in , ,

Elon Musk: ‘Twitter deal temporarily on Hold’

Elon Musk said Friday that his $44 billion US takeover of Twitter is “temporarily on pause” seeking information on spam and phony accounts on the social media network, adding to evidence of internal conflict over the proposed deal. Musk seemed to query if Twitter was underreporting “spambots” that imitate actual people. Musk has been outspoken about his desire to clean up Twitter’s issue with “spambots” that imitate real people.

In a tweet, the Tesla billionaire linked to a Reuters piece dated May 2, citing a Twitter financial filing that indicated fraudulent or spam accounts accounted for less than 5% of the company’s “monetizable daily active users” in the first quarter. “Twitter agreement on hold temporarily for details supporting computation that spam/fake accounts do actually comprise fewer than 5% of users,” Musk stated in his tweet, implying that he doubts the figure.

It was unclear if the problem would jeopardize the agreement. Musk subsequently said he’s “still committed to acquisition” in a tweet. Early Friday, neither Twitter nor Musk replied to calls for comment. The problem of phony Twitter accounts is well-known. Even Twitter expressed doubts about its bot account count in a quarterly statement with the Securities and Exchange Commission, admitting that the estimate may be low.

“Because we used substantial judgment in reaching this assessment, our estimate of false or spam accounts may not correctly reflect the real number of such accounts, and the actual number of false or spam accounts may be larger than we have estimated,” according to the filing.

According to an examination of Twitter’s SEC filings, the estimate of spam-bot accounts, as well as comparable wording expressing questions about it, have been in Twitter’s quarterly and annual reports for at least two years, long before Musk made his offer and would have been known to him and his advisers.

Twitter deal impacting Tesla

Both Twitter and Tesla’s stock swung drastically in opposing ways on Friday, with Twitter’s stock plummeting almost 10% and Tesla’s stock, which Musk had suggested using to help finance the Twitter transaction, rising about 7% in pre-market trade. Investors have had to evaluate Musk’s legal issues against the potential that owning Twitter would be a diversion from operating the world’s most valuable automobile.

The planned merger continued to put pressure on Tesla’s stock, which had already dropped 16% this week. Musk agreed to pay $54.20 per share for Twitter. The price of a share is now hovering around $40 as of Friday morning. Tesla’s stock price jumped sharply before the opening bell on Friday, signaling growing reservations about the purchase of Twitter.

To fund the transaction, Musk has already sold more than $8 billion worth of Tesla stock. Musk had originally agreed to borrow $12.5 billion and use Tesla shares as security to purchase Twitter. He would also take out a $13 billion bank loan and put up $21 billion in Tesla stock.

Last week, Musk bolstered his Twitter bid with more than $7 billion in promises from a wide collection of investors, including Silicon Valley heavyweights like Oracle co-founder Larry Ellison. According to the filing, money from new investors reduces the amount borrowed on the value of Tesla shares to $6.25 billion. Tesla’s stock might rise from $21 billion to $27.25 billion in value.

Wedbush analyst Dan Ives, who watches both Tesla and Twitter, believes Musk’s “bizarre” statement will cause Wall Street to believe the transaction is going to fall apart, Musk is seeking to negotiate a lower purchase price, or Musk is just walking away with a $1 billion penalty.

“Many will see this as Musk using the Twitter filing/spam accounts [reason] to get out of this purchase in a rapidly changing market,” Ives said.

He went on to say that Musk’s decision to make the news through Twitter rather of a financial filing was concerning and that it “turns this entire thing into a circus performance with many doubts and no firm answers as to the direction of this acquisition moving forward.”

Musk’s comment came only one day after Facebook sacked two of its top executives. Twitter said it is “cutting down on non-labor expenditures to ensure we are being responsible and efficient” and is delaying most recruiting, save for crucial areas. CEO Parag Agrawal stated in a note addressed to workers and acknowledged by Twitter that the business has not met growth and revenue targets since investing “aggressively” to develop its user base and income.

Source: CBC News

What do you think?

Written by Alex Bruno

Alex is a writer with a passion for space exploration and a penchant for satirical commentary. He has written extensively on the latest discoveries in astronomy and astrophysics, as well as the ongoing efforts to explore our solar system and beyond. In addition to his space-related work, Alex is also known for his satirical writing, which often takes a humorous and irreverent look at contemporary issues and events. His unique blend of science and humor has earned him a dedicated following and numerous accolades. When he's not writing, Alex can often be found stargazing with his telescope or honing his comedic skills at local open mic nights.

Leave a Reply

Your email address will not be published. Required fields are marked *

Elon Musk slams US President and Trump: “Joe Biden’s Mistake Is…”, ‘Trump Shouldn’t run for President in 2024’

NASA’s Space Telescope captures First-ever photo of a massive black hole at the center of our Galaxy