Elon Musk: Twitter deal ‘temporarily on hold’

LONDON (AP) — Elon Musk said Friday that his plan to buy Twitter is “temporarily on hold” as he tries to pinpoint the exact number of spam and fake accounts on the social media platform, another twist amid signs of turmoil over the proposed $50 deal. 44 billion.

Musk has spoken out about his desire to clean up Twitter’s problem with “spam bots” that impersonate real people and seemed to question whether the company was under-reporting them.

In a tweet, the Tesla billionaire linked to a May 2 Reuters story about a quarterly report from Twitter that estimated less than 5% of the company’s “cashable daily active users” in the first quarter.

“Twitter deal temporarily on hold pending details to support the calculation that spam/fake accounts do indeed represent less than 5% of users,” Musk said, indicating he is skeptical that the number of inauthentic accounts is so low.

It was not clear whether the matter could sink the deal. Musk later tweeted that he is “still” dedicated to acquisition

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

The issue of fake accounts on Twitter is not a secret.

In its quarterly filing with the SEC, even Twitter doubted the number of bot accounts was correct, admitting that the estimate could be low. “We applied significant judgment in making this decision, so our estimate of fake or spam accounts may not accurately reflect the true number of such accounts, and the true number of fake or spam accounts could be higher than we do estimated,” the application said. say.

A review of Twitter’s filings with the U.S. Securities and Exchange Commission shows that the estimate of spambot accounts and similar language that expresses doubt has been in Twitter’s quarterly and annual reports for at least two years, well before Musk made his offer and the would have been known to him and his advisers.

Shares in both Twitter and Tesla swung sharply in opposite directions on Friday, with Twitter’s shares falling nearly 6% and Tesla’s shares, which Musk had proposed to use to fund the Twitter deal, falling nearly 7%. trading before the opening bell.

Investors have had to weigh up legal issues for Musk, as well as the possibility that the Twitter acquisition could be a distraction from running the world’s most valuable automaker. The proposed deal continued to put pressure on Tesla’s stock, which had already fallen 16% this week.

The sharp jump in the price of Tesla shares before the opening bell on Friday raised doubts as to whether the Twitter takeover will materialize.

Musk has already sold more than $8 billion of its Tesla stock to fund the purchase.

Originally, Musk had pledged to borrow $12.5 billion with Tesla stock as collateral to buy Twitter. He would also borrow $13 billion from banks and put $21 billion in Tesla stock.

Last week, Musk bolstered equity stakes in his Twitter offer with pledges of more than $7 billion from a diverse group of investors, including Silicon Valley heavy hitters such as Oracle co-founder Larry Ellison.

Money from the new investors reduces the amount borrowed on Tesla stock value to $6.25 billion, according to the filing. Tesla stock could go from $21 billion to $27.25 billion.

Wedbush analyst Dan Ives, who follows both Tesla and Twitter, said Musk’s “bizarre” tweet will lead Wall Street to suspect the deal is likely falling apart, Musk is trying to negotiate a lower deal price, or he’s just walking away. of the deal. be fined $1 billion.

“Many will see this as Musk using these Twitter/spam accounts as a way out of this deal in a rapidly changing market,” Ives wrote.

He added that Musk’s use of Twitter instead of a financial request to make the announcement was troubling and “sends this whole deal to a circus show with lots of questions and no concrete answers about the path of this deal going forward.” .”

Musk’s tweet comes a day after the social media company fired two of its top executives† Twitter said the company is pausing most hires except for critical positions, and “pulling back on non-labor costs to ensure we’re accountable and efficient.”

In a memo sent to employees and confirmed by Twitter, CEO Parag Agrawal said the company failed to hit growth and revenue milestones after the company began investing “aggressively” to expand its user base and revenue.

AP Business Writer Michelle Chapman in New York contributed to this report.

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