Elon Musk questions his takeover of Twitter, demanding details about fake accounts

posted on Friday, May 13, 2022 at 10:44 pm.

Elon Musk is sending mixed signals about his plan to take over Twitter: On Friday, two hours after announcing that the acquisition was “postponed” due to doubts about the number of fake accounts, the quirky boss assured that he “still intends to close the deal .

“The Twitter acquisition is on hold pending details that spam and fake accounts account for less than 5% of users,” Musk first wrote on the platform, where she has nearly 93 million followers.

He then confirmed his intention to acquire the social network, but the market questioned his true intentions.

Shares started off 25% lower after the suspension was announced before capping their losses and ending the session down 9.7% on Wall Street.

The general manager of the social network, Parag Agrawal, assured during the day that he still expects the operation to go through.

After initially opposing it, the social network’s board of directors accepted a $44 billion buyout offer made by the eccentric South African-born leader in late April.

Mr. Musk, in particular, promised to rid Twitter of spam, authenticate users and increase transparency, without specifying how he intends to implement this project.

In early May, the company indicated that, on average, from January to March, it had 229 million daily users who were called monetized, that is, exposed to ads.

In this case, she calculated that less than 5% of them were spam or fake accounts.

The proportion 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 critical to the site’s future ad revenue streams or paid subscriptions.” .”

– No “seductive comments” –

Since the Tesla and SpaceX boss’ takeover bid, Twitter’s market value has plummeted by billions of dollars, following the same downward slide as most Wall Street tech stocks.

The title ended Friday at just over $40, well below the $54.20 offered by the billionaire.

On Thursday, management announced the departure of two senior officials and the suspension of all non-essential hiring.

“While I expect the deal to be completed, we need to be prepared for all scenarios and continue to act in the interests of Twitter,” Parag Agrawal said Friday on the social network.

“I will also try to make our work more transparent,” he added. But it won’t go through “tweets on +the topic of the day+ or the sexiest comment.”

In Elon Musk’s latest tweet, “Wall Street will now be considering 1) the deal is about to fail, 2) this is Musk’s attempt to negotiate a lower purchase price, or 3) Musk just wants to back out of the $1 billion severance deal,” Dan Ives of Wedbush Securities said.

To finance the operation, the leader planned to resort to a significant personal contribution, requesting a bank loan, as well as a margin loan, under which he would pledge his Tesla shares as collateral.

Earlier this month, Mr. Musk said he had raised just over $7 billion from various investors, including Oracle co-founder Larry Ellison and Saudi Prince Alwaleed bin Talal.

“While we never doubted Musk’s ability to complete the deal financially, we felt the biggest risk was that Elon himself might change his mind,” CFRA’s Angelo Zino said.

According to Dan Ives, the entrepreneur has overestimated the strength of his Tesla shares, whose price has plummeted after the Twitter takeover announcement, and may try to protect the electric car maker.

“The fact that Musk is creating such uncertainty with his tweet (and not a stock document) is very worrying for us and Wall Street” and raises “a lot of questions, but does not provide specific answers as to whether the transaction will take place,” the analyst emphasizes. .

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