Elon Musk says his Twitter takeover is ‘on hold’

Elon Musk said his $44 billion bid to buy Twitter was “temporarily pending” until he can get more details to confirm that spam and fake accounts account for less than 5% of the social network’s total users.

Mr Musk made the announcement in a pre-dawn tweet on Friday, the latest chapter in an ongoing corporate drama that has raised questions about free speech online and the ramifications of setting up the richest person in the world at the head of one of the most influential social media. platforms.

Mr. Musk, Tesla’s chief executive, said ridding the platform of fake accounts, bots and spam would be one of his top priorities after taking office. In his tweet, Mr. Musk referred to a May 2 regulatory filing by Twitter that included an estimate of the number of spam and fake accounts.

Known for his free and sometimes impulsive trading style, Mr Musk’s comments raised questions about the future of the deal.

About two hours after his initial post on Friday – and after Twitter shares fell around 20% in premarket trading – Mr Musk posted again that he was “still engaged in acquisition.”

Twitter has few restrictions on creating an account, and the company has long struggled with spam and bots. But it was difficult to quantify the exact extent of the problem. In a May 2 regulatory filing, Twitter said it estimated less than 5% of its users were fake or spam, a figure it previously disclosed. Twitter warned that it had applied “significant judgment” in the calculation and that its “estimate of fake or spam accounts may not accurately represent the true number”, language similar to that used in previous filings by the company. society.

Mr. Musk’s comments were seen either as a tactic to drive down the price of the acquisition or as an excuse to eventually back down.

“Many will see this as Musk using these Twitter deposit/spam accounts as a way out of this deal in a deeply changing market,” Wedbush analyst Daniel Ives said in a note to investors.

Twitter did not respond to a request for comment.

Mr Musk’s surprise offer on Twitter has sparked considerable debate about the role of a social media platform in policing what is said by its users. Twitter has spent years trying to tackle hate speech, harassment and other abuse online, but Mr. Musk, who has a history of using the platform to attack and belittle critics, s is committed to relaxing the company’s content moderation policies. On Tuesday, he said he would lift the ban on former President Donald J. Trump.

Withdrawing from the deal could get messy. The purchase agreement includes a $1 billion fee that Mr. Musk would have to pay if he terminated the deal, although it’s unclear how such a clause would apply if Mr. Musk could. prove that Twitter’s user numbers were incorrect. If Mr. Musk’s debt funding is intact, Twitter could also sue the billionaire to force him to pay for the deal.

Mr Musk has pledged to use a sizable portion of his personal fortune to fund the Twitter deal, a plan that has been impacted by a recent drop in stock prices, including that of Tesla. Tesla shares have fallen nearly 30% in the past month. Mr. Musk is both selling Tesla shares and pledging them as collateral for personal loans to raise cash.

If a deal were to be struck, Twitter’s business challenges could force Mr. Musk to dip deeper into his stock in the electric carmaker to plug any financial holes. And any problems at Tesla that cause its stock to fall far enough could trigger covenants in Mr. Musk’s personal loans that would require him to add more collateral, limiting his ability to invest in Twitter.

Tesla shares rose on Friday after comments from Mr. Musk.

Mr. Musk’s offer has created uncertainty within Twitter, a company that is already struggling to add users and generate more revenue. On Thursday, Twitter chief executive Parag Agrawal fired two top executives, halted new hires and pledged to cut spending.

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