Hours after Elon Musk announced the halt of his $44 billion Twitter deal, the billionaire said he was still committed to buying the platform.
Twitter Shares fell as much as 22% in pre-market trading after the chief of Tesla and SpaceX tweeted about the current status of the acquisition, pending details on a recent filing from Twitter that fake accounts on the social media platform had made less than 5 percent of the stock. has contributed. % of its users.
Twitter said in its latest quarterly results “that the average of false or spam accounts during the first quarter of 2022 represented less than 5% of our monthly daily active users during the quarter.” Twitter, however, said it implemented an “important decision” for itself. Latest estimates, and the true number could be higher.
Fighting fake accounts has been a cornerstone of Musk’s bid to reform Twitter. Announcing his deal to buy the company last month, he revealed that he wanted to beat spam bots, authenticate all humans, and make its algorithms open source. Musk has also said that he wants to make the platform a bastion of free speech by removing the railing from content moderation.
Bots are currently allowed on Twitter, although under company policy such accounts indicate that they are automated. The platform has also launched a label for “good” bots, such as @tinycarebot, an account that tweets self-care reminders. However, spam bots are not allowed, and company policies are in place to combat them.
Doubts have risen in recent days that Musk will be able to back his acquisition of Twitter, and that the entrepreneur may be considering dropping his bid price for the micro-blogging site.
“It will also be questioned whether fake accounts are the real reason behind this delayed strategy,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdowne, noting that the focus is on free speech rather than wealth creation. They seem to be promoting. Primary motivation for acquisition. The $44 billion price tag is huge, and it could be a strategy to return the amount he is willing to pay to acquire the platform.”
The proposed acquisition includes a $1 billion breakup fee for each party, which Musk must pay if he terminates the deal or fails to fund the acquisition as promised. It’s unclear whether an update by Twitter on the number of fake accounts — if physically more than 5% — will trigger a so-called content adverse effects clause to exempt Musk from the breakup charges.
The spread on the deal, which gives an indication that Wall Street believes the takeover will be complete, rose to $9.11 on Thursday from $8.11 in the previous session. It was the widest level since the billionaire launched his bid to buy Twitter last month for $54.20 – and double that of last week when he announced a financing commitment of about $7.1 billion.
Musk’s latest tweet landed just hours after news that Twitter was freezing hiring as part of pre-deal cost-cutting efforts. Two of Twitter’s top leaders are also leaving. The two executives said in separate public positions, Kyvan Baccour, head of consumer products and Bruce Falk, in charge of revenue products, were both asked to leave the company.
The change reflects the current state of Twitter while it awaits a new owner. Hindenburg Research LLC, an investment research firm focused on activist short-selling, said Monday it sees a “significant risk” that Musk’s proposed offering falls short.
Analysts cited the ongoing slowdown in technology stocks, Twitter’s weak first quarter results, including several years of shedding user numbers, and the possibility that Musk could lose 9% of his stake if the deal doesn’t come together. will sell
Aside from doubts over the extent of spambots on Twitter’s platform, the world’s richest man is still working to secure money to close the deal. According to people with knowledge of the matter, Musk is in talks with investors to raise enough equity and preferred financing to eliminate the need for any margin debt associated with his Tesla shares.
He recently disclosed $7.1 billion in equity commitments from investors including Larry Ellison, Sequoia Capital, Qatar Holding and Saudi Prince Alwaleed bin Talal, the latter adding his Twitter stock to the deal.
“Musk never had full funding – we know that from his relentless efforts to get financial backing – but he also had all the cards,” said Neil Campling, head of TMT research at Mirabaud Equity Research. “Twitter board has been held hostage and has only blamed itself for this mess. No other buyer will come forward – if Musk decides he is still interested he can state his price and it won’t exceed Will happen.”