Why Elon Musk Decided To Put His Twitter Purchase ‘Soak’

Elon Musk said the $44 billion deal to buy Twitter is on hold, after questioning the proportion of fake or spam accounts on the social media platform.

He said he awaits information “that confirms the calculation that fake/spam accounts actually represent less than 5% of users”.

Musk says he is concerned about how to clean up these accounts, which share automated and serial content, from the social network.

However, analysts speculate that he could be trying to renegotiate the price or even pull back from the acquisition.

Following Musk’s tweet, Twitter’s share price dropped by as much as 25% in pre-opening trades.

Shortly after, he used the platform to reinforce that he “is still committed to the acquisition”.

Under the terms of the signed deal, if Musk or Twitter backs out of the deal, one party must pay the other side a $1 billion termination penalty.

Twitter reported more than two weeks ago that fake accounts accounted for less than 5% of its daily active users during the first three months of this year.

However, the company said that in determining the number of fake or spam accounts, it “applied a significant calculation, so our estimate of fake or spam profiles may not accurately represent the actual number of such accounts.”

“The actual number of fake or spam accounts may be higher than we estimate. We are continually looking to improve our ability to tally these profiles,” he said.

Musk, who is the richest person in the world according to Forbes magazine, is now taking a closer look at those numbers.

In the above tweet, Musk wrote in English: “The Twitter deal is temporarily on hold due to pending details supporting the calculation that fake/spam accounts actually represent less than 5% of users.”

Twitter has long had a problem with automated fake accounts, which are used to post content on a recurring and serial basis.

Musk says he wants to “defeat spam bots” on Twitter, as well as make several other changes, including the recovery of some accounts that were banned, such as former US President Donald Trump’s.

Dan Ives, a technology analyst at investment firm Wedbush Securities, said Musk’s tweet “would turn this circus show over Twitter into a Friday the 13th horror show.”

The analyst added that the financial market will now see some future possibilities for the deal. “Number one, the deal likely falling apart; two, like Musk looking for a lower price; or three, like Musk simply walking away from the deal with a $1 billion breakout fee.”

Ives points out that if Musk still goes ahead with the purchase, a “renegotiation is likely on the table.”

For him, this questioning about the fake accounts can be interpreted “as a way to get out of this agreement in a market in great change”.

“Musk’s ability to create so much uncertainty after a tweet is very worrying for us… This whole deal turns into a circus show, with many questions and no concrete answers about the way forward.”

Analysis by Zoe Kleinman, BBC Technology Editor

Here’s another twist in Elon Musk’s attempt to buy Twitter.

One of his priorities, he said, was “cleaning up” the platform — eliminating bots and spam accounts that he believes are harmful to the social network.

However, Twitter claims that less than 5% of its active users are fake profiles.

There is evidence that points both ways.

If a minority of Twitter users are robots, then that means there isn’t a diamond in the rough to be polished here. Does what you see on the social network really reflect reality, not something mediated by fake and automated accounts? If so, does that make the purchase proposal less valuable?

Of course, it’s also possible that Musk’s new hesitation stems from how he intends to finance the deal — he’s even had to sell some of his valuable Tesla shares to raise funds from the Twitter purchase, which has taken a toll on the car company. electrical.

Elon Musk certainly has a lot to think about.

Musk is also the chief executive of Tesla and used much of his shares in the electric car maker to finance part of the Twitter takeover.

He sold $8.5 billion worth of company stock and planned to borrow $12.5 billion, although that amount was reduced to $6.5 billion.

Tesla’s stock price has dropped sharply since Musk revealed he wanted to buy Twitter. There are fears that he will need to sell more shares in the car company to complete the transaction on the social network.

But after Musk tweeted that the deal with Twitter was temporarily on hold, Tesla’s share price jumped 6.7% in trading ahead of the official market opening.

Musk’s latest decision also comes after two Twitter executives announced they were leaving the company.

Kayvon Beykpour, who led Twitter’s consumer division, and Bruce Falck, who oversaw the revenue area, tweeted on Thursday (5/12) that the departures were not made of their own accord.

As of this week, the company also said it had stopped most hiring, with the exception of the arrival of employees for “key functions of the business”.