Elon Musk announces suspension of share repurchases, Wall Street stocks plummet

Tesla CEO Elon Musk said on Friday that he was pausing the takeover of Twitter pending details about the proportion of fake accounts on the social network. However, he claims to be “still committed” to buying the social network. The group’s shares, listed on the New York Stock Exchange, fell about 15% after the announcement in electronic trading ahead of the Wall Street opening. Earlier in the day, it fell 25%.

“The Twitter acquisition is temporarily on hold pending details that spam and fake accounts account for less than 5% of users,” Elon Musk wrote on the platform, where he has almost 93 million followers. Contacting AFP, Twitter did not immediately respond.

$44 billion contract

The social network’s board of directors tweeted a $44 billion takeover bid at the end of April, formulated by the fractious leader of South African origin. Elon Musk promised to rid Twitter of spam, authenticate users and increase transparency, without specifying how he intends to implement this project.

The company indicated in early May during the presentation of its quarterly results that it had an average of 229 million daily users from January to March, which it claims can be monetized, that is, exposed to advertising. In this case, she calculated that less than 5% of them were spam or fake accounts.

“Key indicator”

The share of fake accounts is “a key metric” for Twitter, explains Suzanne Streeter, market analyst at Hargreaves Lansdown, because “counting the exact number of people who actually tweet is considered to be decisive for the site’s future ad revenue streams or paid subscriptions.” . »

In addition to his desire to fight spam, Elon Musk has said he wants to make Twitter a bastion of free speech and has said he is ready to reinstate former US President Donald Trump, whose account was permanently suspended following the January 2021 Capitol attack. .

“Friday the 13th Horror Movie”

After the Tesla and SpaceX boss’ takeover bid, Twitter’s market value has shrunk by billions of dollars. The stock traded at just over $38 on Friday, well below the $54.20 per share purchase price offered by the billionaire.

Dan Ives of Wedbush Securities said Elon Musk’s latest tweet “will turn the Twitter takeover circus into a Friday the 13th horror movie.” just wants to walk away from a $1 billion severance deal,” the analyst said in the note.

Withdrawal of funds to protect Tesla?

The leader, however, sought to reassure him of his ability to finance the operation, planning to draw on a significant personal deposit and request a bank loan, as well as a margin loan in which he would pledge his Tesla shares as collateral.

Earlier this month, Elon Musk said he had raised just over $7 billion from various investors, Oracle co-founder Larry Ellison and Saudi prince and businessman Alwaleed bin Talal. But for Dan Ives, the entrepreneur has overestimated the strength of his Tesla shares, whose price has plummeted since the announcement of the Twitter takeover, and may try to protect the electric car maker.