The saga of Elon Musk’s attempt to acquire Twitter took another shocking turn on Friday, May 13, with Musk announcing he put the deal “temporarily on hold.”
The number of bot, spam, and duplicate accounts on the social media platform is at issue. According to Reuters, Twitter estimated that “false or spam accounts represented fewer than 5% of its monetizable daily active users.”
Musk tweeted on Friday that the deal is on hold “pending details supporting [Twitter’s] calculation” on the percentage of bot/spam accounts.
Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of usershttps://t.co/Y2t0QMuuyn
— Elon Musk (@elonmusk) May 13, 2022
Ending spam accounts has been a driving motivator for Musk as he negotiates the company’s purchase.
Twitter’s share price plunged more than 20% in premarket trading Friday morning after Musk’s tweet, with investors fearing the $44 billion deal might not go through. Shareholders recovered roughly half those losses later in the day when Musk tweeted that he was “still committed to acquisition.”
Events took another turn on Saturday, May 14. Musk stated that Twitter’s legal team contacted him and claimed he violated a non-disclosure agreement with the company for publicly discussing details on how he would determine an accurate estimate of fake/bot accounts on Twitter.
It is unclear whether or not this alleged violation would imperil the deal.
Even if the deal were to go through eventually, analysts at Hindenburg Research expressed skepticism it would close at the agreed-upon price of $54.20 per share.
Hindenburg Research analysts shared that they “suspect that Twitter continues to overstate its true daily active users… As indicated by Musk, the platform is flooded with bots, spam, and scam accounts that likely inflate its genuine user metrics even further.”
They argue this gives Musk significant leverage in potentially renegotiating the purchase price. He could even walk away from the deal, albeit at the cost of a $1 billion penalty.
