Elon Musk said on Friday that his planned purchase of Twitter for 44 billion dollars is “temporarily paused” while waiting for details about spam and fake accounts on the social media platform, another turn in the middle of signs of internal turbulence over the proposed acquisition.
In a tweet, the Tesla billionaire linked to a May 2 Reuters story referring to a financial report from Twitter that estimated fake or spam accounts accounted for less than 5% of the company’s “income-active daily active users” in the first quarter.
“The Twitter business is temporarily paused pending details that support estimates that spam / fake accounts actually represent less than 5% of users,” Musk said, indicating that he is skeptical that the number of fake accounts is so low.
A short time later on Friday morning, Musk tweeted that he is still involved in the purchase.
It was not clear if the problem could weaken the deal. Shares on both Twitter and Tesla swung sharply in opposite directions, with Twitter’s stock falling 17% to $ 37.20 before trading opened in the US, and Tesla, which Musk had suggested using to help fund the Twitter deal, jumping by 5%. Twitter’s share price is now well below the $ 54.20 per share that Musk agreed to pay for the company.
Twitters vd Parag Agarwal twittrade Friday afternoon that “Although I expect the deal to end, we must be prepared for all scenarios and always do what is right for Twitter.”
When he called Musk’s tweet “bizarre,” Wedbush Securities analyst Dan Ives said, “The consequences of this tweet will send this Twitter circus show to a horror show on Friday, the 13th, as the street will now see this deal as 1) likely to collapse, 2) Musk is negotiating a lower price, or 3) Musk is simply leaving the deal with a $ 1 billion dissolution fee. ”
Twitter revealed its results on bot and spam accounts in one archiving for its result for the first quarter. The company said: “We have conducted an internal audit of a sample of accounts and estimate that the average of fake accounts or spam accounts during the first quarter of 2022 represented less than 5% of our accounts. [monetizable daily active users] during the quarter. “
Twitter added that it was possible that “the actual number of fake accounts or spam accounts may be higher than we have estimated.”
Academic researchers in 2017 attempted a census of all Twitter’s active English-language accounts and estimated that up to 15% were bots of some kind. Emilio Ferrara, a professor at the University of Southern California who helped lead the research, said on Friday that Twitter has become better at detecting and constantly removing spam accounts – but they are being added to the platform all the time.
“It’s really hard to determine the number overall,” he said. “It’s not possible – if you are not Twitter – to make a comprehensive estimate of the user base.”
Investors have had to weigh legal issues for Musk, as well as the possibility that the acquisition of Twitter could be a distraction from running the world’s most valuable carmaker. Musk has too review is drawn for his tendency to disclose so-called “material information” – information that may affect a listed company’s share price – via Twitter rather than through a regulatory notification.
“The nature of Musk that creates so much uncertainty in a tweet (and not a report) is very worrying to us,” Ives said in a statement to investors.
Musk has already sold more than $ 8 billion of its Tesla shares to fund the Twitter purchase. Originally, he had committed to borrow $ 12.5 billion with Tesla shares as collateral. He would borrow $ 13 billion more from banks and put up $ 21 billion in Tesla shares that would go to banks in exchange for cash when the deal closes.
Last week, Musk announced more than $ 7 billion in commitments from investors that would reduce the number of Tesla shares he would need to provide as collateral. Tesla’s share price rose nearly 6% on Friday to close at $ 769.59, while Twitter fell about 10% to $ 40.72.
Musk’s tweet comes one day after the social media company. Twitter said the company is pausing most jobs, except for critical roles, and “reducing non-labor costs to ensure we are responsible and efficient.”
In a memo sent to employees and confirmed by Twitter, CEO Parag Agrawal said the company has not reached milestones for growth and revenue after the company began investing “aggressively” to expand its user base and revenue.