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Friday, May 27, 2022

Musk announces “temporary suspension” of the purchase of Twitter

LONDON ( Associated Press) — Elon Musk announced Friday that his plans to acquire Twitter for $44 billion are on “temporary hold,” saying he is awaiting the exact number of spam and fake accounts on the platform. social networks, in a new turn amid signs of internal turmoil caused by the purchase offer.

Musk, who has been outspoken about his desire to end Twitter’s problem with “spam bots” that impersonate real people, seemed to question whether the company was underreporting such numbers.

In a tweet, the billionaire owner of the automaker Tesla posted a link to an article published on May 2 by Reuters that cited a Twitter financial report that estimated that fake or spam accounts accounted for less than 5% of “users”. monetizable daily assets” in the first quarter of the year.

“The Twitter deal is on temporary hold, pending details to support the calculation that spam/fake accounts effectively represent less than 5% of users,” Musk said, indicating skepticism that the number of accounts not authentic is really so low.

It was unclear whether this could derail the deal.

Twitter did not immediately respond to requests for comment early Friday.

After Musk’s announcement, shares of Twitter and Tesla soared in opposite directions: Those of the social network lost 14%, while those of the automaker, which Musk proposed to use to help finance the purchase, gained 7. %.

Investors are eyeing Musk’s legal troubles, as well as the possibility that the Twitter acquisition could distract him from running the world’s most valuable automaker. The proposed deal continued to put pressure on Tesla shares, which had already fallen 16% this week.

The sharp jump in Tesla’s share price before the opening bell on Wall Street on Friday signaled growing doubts that the Twitter takeover would go through.

Musk has already sold Tesla shares for more than $8 billion to finance the purchase.

Musk had originally agreed to borrow $12.5 billion to buy Twitter, with Tesla shares as collateral. He also said that he would borrow $13 billion from banks and that he would contribute $21 billion in Tesla stock.

Last week, Musk bolstered his shareholding in his Twitter offering, with commitments of more than $7 billion from a diverse group of investors, including several Silicon Valley bigwigs such as Oracle co-founder Larry Ellison.

The money from the new investors was reducing the amount borrowed on the value of Tesla shares to $6.25 billion, according to an official filing. Tesla’s shareholding could go from $21 billion to $27.25 billion.

Wedbush analyst Dan Ives, who follows both Tesla and Twitter, said Musk’s “strange” tweet will lead Wall Street to think the deal is likely falling apart, that Musk is trying to negotiate a lower price. low or that it is simply walking away from the acquisition proposal without paying a $1 billion penalty.

“Many will see this as Musk using the fake/spam Twitter account issue as a way to get out of this deal in a rapidly changing market,” Ives wrote.

He added that it was concerning that Musk used Twitter to make the announcement instead of a financial statement, as it “sends this whole deal to a circus sideshow with a lot of questions and no concrete answers on the way forward for this deal.”

Musk’s tweet came a day after the platform fired two of its top managers. Twitter reported that it has halted most hiring, except for critical positions, and is “reducing non-labor costs to ensure we are being responsible and efficient.”

In a note to employees, confirmed by Twitter, CEO Parag Agrawal said the company has fallen short of its growth and profit targets after “aggressive” investment to expand its user base and revenue.

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Associated Press writer Michelle Chapman in New York contributed to this report

World Nation News Deskhttps://www.worldnationnews.com
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