LONDON (AP) – Elon Musk said on Friday that his plan to buy Twitter for $ 44 billion has been “suspended” as he tries to determine the exact number of spam and fake accounts on the social media platform, another twist on against the background of signs of internal shocks over the proposed acquisition.
Musk spoke out about his desire to clear up Twitter’s problem with “spam bots” that mimic real people, and he seemed to doubt whether the company was reporting them.
In a tweet, the Tesla billionaire linked a May 2 story to Reuters for a quarterly Twitter report that fake or spam accounts accounted for less than 5% of “daily active users who can monetize” in the first quarter.
“The Twitter deal has been suspended pending details supporting estimates that spam / fake accounts actually account for less than 5% of users,” Musk said, adding that he was skeptical that the number of non-authentic accounts was so small. .
It was unclear whether the issue could ruin the deal. Musk later tweeted that he was “still committed to the acquisition.”
Neither Twitter nor Musk responded to requests for comment early Friday.
The problem with fake Twitter accounts is no secret.
In its quarterly SEC submission, even Twitter doubts that the number of bot accounts is correct, acknowledging that the rating may be low. “We made a significant judgment in making this decision, so our estimate of fake or spam accounts may not be exactly the actual number of such accounts, and the actual number of fake or spam accounts may be higher than we calculated.” filing the application says.
A review of Twitter’s statements to the US Securities and Exchange Commission shows that the assessment of spam bots and similar language in question has been on Twitter’s quarterly and annual reports for at least two years, long before Musk to make his proposal and it will be have been known to him and his advisers.
Shares on both Twitter and Tesla turned sharply in opposite directions on Friday, with Twitter shares falling nearly 6 percent and Tesla shares, which Musk suggested being used to fund the Twitter deal, jumped nearly 7 percent. % in trade before the start of the bell.
Investors had to consider the legal issues for Musk, as well as the possibility of the acquisition of Twitter to distract from the management of the world’s most valuable carmaker. The proposed deal continued to put pressure on Tesla shares, which have already fallen 16% this week.
The sharp jump in Tesla’s share price before opening on Friday highlighted growing doubts that the acquisition of Twitter will take place.
Musk has already sold more than $ 8 billion in shares to Tesla to fund the purchase.
Musk initially pledged a $ 12.5 billion loan with Tesla shares as collateral to buy Twitter. It will also borrow $ 13 billion from banks and invest $ 21 billion in Tesla’s equity.
Last week, Musk stepped up his stake in Twitter with more than $ 7 billion in commitments from a diverse group of investors, including heavyweight Silicon Valley players like Oracle co-founder Larry Ellison.
The money from the new investors reduced the amount borrowed for the value of Tesla’s shares to $ 6.25 billion, according to the documentation. Tesla’s share could grow from $ 21 billion to $ 27.25 billion.
Wedbush analyst Dan Ives, who follows both Tesla and Twitter, said Musk’s “weird” tweet would make Wall Street think the deal is likely to fall apart. Musk is trying to negotiate a lower deal price, or just is moving away from dealing with a $ 1 billion fine.
“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.
He added that Musk’s use of Twitter, rather than financial documentation, to make the announcement was worrying and “sent the whole deal to a circus show with many questions and no specific answers about the way forward.”
Musk’s tweet comes a day after social media fired two of its top executives. Twitter said the company stopped most hiring, except for critical roles, and “withdrew non-labor costs to ensure we are responsible and efficient.”
In a note sent to employees and confirmed by Twitter, CEO Parag Agraval said the company had failed to achieve significant growth and revenue milestones after the company began investing “aggressively” to expand its customer base and revenue.
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AP business writer Michelle Chapman of New York contributed to this report.
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