October 1, 2022

Musk suspends Twitter purchase, casts doubt on $ 44B deal

Detroit (AB) – Elon Musk He said on Friday that his plan to buy Twitter had been “suspended”, raising new doubts about whether he would pursue the $ 44 billion acquisition.

Musk tweeted that he wants to find out the number of spam and fake accounts on the social media platform. Musk voiced his desire to solve Twitter’s problem with “spam bots” that represent real people, and questioned whether the company was underestimating them.

But Twitter has revealed in regulatory filings that its bot ratings could be as low as two years, with some analysts believing it could raise the Musk issue as a reason to withdraw from the deal.

“Twitter The contract has been suspended Details are pending in support of the estimate that spam / fake accounts actually represent less than 5% of users, ”Musk tweeted on Friday morning, suspecting that the number of unreliable accounts was too low.

Musk later tweeted “more” Confirmation of AcquisitionNeither Twitter nor Moscow responded Friday to requests for comment.

The problem of fake accounts on Twitter is no secret.

In its quarterly filing with the SEC, Twitter doubted the number of its bot accounts and agreed that the rating could be lower. “In making this decision, we used significant judgment, so our estimate of false or spam accounts does not accurately indicate the actual number of such accounts, and the actual number of false or spam accounts may be higher than we estimated,” the file says.

A review filed by Twitter with the U.S. Securities and Exchange Commission shows that the same language used to evaluate spam bot accounts and express doubts about it was present in Twitter’s quarterly and annual reports for at least two years, before Musk offered his offer. He and his advisers know.

Sarah Silver, a professor of business journalism and finance at the University of Queensland, seems to be using the number of spam accounts as an excuse to leave the deal.

“It is not credible that he said this was the reason for suspending the contract,” Silver said. “It simply came to our notice then. It does not enter his consciousness now.

Shares in both Twitter and Tesla turned sharply in the opposite direction on Friday, with Twitter’s shares falling more than 9% and Tesla’s shares falling nearly 6% as Musk proposed to finance the Twitter deal.

But shares of Tesla, which has been selling Musk to finance some of Twitter’s acquisitions, have plummeted since it was revealed that the social platform had become a target for Kasturi.

Those shares have lost a quarter of their value in the past month, and fell to about $ 762 on Friday when Musk confirmed it had taken a large stake in Twitter from about $ 1,150 in early April.

“So it was very expensive for him to buy this company using his Tesla shares,” Silver said.

Musk’s net worth, estimated by Forbes earlier this week, was $ 240 billion, down from $ 223 billion on Friday.

Tesla shares may have benefited from Twitter bot accounts for years. A researcher at the University of Maryland recently concluded that bots like this would be used to generate hundreds of thousands of positive tweets about Tesla, improving its share of the years it was under pressure.

Neither Tesla nor its supporters are responsible for those bots.

Investors evaluating the deal had to weigh in on Musk’s legal issues Acquiring Twitter has the potential to distract from running the world’s most valuable automaker. The proposed deal continued to push shares of Tesla, which had already fallen 16% this week.

The sharp jump in Tesla stock prices ahead of Friday’s opening hours raises doubts about whether Twitter’s acquisition will take place.

Musk has already sold more than $ 8 billion The value of his Tesla shares to finance the purchase.

Musk first pledged $ 12.5 billion in debt to Tesla to buy Twitter. He borrows $ 13 billion from banks and puts $ 21 billion in Tesla equity.

Last week, Musk strengthened its equity stake in its Twitter offer with more than $ 7 billion in commitments from a variety of investors, including Silicon Valley heavy hitters such as Oracle co-founder Larry Ellison.

Money from new investors reduces the amount borrowed on Tesla shares to $ 6.25 billion. Tesla equity shares will range from $ 21 billion to $ 27.25 billion.

Walbush analyst Dan Yves, who follows both Tesla and Twitter, said Musk’s “bizarre” tweet could collapse the Wall Street deal if Musk tries to negotiate a lower contract price or he simply pulls out to deal with the $ 1 billion fine.

“Many will see this as a musk way to get out of this deal in a highly changing market using these Twitter filing / spam accounts,” Ives wrote.

Instead of filing funding to publish the announcement, Musk said his use of Twitter was worrisome, adding that “the circus is sending the entire deal to the show without many questions and definitive answers in the path of this deal.”

Musk’s tweet comes a day after the social media company fired two of its top managers. Twitter said it was suspending most of the hiring, except for key roles, and “recovering non-labor costs to ensure we are responsible and efficient.”

In a note sent to employees and confirmed by Twitter, CEO Barack Agarwal said the company has not reached growth and revenue milestones since it began investing “actively” to expand its user base and revenue.


Chan reported from London. Michael Chapman, an AP business writer in New York, contributed to the report.