If shareholders believe this, they can do a variety of things such as sell the stock (smaller holders), or demand answers from leadership that go beyond "Yeah, we're secure" (bigger holders such as Saudi Arabia).
Mudge also raises a number of allegations not pertaining to bots, including that Twitter has deliberately failed to abide by the terms of a federal consent decree. If proven out, that fact alone would constitute material adverse affect.
Not the bot complaints, anyway, because "failed to properly estimate the number of bots on its platform" has been covered off by Twitter's consistent "this is how we estimate by sampling, it's a finger in the air guess, could be right, could be miles off, there's no standard methodology for this" stance in their SEC filings since 2013 (which no-one has questioned until now, mind.)
Anything Elon or crypto related is still being spammed heavily with giveaway/impersonation bots. Nothing has changed. The spam/bot problem is as bad now as it has ever been, and likely is worse than assumed, because it includes not just obvious spam accounts, but legit accounts that have been taken over by spammers or repurposed for spamming. So there is a % of accounts which are obvious bots and than another % accounts that exhibit bot-like behavior. Given how much time Elon spends on twitter and his first-hand experience with scammers using his name and spamming his comments, I think his assessment is probably more accurate compared to what twitter is claiming.
Pop legal quiz - does "waving due diligence rights" during an acquisition remove the other party's liability for fraud they've committed against the prospective buyer?
Musk literally tweeted about the « bot problem » on Twitter before the acquisition.
What fraud though?
If Mudge's allegations are true that Twitter has been defrauding the public in their reporting, failing to abide by the terms of a federal consent decree, and generally turning a blind eye to real problems to prop up their image, then "waived due diligence" or not, Musk has an out from the acquisition, and cause for a significant tort claim.
"Zatko was fired by Twitter in January and claims that this was retaliation for his refusal to stay quiet about the company’s vulnerabilities. Last month, he filed a complaint with the Securities and Exchange Commission (SEC) that accuses Twitter of deceiving shareholders and violating an agreement it made with the Federal Trade Commission (FTC) to uphold certain security standards. His complaints, totaling more than 200 pages, were obtained by CNN and The Washington Post and published in redacted form this morning."
What a bombshell! Maybe Elon Musk's complaints about Twitter have more merit than anyone expected.
What might the SEC and shareholders do in response?