Musk later said he “remains committed to the acquisition,” but his comments raised doubts on Wall Street, sending Twitter’s stock price down 10% during morning trading in New York. The share price had fallen from $54.4 even before Musk’s comments, indicating that the markets are not convinced that he will complete the buying process.
Some analysts have commented that Musk may seek to renegotiate the acquisition price of Twitter, or he may dismiss the whole matter, the BBC reported, noting that Twitter’s board last month approved an offer worth $44 billion from the president of “Tesla” to acquire the company.
As such, many would view Musk’s highlighting the number of spam accounts on the site as an excuse to “walk out of the bargain in a dramatically changing market.” Analysts said, “The nature of Musk creating a lot of uncertainty from his tweet is worrisome for markets. Now there are no definitive answers on the path of this deal.”
Under the terms of the deal, if Twitter or Musk, the world’s richest man, withdrew, the withdrawing party would have to pay the other a $1 billion contract cancellation fee. Musk had called more than once to “defeat the spam bots” in Twitter, saying that it was one of his priorities after completing the acquisition deal.
Twitter has long had a problem with fake bot accounts, which are frequently used to post content. The site said last month that fake accounts represented less than 5% of daily active users on the site during the first three months of this year. The company warned at the time that its estimate of “mistaken or unwanted accounts may not accurately represent the actual number of such accounts”, adding that the actual number “may be higher than the estimate”.
The number of spam accounts on the service is significant, because having a higher number of estimates for this type of account can hurt the ability to increase ad revenue or paid subscriptions, said Susanna Streeter, an analyst at Hargreaves Lansdon. But she stressed that it is not possible to be sure of the extent to which Musk is sincere in his concerns. “There will be questions as to whether fake accounts are the real reason behind this stalling tactic, given that it appears that promoting free speech rather than focusing on wealth creation was the primary motivation behind Musk’s acquisition,” she added.
Musk is also the CEO of Tesla, and has used a significant amount of his shares in the electric car maker to help fund the Twitter acquisition, selling $8.5 billion worth of Tesla stock and planning to borrow $12.5 billion with a guarantee. shares, but reduced the loan amount by 6.5 billion dollars.
Tesla’s share price has fallen sharply since Musk revealed his desire to buy Twitter over fears that he might have to sell more shares, but after Musk tweeted that the deal was temporarily suspended, Tesla’s share price jumped 6.7% in Pre-market trading.
Musk’s latest announcement came shortly after Twitter confirmed that two of its managers would be leaving in one of the largest restructurings since Musk reached an agreement to acquire the company. The two CEOs were driving Twitter’s consumption and revenue operations.
Starting this week, the company has also halted most hiring, except for “critical roles at work”. A Twitter spokesperson told the BBC: “We are eliminating non-labor costs to make sure we are responsible and efficient.”
Cayvonne Beckbauer, who led Twitter’s consumer division, and Bruce Flack, who oversaw its revenue division, tweeted last Thursday that it was not their decision to leave. He stated that he is now on paternity leave and was disappointed after Parag, who “wanted to take the team in a different direction”, asked him to leave. As for Falk, he tweeted: “I will make it clear that I, too, were fired by Parag.” But it appears that he later deleted the tweet. His Twitter bio now says he is “unemployed”.
Jay Sullivan, who led the consumption division during Pickpur’s leave, will become permanent head of the division. He will also oversee the revenue department until a new manager is appointed.