Twitter acquisition put on hold by Musk due to fake account info

WASHINGTON (Parliament Politics Magazine) – Elon Musk has put his $44 billion (£35 billion) proposal to buy Twitter on hold, citing concerns over the amount of fake or spam accounts on the platform.

He stated that he was awaiting facts “to support [the] calculation that spam/fake accounts do indeed comprise less than 5% of users.”

Later, Mr Musk said he was “still committed to [the] acquisition.”

Analysts believed that he may be attempting to renegotiate the price or perhaps walk away from the acquisition.

Mr Musk’s remarks sent Twitter’s stock price tumbling 10% in New York morning session.

Even before Mr Musk’s comments, the company’s shares was trading for less than Mr Musk’s offer of $54.20 per share, indicating that the markets were not persuaded he would complete the takeover.

Mr Musk’s statements, according to Dan Ives, a tech analyst at investment company Wedbush Securities, will “turn this Twitter circus act into a Friday the 13th horror show.”

Many would interpret this as Musk using these Twitter filing/spam accounts to get out of the purchase in a rapidly shifting market, he said in a note.

“The nature of Musk creating so much uncertainty in a tweet (and not a filing) is very troubling to us… and now sends this whole deal into a circus show with many questions and no concrete answers as to the path of this deal going forward.”

Twitter has long been accused of failing to do enough to combat automated and false accounts that post content.

According to Twitter’s estimation the fake accounts accounted for less than 5% of its daily active users during the first three months of this year in a filing over two weeks ago. It warned that the numbers were estimated and that they could be higher.

Those statements were similar to those made by the firm in earlier filings.

According to Susannah Streeter, analyst at Hargreaves Lansdown, the amount of spam bots on the service is a crucial metric because a greater than projected figure could hinder the company’s potential to grow advertising income or paid-for subscriptions.

She did say, though, that it was unclear how genuine Mr Musk’s fears were.

There would also be concerns raised about if fake accounts were the real reason for this delaying tactic, considering that his primary objective for the takeover appeared to be encouraging free expression rather than focusing on wealth creation, she said.

The $44 billion price tag was enormous, and it could be a plan to reduce the amount he was willing to pay for the platform, she added.

Many companies’ values have been wiped out by weeks of market volatility in the United States, including once-favoured tech giants.

Tesla, the electric car firm where Mr Musk serves as CEO, has also seen its stock fall, a blow to Mr Musk, whose standing as the world’s richest person is tied to his ownership in Tesla and who had plans in place for relying on his shares to aid fund the Twitter purchase.

He raised $8.5 billion by selling shares last month. He intended to use the stock to secure $6.5 billion in loans.

Tesla’s stock rose more than 5% after Mr Musk tweeted that the deal was temporarily put on hold.

Kourtney Spak

Kourtney Spak is an american journalist and political commentator. Her journalism career focuses on American domestic policy and also foreign affairs. She also writes on environment, climate change and economy.