Elon Musk: Twitter deal ‘temporarily suspended’

London (AFP) – Elon Musk On Friday, he said his plan to buy Twitter for $44 billion is “temporarily on hold” as he tries to determine the exact number of fake accounts and spam on the social media platform, another development amid signs of internal turmoil over the proposed acquisition.

Musk has been vocal about his desire to get rid of Twitter’s issue with “spam bots” that mimic real people and appears to question whether the company is under-reporting it.

In a tweet, the billionaire linked Tesla to a Reuters story from May 2 about a quarterly report from Twitter estimating that false accounts or spam made up less than 5% of the company’s “monetable daily active users” in the first quarter.

“Twitter Deal temporarily on hold Pending details supporting the account that fake/fake accounts actually account for less than 5% of users,” Musk said, noting his suspicion that the number of non-genuine accounts is too low.

It was not clear if the issue might spoil the deal. Musk later tweeted, “Still Committed to the acquisition. ”

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

The topic of fake accounts on Twitter is no secret.

In its quarterly filing with the Securities and Exchange Commission, Twitter doubted that the number of bot accounts was correct, acknowledging that the estimate may be understated. “In making this decision, we applied significant judgment, so our estimate of miscalculations or unwanted may not accurately represent the actual number of such accounts, and the actual number of miscalculations or unwanted may be higher than we estimated,” he says.

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A review of Twitter’s filings with the US Securities and Exchange Commission shows that an estimate of spam accounts and similar language expressing skepticism has been in Twitter’s quarterly and annual reports for at least two years, long before Musk made his presentation, known to him and his advisors.

Shares in both Twitter and Tesla swung sharply in opposite directions on Friday, with Twitter shares down nearly 6% and Tesla shares, which Musk suggested using to help fund the Twitter deal, jumping nearly 7% in trading before the opening bell .

Investors had to weigh legal problems For Musk, plus the possibility of acquiring Twitter is a distraction from running the world’s most valuable automaker. The proposed deal continued to put pressure on Tesla shares, which are already down 16% this week.

The sharp jump in Tesla stock prices before the opening bell on Friday highlighted growing doubts about the Twitter acquisition.

Musk has already sold over $8 billion The value of his shares in Tesla to fund the purchase.

Originally, Musk committed to borrowing $12.5 billion of Tesla stock as collateral for the purchase of Twitter. It will also borrow $13 billion from banks and float $21 billion in Tesla stock.

Last week, Musk boosted the equity stake in his Twitter offering with commitments of more than $7 billion from a variety of investors including Silicon Valley hitters like Oracle co-founder Larry Ellison.

Funds from new investors reduce the amount borrowed from the value of Tesla’s stock to $6.25 billion, according to the filing. Tesla’s stake could rise from $21 billion to $27.25 billion.

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Wedbush analyst Dan Ives, who tracks both Tesla and Twitter, said Musk’s “weird” tweet would either lead Wall Street to believe the deal was likely to collapse, or Musk would try to negotiate a lower price for the deal, or he would simply walk away from doing business with A fine of $1 billion.

“Many will see this as a catcher using these Twitter deposit/spam accounts as a way to get out of this trade in a wildly changing market,” Ives wrote.

He added that Musk’s use of Twitter in place of a financial deposit to advertise was annoying and “sends this entire deal to a circus show with many questions and no definitive answers regarding the future course of this deal.”

Musk’s tweet comes a day after the social media company fired two of its top managers. Twitter said the company is temporarily halting most hiring, except for critical roles, and is “stepping back on non-labor costs to ensure our responsibility and efficiency.”

In a note sent to employees and confirmed by Twitter, CEO Parag Agrawal said the company had yet to generate growth and revenue after the company began investing “vigorously” to expand its user base and revenue.

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Author Michelle Chapman, a staff writer for the Associated Press in New York, contributed to this report.

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