Tesla CEO and richest man in the world, Elon Musk, said on Friday morning, May 13, “suspend” the process of taking over the social network Twitter. The reason for this new surprise announcement? The investor says he is waiting for more details on the proportion of fake accounts on the social network. Shares of the New York Stock Exchange-listed group immediately fell about 11% at the Wall Street open, a sign that investors are wondering, even doubtful, that the takeover project will come to an end.
Also listen What is the future of Twitter, bought by Elon Musk?
What is the story with fake accounts? In his message, Mr. Musk says he wants to make sure “that spam and fake accounts make up less than 5% of users”of the 229 million active users claimed by Twitter. This figure was made public in early May by Twitter in documents filed with the US Securities and Exchange Commission, which oversees the stock market. Automated accounts have historically been a rampant problem on the platform, where politicians, scammers, and even government propaganda departments have resorted to bot accounts to spread and amplify their messages. Mr. Musk is aware of this problem: in his takeover project, he said he wants to end spam – those polluting messages that are often sent by fake auto-accounts.
The 5% rate quoted by Twitter is relatively low. In the past, numerous independent studies have suggested a much higher level; over the past two years, the company has invested more in fighting these accounts.
“Our judgment is important in determining whether an account is fake or genuine, and therefore our estimates may not reflect the true number of such accounts.”, — wrote Twitter in the stock documentation. In addition, the company has had to slightly underestimate its monthly active users, a key statistic, several times due to miscalculations.
These elements, of course, can influence the activity of Twitter, which depends mainly on advertising, and therefore on its evaluation, but the issue of fake accounts has been known for a long time and exists in all social networks. Thus, the sudden suspension of the takeover may seem disproportionate or a pretext.
Tesla-related funding issues
Elon Musk’s announcement raises questions about funding the takeover of Twitter and, more broadly, Tesla. Tesla’s share price has lost 29% of its value in the past month, with implications for the approximately $250 billion (239.5 million euros) of the personal wealth of the world’s richest man, and thus indirectly for the financial package. designed for social network acquisition.
By announcing on April 25 a buyback of Twitter shares for $54.20 (about 52 euros) – a 54% bonus compared to the price at the end of January – the buyer valued the company at $43 billion (42.1 billion euros). ). But Mr Musk’s wealth is not made up of cash, but stocks. The entrepreneur initially intended to secure financing from several sources: 13 billion bank loans, up to 21 billion from the sale of Tesla shares and 12.5 billion “Margin Loan”pledged in Tesla shares, which creditors will repay if he doesn’t repay.
However, Bloomberg explains, Mr. Musk has already pledged more than half of his Tesla shares on previous loans… His new $12.5 billion margin loan would be called into question if the automaker’s share price fell below $837 – on Friday he reached 762.18 dollars (730.2 euros). Elon Musk just announced on Thursday that he wants to reduce the amount of this loan thanks to approximately 7 billion in funding from investors: Oracle co-founder Larry Ellison, Sequoia Capital fund, Qatar Holding fund and Saudi Arabia. Prince Al-Waleed Ben Talal, who will contribute to the already held action on Twitter. According to financial agency Bloomberg, Elon Musk will even try to get rid of the pawnshop by selling more Tesla shares totaling more than $27 billion.
Aside from these stock market and financial games, the drop in Tesla’s share price is indicative of fundamental tensions surrounding the takeover of Twitter, as if Elon Musk’s desires to lead the two companies contradict each other. “As the CEO of a $1 trillion company, Elon Musk shouldn’t spray and focus on Tesla, nor should he waste time buying and running a $43 billion company.”, David Trainer, CEO of investment firm New Constructs, calculated in mid-April. However, Mr. Musk is already busy with his role at space company SpaceX, stock markets are falling, the world is in an unprecedented crisis, electric vehicles are booming, and Tesla is facing challenges such as the recent recall of 130,000 vehicles due to an overheating problem… Tesla’s share price jumped by 7% on Friday, when the Twitter takeover was announced to be on hold.
” Horror movie “
What are the real intentions of the unpredictable Elon Musk? “Wall Street will now assume that the deal is about to collapse, or that Musk is trying to negotiate a lower purchase price, or that he simply wants to exit the deal by paying a $1 billion severance package.”sums up Dan Ives, an analyst at investment firm Wedbush Securities, who estimates takeover chances at “less than 50%”. For Mr. Ives “The Twitter takeover circus will turn into a horror movie worthy of Friday the 13th ».
“We will inevitably question whether fake accounts are the real reason behind these delaying tactics.abounds Suzanne Streeter, an analyst at investment firm Hargreaves Lansdown, quoted by Bloomberg. Forty-three billion seems like a gigantic price. His announcement could be a strategy to bring that amount down. »
An hour after his devastating tweet, Mr Musk stated that “always invested” in redemption. These two reports will certainly be scrutinized by the Securities and Exchange Commission, which, according to US press reports, has already launched an investigation into how Mr. Musk quietly acquired a massive amount of Twitter shares in late January. declaring them as required by US law. A stock market cop has already sanctioned Mr. Musk for posting information about Tesla on Twitter that goes beyond the requirements for a listed company.
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