filed confidentially last week and unsealed in a filing late Thursday at the Delaware Chancery Court.

Musk offered to buy Twitter earlier this year, then tried to back out of the deal by claiming the social platform was infested with a larger numbers of "spam bots" and fake accounts than Twitter had disclosed.

Twitter sued to force him to complete the acquisition. Musk responded by filing his countersuit.

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Musk's attorneys argue in the countersuit that Twitter "misrepresentations or omissions" distorted the company’s value and caused Musk to agree in April to buy it at an inflated price. They said Twitter’s own disclosures revealed that it has 65 million fewer "monetizable daily active users," who can be shown digital ads, than the 238 million that Twitter claims.

The filing also said most of Twitter's ads are shown only to a sliver of the company's user base.

Musk's team also accused Twitter of making too many major changes in recent months without consulting Musk, including personnel decisions and allegedly disobeying social media restrictions imposed by the government of India, which is Twitter's third largest market. Musk had pledged to make Twitter a haven for free speech but has also said it must comply with the local laws where it operates.

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In an unexpected twist, Twitter filed its response denying Musk's accusations before Musk’s own counterclaims surfaced.

Twitter called Musk’s reasoning "a story, imagined in an effort to escape a merger agreement that Musk no longer found attractive." The company, in particular, took issue with Musk's estimate of fake accounts, saying the analysis relied on a "generic web tool" that designated Musk's own Twitter account as a likely bot.

"The result is a distortion that Musk is hoping will nonetheless make waves," Twitter's response said.

The case is scheduled to go to trial on October 17. The Delaware court handles many high-profile disputes between businesses, such as Twitter, that are incorporated there.

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