Elon Musk has suspended the takeover of Twitter over concerns about the number of spam and fake social media accounts, raising new doubts about whether Tesla’s chief executive will complete the $ 44 billion deal.
The entrepreneur announced the move in a Twitter message on Friday, sharing a link to a Reuters news story this month that suggests the number of fake accounts on the site represents less than 5% of its 229 million users.
The statement immediately hit the price of shares on Twitter, as shares fell 19.7% to $ 36.23 in pre-US trading.
The Twitter deal has been suspended pending details to support the calculation that spam / fake accounts actually account for less than 5% of users https://t.co/Y2t0QMuuyn
– Elon Musk (@elonmusk) May 13, 2022
Twitter is now trading a huge spread of 44 percent to a price of $ 54.20 per share, which Musk agreed to pay in mid-April, signaling that investors do not believe the deal will happen anywhere near that price. and probably not at all.
The suspicion introduced by Musk’s tweet is the latest example of the whirlwind way in which the deal came together, which even led to Musk’s denial of his right to conduct due diligence when negotiating terms.
Twitter and Musk did not immediately respond to a request for comment.
Shares of Tesla, which fell 33 percent since Musk tweeted that it was seriously considering buying Twitter in late March, rose nearly 6 percent in New York’s retail market.
It is not clear what the legal effect of his notice is. Musk had previously said that one of his priorities for the platform was to “beat spam bots or die trying” and authenticate human accounts.
In the first quarter of Twitter, the company said that less than 5% of its active users who can generate revenue are fake or spam accounts.
“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 thought,” he said. Twitter in the results.
Musk’s move comes just a day after Twitter announced an immediate freeze on hiring, spending cuts and the departure of two top leaders. The company faces long-term pressure from investors for slow growth compared to competitors such as Meta and TikTok.
The billionaire’s offer to buy Twitter has come as a shock to the entire technology and financial world, although many have speculated that Musk is not serious about the deal or that he will eventually step down. Tesla’s boss has agreed to pay a $ 1 billion interruption fee if he withdraws from the agreement.
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