Elon Musk has paused his Twitter takeover over concerns about the number of spam and fake accounts on the social media platform, raising new doubts about whether the Tesla chief executive will close the deal. $44 billion or not.
The businessman announced the move in an announcement on Twitter on Friday, sharing a link to a Reuters news story this month, suggesting that the number of fake accounts on the site accounts for less than 5% of its 229 million users.
The statement immediately hit Twitter’s share price, with shares falling 19.7% to $36.23 in pre-US trading. Musk then continued with an additional tweet that he was “still committed to acquisition”.
Twitter suspends agreement temporarily pending details that aid in calculations that spam/fake accounts actually represent less than 5% of usershttps://t.co/Y2t0QMuuyn
– Elon Musk (@elonmusk) May 13, 2022
Twitter is now trading at a 33% discount to $54.20 per share, which Musk agreed to pay in mid-April, signaling that investors don’t believe a deal is going anywhere. near that price point and may not happen at all.
The suspicion raised by Musk’s tweet is the latest example of how swirling in it Transactions come togetherthis even resulted in Musk giving up his right to do due diligence while negotiating terms.
Twitter and Musk did not immediately respond to requests for comment.
Tesla shares, which have fallen 33% since Musk tweeted that he was seriously thinking about buying the social networking platform in late March, were up nearly 6% in pre-New York trading.
The legal validity of his notice is unknown. Musk has previously said that one of his priorities for the platform is “beating the spam bots or trying to die” and authenticating human accounts.
In Twitter’s first quarter results, the company said less than 5 percent among its monetized daily active users are fake or spam accounts.
“In making this decision, we applied a material judgment, so our estimates of fake or spam accounts may not be an accurate representation of the actual number of such accounts. and the actual number of spam or false accounts may be higher than we estimate,” Twitter said in the results.
Musk’s move comes just a day after Twitter announced freeze recruitment immediately, cost-cutting measures and the departure of two senior leaders. The company has faced long-term pressure from investors over slowing growth relative to rivals like Meta and TikTok.
The billionaire’s acquisition of Twitter sent shockwaves through the tech and financial worlds, though many speculated that Musk wasn’t serious about the deal or that he would eventually walk away. The Tesla chief agreed to pay a $1 billion break-out fee if he reneges on the deal.
Daniel Ives, strategist at Wedbush Securities, wrote in an analyst note: “The street will view this deal as 1) likely to collapse, 2) Musk negotiating for a lower deal price, or 3) Musk simply walked out of the deal with a $1 billion Parting Fee.”
