Elon Musk: Twitter deal ‘temporarily on hold’

DETROIT (AP) – Elon Musk Twitter said Friday that its plan to buy Twitter is “temporarily on hold” as it tries to pinpoint the exact number of spam and fake accounts on the social media platform, another twist amid signs of a proposed $ 44 billion acquisition of Turmoil.

Musk has been vocal about his desire to clean up Twitter’s problem with “spam bots” that mimic real people and appear to question whether the company was underreporting them.

“Twitter Deal temporarily on hold Pending details supporting calculation that spam / fake accounts do indeed represent less than 5% of users, “Musk said, indicating he is skeptical that the number of inauthentic accounts is that low.

It wasn’t clear if the issue could scuttle the deal. Musk later tweeted that he was “still committed to acquisition. ”

Neither Twitter nor Musk responded Friday to requests for comment.

The problem of fake accounts on Twitter is not a secret.

In its quarterly filing with the SEC, even Twitter doubted that its count of bot accounts was accurate, conceding that the estimate might be lower. “In making this determination, we applied significant judgment, so our estimation of false or spam accounts may not accurately represent the actual number of such accounts, and the actual number of false or spam accounts could be higher than we have estimated,” the filing says.

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

Sara Silver, a professor of business journalism and financial communication at Quinnipiac University, said it appears Musk is using a number of spam accounts as a pretext to back out the deal as it is something he is well aware of.

“To claim that this is the reason that he is putting a pause on the deal, it is not credible,” Silver said. “This is not a new issue for him. It’s not just entering his consciousness now. “

Stock in both Twitter and Tesla swung sharply in the opposite direction Friday, with Twitter’s stock falling nearly 10% and shares of Tesla, which Musk had offered to use to help fund the Twitter deal, jumping nearly 6%.

But the shares of Tesla, which Musk has been selling to fund some acquisition of Twitter, have tumbled since it was revealed the social platform had become a Musk target.

Those shares have lost a quarter of their value in the last month, and have fallen from about $ 1,150 in early April when Musk confirmed he had taken a huge stake in Twitter, to about $ 762 Friday.

“So it becomes much more expensive for him to buy this company using his Tesla shares,” Silver said.

Musk’s net worth, estimated by Forbes earlier this week at $ 240 billion, has dropped to $ 223 billion as of Friday.

Tesla shares may benefit from Twitter bot accounts over the years as well. A University of Maryland researcher recently concluded that such bots have been used to generate thousands of positive tweets about Tesla, likely buoying its stock in years when it was under pressure.

Neither Tesla nor its supporters have taken responsibility for those bots.

Investors have to weigh legal troubles For Musk, acquiring Twitter as well as the possibility that Twitter could be a distraction from the world’s most valuable automaker. The proposed deal will continue for pressure shares of Tesla, which had already fallen 16% this week.

The sharp jump in the price of Tesla shares ahead of the opening bell Friday signaling doubts that the acquisition of Twitter will take place.

Musk has already sold more than $ 8 billion Worth of his Tesla shares to finance the purchase.

Originally Musk had committed to borrowing $ 12.5 billion with Tesla stock as collateral to buy Twitter. He would also borrow $ 13 billion from banks and put up $ 21 billion in Tesla equity.

Last week, Musk strengthened its offer of equity stake in Twitter for commitments with more than $ 7 billion from a diverse group of investors including Silicon Valley heavy hitters like Oracle co-founder Larry Ellison.

Money from the new investors cuts the amount borrowed on the value of Tesla stock to $ 6.25 billion, according to the filing. The Tesla equity share could go from $ 21 billion to $ 27.25 billion.

Wedbush analyst Dan Ives, who follows both Tesla and Twitter, said Musk’s “bizarre” tweet will lead to Wall Street either thinking the deal is falling apart, Musk is trying to negotiate a lower deal price, or he’s simply walking away from the deal with a $ 1 billion penalty.

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

He added that Musk’s use of Twitter was troubling the announcement rather than making a financial filing and “sends this whole deal into a circus show with many questions and no concrete answers as to the way this deal is going.”

Musk’s tweet comes a day after the social media company fired two of its top managersGeneral Chat Chat Lounge Twitter said the company is most hiring, except for critical roles, and is “pulling back on non-labor costs to ensure we are being responsible and efficient.”

In a memo sent to employees and confirmed by Twitter, CEO Parag Agrawal said the company has not hit growth and revenue milestones after the company started investing “aggressively” to expand its user base and revenue.


Chan reported from London. AP Business Writer Michelle Chapman in New York contributed to this report.

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