KELVIN CHAN and TOM CRISCHER
DETROIT (AP) – Elon Musk said on Friday that his plan to acquire Twitter was “temporarily suspended”, raising new doubts about whether he would continue to acquire for $ 44 billion.
Musk wrote on Twitter that he wants to pinpoint the amount of spam and fake accounts on the social networking platform. 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.
But Twitter has revealed in regulations that its bot ratings could be low for at least two years, leading some analysts to speculate that Musk may raise the issue as a reason for abandoning the deal.
“The Twitter transaction has been suspended until details are provided that support the calculation that spam / fake accounts actually represent less than 5% of users,” Musk tweeted Friday morning, showing that he is skeptical that the number of invalid accounts is so low.
Musk later tweeted that he was “still looking to acquire.” Neither Twitter nor Musk responded Friday to requests for comment.
The problem of fake Twitter accounts is no secret.
In its quarterly submission to the SEC, Twitter questioned 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.
Sarah Silver, a professor of business journalism and financial communications at the University of Quinnipiac, said Musk seems to be using spam accounts as a reason to quit the deal.
“To claim that this is the reason he is pausing the deal is not credible,” Silver said. “This is not a new topic for him. It’s not just in his mind now. “
On Friday, shares on both Twitter and Tesla rose sharply in opposite directions: Twitter shares fell more than 9%, and Tesla shares, which Musk proposed to use to finance the Twitter deal, fell nearly 6%.
But shares of Tesla, which Musk sold to fund part of Twitter’s acquisition, have fallen since it was discovered that the social platform had become Musk’s target.
The stock lost a quarter of its value last month and fell from about $ 1,150 in early April when Musk confirmed it had acquired a large stake in Twitter, to about $ 762 on Friday.
“So it has become much more expensive for him to buy this company using his Tesla shares,” Silver said.
Mask’s net capital, which Forbes estimated earlier this week at $ 240 billion, fell to $ 223 billion as of Friday.
Over the years, Tesla shares have been able to benefit from the bot’s Twitter accounts. A researcher from the University of Maryland recently concluded that such bots were used to generate hundreds of thousands of positive tweets about Tesla, potentially reinforcing its stock in the years when it was under pressure.
Neither Tesla nor its fans have claimed responsibility for these bots.
Investors evaluating the deal had to weigh Mask’s legal concerns as an opportunity 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 signaled 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.
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 will 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 stages of growth and revenue after the company began “aggressively” investing to expand its user base and revenue.
Chan reported from London. AP Business writer Michelle Chapman of New York contributed to this report.