Elon Musk said his $ 44 billion Twitter acquisition was “temporarily withheld” pending details on the number of spam and bot accounts on the social media platform.
The company said earlier this month that fake or spam accounts accounted for less than 5 percent of its 229 million users in the first quarter.
But Musk is now halting his huge takeover, demanding more information on the numbers. The Twitter board approved the purchase, but it has not yet been approved by shareholders and was not expected to be completed for several months.
Shares of the social media company fell 25% in pre-market trading this morning, continuing a huge downward trend after its takeover bid was announced on April 25th.
Analysts have called the move a “farce,” with some speculating that Musk was trying to negotiate a lower price for the deal or withdraw altogether, saying it was “straight from Musk’s book.”
The world’s richest man said on Twitter early Friday: “The Twitter deal has been suspended pending details to support the calculation that spam / fake accounts actually account for less than 5% of users.”
Elon Musk’s $ 44 billion Twitter acquisition has been suspended pending details on the number of spam and bot accounts on the social media platform
Musk is now halting his huge takeover, demanding more information on the numbers
He linked a May 2 report by Reuters, which said Twitter calculated that bots were only a small percentage of the site’s users.
Musk said one of his priorities would be to remove spam bots from the platform.
It is unclear what the legal implications of his tweet are, and some analysts were puzzled that he announced the move on Twitter rather than in a regulatory request.
Wedbush analyst Dan Ives called the tweet “weird” and said he was “now sending this whole deal to a circus show with many questions and no specific answers.”
“Many will see this as Musk, using this Twitter / spam account as a way to get out of this deal in a highly changing market,” Ives wrote in a note.
“If Musk still decides to continue on the path of the deal, it is likely a clear renegotiation of the table,” he added.
The stock price of Twitter sank after the announcement on April 25 that the Twitter board had agreed to buy it when the stock closed at $ 51.70.
Earlier this week, shares of Twitter reached $ 46.75, which means that Wall Street views the implied probability of closing the deal at the agreed price of $ 44 billion as less than 50 percent.
Shares closed at $ 45.08 on Thursday and plunged into stock trading on Friday after Musk’s tweet, falling 13 percent.
Meanwhile, shares of Tesla, against which Musk has provided $ 6.25 billion in funding for the acquisition, rose about 5 percent.
Twitter did not respond immediately to a request for comment.
Susanne Streetter, an analyst at Hargreaves Lansdown, said: “This 5% figure has not existed for some time. Apparently he would have seen it by now … So it could be part of a strategy to lower the price.
“This will be very disappointing for many in the company, given that a number of senior executives have already been fired,” she said.
Neil Campling, head of TMT Research in London, said: “It’s ridiculous. We have always said that he can cut, play or change his melody at 11 o’clock and 59 minutes and 59 seconds on the clock. This is a farce.
“He never had full funding – we know this from his constant attempts to get financial support – but he also kept all the cards.
“And the Twitter board is being held hostage and they are the only ones to blame for this mess. There will be no other buyer – if he decides he is still interested, he can indicate his price – and it will not be higher!
“They (the board) had to see that. There was a specific implementation clause in the merger agreement (section 9.9) that gave Twitter the right to “complete the completion (of the transaction)”, but only if it has the funding … which it does not have.
Prices have been falling since the Musk buyout deal was negotiated by technology giant on April 25
Michael Husson, chief market analyst at CMC Markets, added: “Obviously the markets are reacting as if he will withdraw from the deal, otherwise why Twitter shares have fallen by 20 percent. So maybe he (Elon Musk) is paving the way for the withdrawal from the deal.
“But the timing is curious, given what he has put in to secure funding for the deal. So, maybe some shareholders in SpaceX and Tesla said they wanted his attention on his main problems there. This is straight from Musk’s book, which keeps shareholders at bay.
The implied probability of the deal closing at the agreed price fell below 50% for the first time on Tuesday, when Twitter shares fell below $ 46.75.
This week, a US company that is betting on the company’s stock prices said that Musk could submit a lower offer for Twitter due to the decline in shares and poor financial performance.
Short selling firm Hindenberg Research said there was a “significant chance” the developer would try to pay less than the agreed share price of $ 54.20, which was accepted by Twitter.
The sharp decline in the Nasdaq stock market after the deal suggests a far lower value for Twitter, the value of which is supported by the takeover bid.
In a document released Monday, the company said: “We support Musk’s efforts to make Twitter private and see a significant chance that the deal will be completed at a lower cost.”
They added that if Musk decides to leave, Twitter shares could fall by up to 50 percent.
But the founder of SpaceX may have to pay $ 1 billion just to drop the deal as a separation fee.
Twitter said it faces several risks while the deal with Musk is concluded, including whether advertisers will continue to spend on Twitter.
The announcement is another twist amid signs of internal turmoil over its planned buyout on Twitter, including that social media company fired two of its top executives on Thursday.
Consumer Product Manager Kaiwon Bakepour and General Revenue Manager Bruce Falk were fired unceremoniously.
Kaiwon Bakepour, head of Twitter’s consumer products department, said he was fired Thursday after the company’s chief executive told him he “wants to take the team the other way”.
“The truth is that this is not the case and when I imagined leaving Twitter and it was not my decision. [CEO] Parag [Agrawal] he asked me to leave after he told me he wanted to take the team in another direction, “Bakepur said.
Musk also suffered a massive collapse in the cryptocurrency this week.
He is one of four so-called “Crypto Bros” whose combined gigantic wealth, which for years has helped keep the online currency market afloat, has now suffered the most colossal blow, although he believes crypto will be a safe haven during of the pandemic.
But more than $ 20 billion was wiped off the cryptocurrency market just yesterday.
Tesla, which bet $ 1.5 billion on bitcoin last February, has already seen that investment fall, with an estimated $ 300 million lower than 15 months ago.
It was also revealed yesterday that Tesla’s CEO’s purchase was being investigated by US regulators after he delayed reporting on the purchase – and thus failed to provide enough warning that a takeover bid was being made.
The 50-year-old’s first move to buy Twitter was to buy him a 9.2% stake in the technology company in mid-February.
But he did not disclose his purchase to the Securities and Exchange Commission (SEC) until at least 10 days later, on April 4.
Any investor who passes a 5% share must submit a form to the SEC within 10 days. It serves as an early sign to stakeholders that a large investor may seek to control the company.
Musk’s April 4 statement also described his stake as passive, meaning he had no plans to take over Twitter or influence his management or business.
The next day, however, he was offered a position on Twitter, and a few weeks later the world’s richest man struck a $ 44 billion deal to buy the social media giant.
The SEC investigation was first reported Wednesday by The Wall Street Journal.
This week, Musk also sparked a heated debate after saying he would allow Donald Trump to return to Twitter if and when he takes the reins, according to his previous statements that he plans to wrong the freedom of speech side. not on bans and censorship.
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