Takeover of the online platform – “Deal on hold”: Elon Musk’s tweet causes Twitter shares to plummet

– “Deal on hold”: Elon Musk’s tweet causes Twitter shares to plummet

The tech billionaire is putting the Twitter acquisition on hold for now, but says he’s still interested in buying the online service.

Updated: 05/13/2022 13:28

Hold off on buying Twitter: Elon Musk wants to check fake accounts first.

Photo: Keystone

Tech billionaire Elon Musk put his deal to buy Twitter on hold on Friday. He first wants to wait for calculations to show that accounts without real users actually make up less than five percent.

Musk wrote this on Twitter. The online service published this estimate a few days ago in its detailed quarterly report.

A few hours later, Musk assured that he was still interested in Twitter. He is sticking to the takeover plans, he wrote on Twitter without further details.

Twitter stock quickly fell nearly a quarter in premarket trading after Musk’s tweet, to trade at around $34.50. The price later recovered somewhat to around $38. That’s a far cry from the $54.20 a share Musk had promised shareholders.

The paper went out of business on Thursday at $45.08 – a sign of investor skepticism that Musk is actually going through with the deal.

Twitter named the number of 229 million users for the first quarter that the service can reach with its ads. The service does not count clearly identified fake accounts in the user numbers. However, Twitter recently had to admit that slightly inflated user numbers have been reported since 2019 due to an error. However, the deviations were rather small with a maximum of almost two million users.

Spammers are kicked out

It shouldn’t have come as a surprise to Musk that there are also fake accounts on the platform. Because he had declared as one of his goals for the Twitter purchase that he wanted to ban profiles that are used to send spam messages from the platform.

It’s unclear whether Musk could use the accusation that Twitter provided inaccurate information about the number of fake accounts to exit the deal or lower his bid. After all, he had waived the usual check of the Twitter books before the agreement.

Twitter and Musk both agreed to a $1 billion fine if either side canceled the deal. But experts didn’t think that meant Musk could just change his mind without explanation and be off the hook with a billion dollars.

Agreement on 44 billion deal

The boss of the electric car manufacturer Tesla had agreed with the Twitter board of directors on a deal worth around 44 billion dollars. But he is still dependent on enough shareholders wanting to sell him their shares. Twitter and Musk previously wanted to complete the acquisition by the end of the year. In the past few months, he has already bought a good nine percent stake in Twitter on the stock exchange.

In the past few days, other problems for the deal have also become apparent. Musk originally wanted to borrow around $12 billion of the purchase price, which would be secured with his Tesla shares. But after Tesla stock plummeted from around $1,000 to just $728 on Thursday, that plan became increasingly unfavorable to him.

Financial service Bloomberg reported on Thursday that Musk is looking for alternative sources of funding instead of the equity-backed loan. Tesla shares surged towards the $770 mark in premarket trading following Musk’s tweet.

Musk’s announcement also sheds new light on radical moves by Twitter CEO Parag Agrawal on Thursday. He had pushed out the product manager and the top manager responsible for sales development and imposed a hiring freeze.

SDA / was

Published: 05/13/2022, 12:17

Found a mistake?Report now.

22 comments