Elon Musk CEO of tesla said Friday that the Twitter deal was temporarily on hold while he looked into a report that spam bots and other fake accounts made up less than 5% of its users. He added, hours after his first tweet, that he was “still committed to [the] acquisition.”
Why has Elon Musk put the Twitter deal on hold?
The world’s richest man on prior occasions has said that removing “spam bots” from Twitter will be one of his top priorities following the completion of the acquisition.
Earlier this month, the microblogging platform had claimed in a regulatory filing that false or spam accounts represented fewer than 5 per cent of its monetisable daily active users during the first quarter. It also said it faced several risks until the deal with Musk is closed, including whether advertisers would continue to spend on Twitter.
What was the reaction to Musk’s announcement?
According to Reuters, shares of Twitter fell 20 per cent in premarket trading. Even though Musk did not provide much details in his tweet announcing the deal going on hold, it could cause a flurry in the tech and investment ecosystem.Earlier this month, the microblogging platform had claimed in a regulatory filing that false or spam accounts represented fewer than 5 per cent of its monetisable daily active users during the first quarter. It also said it faced several risks until the deal with Musk is closed, including whether advertisers would continue to spend on Twitter. His declaration cast fresh doubt on the seriousness of his offer just as he was scrambling to find new investors to help him fund the deal. It also played into his hand by sending Twitter’s stock price tumbling, though the tweet had the potential to draw regulatory scrutiny.“Twitter deal temporarily on hold pending details supporting calculation that spam/accounts do indeed represent less than 5% of users,” Musk tweeted, linking to a Reuters article last week citing a Twitter filing. Roughly two hours later, he added, “Still committed to acquisition.”Story continues below advertisement Spam bots, accounts that peddle cryptocurrency scams and otherwise seek to exploit vulnerable users, have long been a pet peeve of the technology mogul who regularly encounters impersonators in his activity on the site.
But his public declaration was an unusual and unexpected maneuver at this stage of the negotiations, according to financial experts and people familiar with the negotiations who spoke on the condition of anonymity to discuss sensitive matters. The deal was expected to close in the next three to six months, but the tweets Friday could represent an effort by Musk to return to the negotiation table to buy Twitter for less than previously agreed upon.It also sent Tesla’s stock price, which had declined steeply this year, upward while Twitter’s stumbled.
