April 19, 2024

Tesla CEO Elon Musk says his deal to buy Twitter can’t move forward unless the company shows public proof that less than 5% of the accounts on the social media platform are fake or spam.

Musk made the comment in a reply to another user on Twitter early Tuesday. He spent much of the previous day in a back-and-forth with Twitter CEO Parag Agrawal, who posted a series of tweets explaining his company’s effort to fight bots and how it has consistently estimated that less than 5% of Twitter accounts are fake.

In his tweet Tuesday, Musk said that “20% fake/spam accounts, while 4 times what Twitter claims, could be much higher. My offer was based on Twitter’s SEC filings being accurate.”

He added: “Yesterday, Twitter’s CEO publicly refused to show proof of 5%. This deal cannot move forward until he does.”

It’s Musk’s latest salvo over inauthentic accounts, a problem he has said he wants to rid Twitter of.

At a Miami technology conference Monday, Musk estimated that at least 20% of Twitter’s 229 million accounts are spam bots, a percentage he said was at the low end of his assessment, according to a Bloomberg News report.

The battle over spam accounts kicked off last week when Musk tweeted that the Twitter deal was on on hold pending confirmation of the company’s estimates that they make up less than 5% of total users.

Also at the All In Summit, Musk gave the strongest hint yet that he would like to pay less for Twitter than the $44 billion offer he made last month.

He said a viable deal at a lower price wouldn’t be out of the question, according to the report by Bloomberg, which said it viewed a livestream video of the conference posted by a Twitter user.

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Musk’s comments are likely to bolster analyst views that the billionaire either wants out of the deal or to buy the company at a cheaper price. His tweet Tuesday came in reply to one from a Tesla news site speculating that Musk “may be looking for a better Twitter deal as $44 billion seems too high.”

“It appears the spam/bot issue is cascading and clearly making the Twitter deal a confusing one,” Wedbush Securities analyst Dan Ives remarked in a note to investors. “The bot issue at the end of the day was known by the New York City cab driver and feels more to us like the ‘dog ate the homework’ excuse to bail on the Twitter deal or talk down a lower price.”

Tough spot

Despite the hitch, Twitter said in a regulatory filing Tuesday that it plans to complete the deal at the agreed price and terms, and that it’s subject to the approval of Twitter stockholders and is expected to close in 2022. Twitter’s board of directors unanimously recommended that shareholders vote in favor of the deal.

“The Twitter board is caught in a very tough spot as if they do not accept a lower price (after negotiations following the bot issue scrutiny over the coming weeks) for the deal and Musk does actually walk, then the stock would likely see a sub $30 level with a broken deal in this shaky market backdrop,” Ives said. 

Musk offered to buy Twitter on April 14 for $54.20 per share. Twitter shares have slid since then and are now down by just over 8%, closing Monday at $37.39

To finance the acquisition, he has pledged some of his Tesla shares, but they have slumped by a third since the deal was announced.

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