Elon Musk says his $44 billion acquisition of Twitter is temporarily on hold as a result of he’s investigating how most of the platform’s customers are actual. It’s doable the world’s richest man didn’t conduct correct due diligence earlier than submitting his supply. Or maybe he’s having second ideas about shopping for Twitter and searching for an excuse to again out.
The takeover, which has concerned a number of funding banks and greater than a dozen co-investors, now has a lower than 50 % probability of going by way of, in line with Dan Ives, a Wedbush Securities analyst identified for his protection of Tesla inventory.
“Our view is while Musk is committed to the deal, the massive pressure on Tesla’s stock since the deal, a changing stock market/risk environment the last month, and a number of other financing factors has caused Musk to get ‘cold feet’ on the Twitter deal,” Ives’ workforce wrote in a note to purchasers on Might 16.
Ives added that the proportion of spam account on Twitter, which Musk claims is slowing down the deal, is “not a new issue and likely more of a scapegoat to push for a lower price.”
Below Musk’s settlement with Twitter, he should pay $1 billion in breakup payment if the deal falls aside.
Pushing for a cheaper price is likely to be essential, given Musk’s battle discovering the cash to pay for the deal.
Tesla’s falling share costs complicates Musk’s plans
Musk has mentioned he plans to promote $21 billion price of his Tesla inventory to fund the Twitter buy. Tesla’s share value has fallen sharply in latest weeks, which means that he must promote much more shares than he initially wished to get the money.
Tesla’s share value is down 28 % because the acquisition was introduced on April 24. The anticipation of Musk’s heavy unloading of his shares, Tesla’s manufacturing turmoil in China, and a broad market selloff all contributed to Tesla’s decline.
But Musk is pointing at Twitter for pausing the deal. He suspects bot accounts make up a much bigger portion of Twitter customers than the lower than 5 % claimed by the corporate. Since Musk mentioned eradicating bot accounts is a key purpose as soon as he owns Twitter, he gained’t transfer ahead till he has definitive details about its consumer make-up.
The precise variety of bot accounts is one thing that may solely be calculated internally as a result of it requires the usage of personal consumer data, Twitter CEO Parag Agrawal defined in a collection of tweets on Might 16.
“We don’t believe that this specific estimation can be performed externally,” Agrawal wrote in one of many tweets, including that, with out personal information akin to geolocation and IP addresses, it’s not even doable to know which accounts are counted as each day energetic customers.
Musk dismissed Agrawal’s arguments by replying with a turd emoji. In a textual content response later, he prompt bot data must be at the least out there to Twitter’s advertisers. “So how do advertisers know what they’re getting for their money? This is fundamental to the financial health of Twitter,” Musk tweeted.