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Elon Musk says Twitter deal “temporarily suspended” until details of spam and fake accounts were clarified – The Morning Call

LONDON – Elon Musk said on Friday that his plan to acquire Twitter is “temporarily suspended” as he tries to identify the exact amount of spam and fake accounts on the social media platform, another twist amid signs of turmoil over the proposed $ 44 billion acquisition .

Musk has spoken out loud about his desire to fix Twitter’s problem with “spam bots” that mimic real people, and seemed to doubt whether their company was underestimating them.

In a tweet, the billionaire Tesla cites a May 2 Reuters story about a quarterly Twitter report in which false or spam accounts were estimated to account for less than 5% of the company’s “monetized daily active users” in the first quarter.

“Twitter the transaction is temporarily suspended Details are expected to support the calculation that spam / fake accounts actually represent less than 5% of users, ”said Musk, showing that he is skeptical that the number of invalid accounts is so small.

It was unclear whether the issue could ruin the deal. Musk later tweeted that “still committed to acquisition».

Neither Twitter nor Musk responded to requests for comment early Friday.

The issue of fake Twitter accounts is no secret.

In its quarterly submission to the SEC, even Twitter doubted the correctness of counting bot accounts, acknowledging that the score could be low. “We have taken this definition seriously, so our estimate of fake accounts or spam accounts may not accurately reflect the true number of such accounts, and the actual number of fake or spam accounts may be higher than we estimated,” it said. in a statement. I say.

A review of Twitter documents by the U.S. Securities and Exchange Commission shows that the assessment of spam accounts and similar questionable language has been in Twitter’s quarterly and annual reports for at least two years, long before Musk did his proposal, and it would have been known to him and his advisers.

Shares on both Twitter and Tesla turned sharply on opposite sides on Friday: Twitter shares fell nearly 6%, and Tesla shares, which Musk offered to use to fund the Twitter deal, jumped nearly 7% in trading ahead of the opening call.

Investors had to weigh the legal issues for Mask, as well as the possibility that the acquisition of Twitter could distract from managing the world’s most valuable automaker. The proposed deal continued to put pressure on Tesla shares, which had already fallen 16% this week.

A sharp jump in Tesla’s stock price ahead of Friday’s opening call highlighted growing doubts that Twitter’s acquisition will take place.

Musk has already sold his Tesla shares for more than $ 8 billion to fund the purchase.

Musk initially pledged to borrow $ 12.5 billion in collateral for Tesla shares to buy Twitter. He also borrowed $ 13 billion from banks and invested $ 21 billion in Tesla’s equity.

Last week, Musk stepped up a stake in his proposal for Twitter, pledging more than $ 7 billion in commitments from a variety of investor groups, including heavyweight Silicon Valley members such as Oracle co-founder Larry Allison.

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Money from new investors reduces the amount of debt on Tesla shares to $ 6.25 billion, the statement said. Tesla’s stake could rise 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 either think the deal is likely to fall apart, or Musk is trying to negotiate a lower deal price, or he just walks away with a $ 1 billion fine.

“Many will see this as Musk’s use of this Twitter feed / spam account as a way to get out of this deal in a highly changing marketplace,” Ives wrote.

He added that Mask’s use of Twitter, rather than financial documentation, to make the announcement is a cause for concern and “sends the whole deal to a circus show with many questions and no specific answers as to the path of the deal.”

Musk’s tweet came a day after the company fired two of its top executives on social media. Twitter said the company is suspending most hiring, except for critical roles, and “cutting non-work-related costs to make sure we’re responsible and efficient.”

In a note sent to employees and confirmed by Twitter, CEO Parag Agraval said the company had not reached the growth and revenue stages after the company began “aggressively” investing to expand its user base and revenue.

AP Business writer Michelle Chapman of New York contributed to this report.

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