Elon Musk: Twitter deal ‘on hold for now’

Kevin Chen

LONDON (AP) — Elon Musk said Friday that his plans to buy Twitter for $44 billion are “on hold” as he tries to pinpoint the exact number of spam and fake accounts on the social media platform is another turning point in signs of internal turmoil regarding the proposed acquisition.

Musk has been vocal about his desire to clean up Twitter’s problems with “spam bots” that mimic real people, and appears to question whether the company is underreporting the issues.

In a tweet, the Tesla billionaire linked to a May 2 Reuters report on Twitter’s quarterly report estimating that fake or spam accounts were “monetizable” in the company’s first quarter. of daily active users” accounts for less than 5%.

“The Twitter deal is on hold pending details in favor of calculating that spam/fake accounts do represent less than 5% of users,” Musk said, skeptical that the number of fake accounts is so low.

It’s unclear if the issue will be a deal breaker. Musk later tweeted that he was “still committed to the acquisition.”

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

The problem of fake accounts on Twitter is no secret.

In a quarterly filing with the Securities and Exchange Commission, even Twitter doubted the number of its bot accounts was correct, acknowledging that the estimate was likely low. “We exercised significant judgement in making this decision and therefore our estimates of fake or spam accounts may not accurately reflect the actual number of such accounts, and the actual number of fake or spam accounts may be higher than our estimates,” the document said.

A review of Twitter’s filings with the Securities and Exchange Commission shows that estimates of spam bot accounts and similar language expressing doubts have been appearing in Twitter’s quarterly and annual reports for at least two years, long before Musk raised the issue. Before proposing, it would have been known to him and his advisors.

Shares of Twitter and Tesla both moved sharply in opposite directions on Friday, with Twitter’s stock down nearly 6% and Tesla’s stock, which Musk had proposed to fund the Twitter deal, traded in pre-market trading. rose nearly 7%.

Investors have had to weigh the legal issues facing Musk and the potential distraction of the world’s most valuable automaker by acquiring Twitter. The proposed deal continues to weigh on Tesla’s shares, which have fallen 16% this week.

The sharp rise in Tesla shares ahead of the opening bell on Friday underscored doubts over whether Twitter would be acquired.

Musk has sold more than $8 billion worth of Tesla stock to fund the acquisition.

Musk had initially pledged to borrow $12.5 billion in Tesla stock as collateral to buy Twitter. He will also borrow $13 billion from the bank and hold $21 billion in Tesla stock.

Last week, Musk stepped up his equity investment in Twitter, pledging more than $7 billion in investments that include Silicon Valley heavyweights like Oracle co-founder Larry Ellison.

Funding from new investors brought the amount borrowed for the value of Tesla stock down to $6.25 billion, the filings show. Tesla’s stake could increase from $21 billion to $27.25 billion.

Wedbush analyst Dan Ives, who follows Tesla and Twitter, said Musk’s “weird” tweets will lead Wall Street to either think the deal may fall apart or that Musk is trying to negotiate lower prices The deal price, or he just forgoes processing the $1 billion fine.

“Many would see this as Musk using this Twitter file/spam account as a way to get out of the deal in a rapidly changing market,” Ives wrote.

He added that Musk’s use of tweets rather than financial documents to announce the news was disturbing and “turned the whole deal into a circus show with many questions and no specifics about the future path of the deal. Answer.”

Musk’s tweet came a day after the social media company fired two senior executives. Twitter said the company is suspending most hiring except for key roles and “cutting non-labor costs to keep us accountable and efficient.”

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

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Associated Press business writer Michelle Chapman in New York contributed to this report.

US News.

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