Elon Musk says his $44 billion purchase of Twitter is “temporarily on pause” as more information on spam and phoney accounts on the social media platform becomes available.
Elon Musk said Friday that his $44 billion acquisition of Twitter is “temporarily on pause” as he seeks to determine the actual amount of spam and phoney accounts on the social media network, a new twist amid signs of internal conflict over the proposed deal.
Musk appeared to query whether Twitter was underreporting “spam bots” that imitate actual people. Musk has been vocal about his desire to clean up Twitter’s problem with “spam bots” that imitate real people.
The Tesla billionaire linked to a Reuters piece from May 2 about a quarterly report from Twitter that projected that bogus 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 represent less than 5% of users,” Musk stated, implying that he doubts the number of fraudulent accounts is that low.
It was unclear whether the issue would jeopardise the agreement.
Early Friday, Twitter did not immediately reply to calls for comment.
Both Twitter and Tesla stock moved drastically in opposing directions, with Twitter stock falling 14% and Tesla stock, which Musk had proposed using to help fund the Twitter deal, rising 7%.
Investors have had to evaluate Musk’s legal troubles against the potential that acquiring Twitter would be a diversion from running the world’s most valuable automobile. The potential transaction weighed on Tesla’s stock, which had already dropped 16 percent this week.
The huge increase in the price of Tesla stock before the opening bell on Friday raised new worries about the acquisition 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 stock as collateral to purchase Twitter. He would also take out a $13 billion bank loan and put up $21 billion in Tesla stock.
Last week, Musk raised more than $7 billion in stock pledges for his Twitter bid 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 stock 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 lead Wall Street to believe the deal is going to fall apart, Musk is seeking to negotiate a lower purchase price, or Musk is simply walking away with a $1 billion penalty.
“Many will interpret this as Musk using these Twitter filing/spam accounts to get out of this purchase in a rapidly shifting market,” Ives wrote.
He went on to say that Musk’s decision to make the news via Twitter rather than a financial filing was concerning, and that it “turns this whole thing into a circus performance with many doubts and no firm answers as to the direction of this deal going forward.”
Musk’s comment came just one day after Facebook sacked two of its top executives. Twitter said it is “cutting back on non-labor costs to ensure we are being responsible and efficient” and is delaying most hiring, save for crucial areas.
CEO Parag Agrawal stated in a note addressed to workers and acknowledged by Twitter that the company has not met growth and revenue targets since investing “aggressively” to develop its user base and income.