Elon Musk says Twitter deal is ‘temporarily suspended’

LONDON — Elon Musk said on Friday his plan to buy Twitter was “temporarily on hold” as he tries to determine the exact number of spam and fake accounts on the social media platform, another twist amid signs of turmoil over proposed $44 billion (US). ) acquisition.

Musk expressed his desire to fix Twitter’s problem with “spam bots” that impersonate real people and seemed to wonder if the company was underreporting them.

In a tweet, the Tesla billionaire linked a May 2 Reuters article about a quarterly Twitter report that estimated that fake or spam accounts accounted for less than 5% of the company’s “monetizable daily active users.” in the first trimester.

“The Twitter agreement is temporarily on hold pending details supporting the calculation that spam/fake accounts indeed represent less than 5% of users,” Musk said, indicating he was skeptical of the number of accounts. not authentic.

It was unclear whether the issue could cause the deal to fall through. Musk later tweeted that he was “still committed to the acquisition.”

Neither Twitter nor Musk responded to requests for comment early Friday.

Elon Musk said on Friday his planned $44 billion purchase of Twitter was “temporarily on hold” pending details of spam and fake accounts on the social media platform, another twist amid signs of unrest internal regarding the proposed acquisition. (May 13 / THE ASSOCIATED PRESS)

The issue of fake accounts on Twitter is not secret.

In its quarterly filing with the SEC, even Twitter doubted its bot account count was correct, admitting the estimate may be low. “In making this decision, we exercised significant judgment, so our estimate of fake or spam accounts may not accurately represent the actual number of such accounts, and the actual number of fake or spam accounts may be higher. at what we have estimated,” the filing said. said.

A review of Twitter’s filings with the U.S. Securities and Exchange Commission shows that the estimate of spambot accounts and similar statements expressing doubts about it have appeared in Twitter’s quarterly and annual reports for at least two years. years, long before Musk made his bid and would be known to him and his advisers.

Shares of Twitter and Tesla swung sharply in opposite directions on Friday, with shares of Twitter falling nearly 6% and shares of Tesla, which Musk had offered to use to help fund the Twitter deal, making a jump of nearly 7% in trading before the opening bell.

Investors had to weigh legal issues for Musk, as well as the possibility that the Twitter acquisition could be a distraction from running the world’s most valuable automaker. The proposed deal continued to pressure Tesla shares, which had already fallen 16% this week.

The sharp rise in the price of Tesla shares before the opening bell on Friday highlighted growing doubts about the completion of the Twitter acquisition.

Musk has already sold more than $8 billion of his Tesla stock to fund the purchase.

Originally, Musk pledged to borrow $12.5 billion (US) with Tesla stock as collateral to buy Twitter. It would also borrow $13 billion (US) from banks and invest $21 billion (US) in Tesla stock.

Musk last week boosted stake in his Twitter offering with commitments of more than $7 billion (US) from a diverse group of investors, including Silicon Valley heavyweights like the co-founder from Oracle, Larry Ellison.

The money from the new investors reduces the amount borrowed against Tesla’s stock value to $6.25 billion (US), according to the filing. Tesla’s equity share could increase from $21 billion (US) to $27.25 billion (US).

Wedbush analyst Dan Ives, who follows both Tesla and Twitter, said Musk’s ‘weird’ tweet would lead Wall Street to think the deal is likely falling apart, Musk tries to negotiate a lower price, or he simply walks away from facing a $1 billion fine.

“Many will see this as Musk using these Twitter drop/spam accounts as a way out of this deal in a changing market,” Ives wrote.

He added that Musk’s use of Twitter rather than a financial record to make the announcement was troubling and “sends this whole deal into a circus spectacle with many questions and no concrete answers as to a way forward. for this deal.”

Musk’s tweet comes a day after the social media company fired two of its top executives. Twitter said the company is suspending most hiring, except for critical positions, and “reducing non-salary costs to ensure we are accountable and efficient.”

In a memo sent to employees and confirmed by Twitter, CEO Parag Agrawal said the company fell short of growth and revenue milestones after the company began “aggressively” investing to expand its user base. and its income.

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