Elon Musk tweeted that his $44 billion takeover of Twitter Inc. is “temporarily on hold” as he awaits data on its proportion of fake accounts, sending the social media giant into a tailspin.
Twitter slumped 20% in pre-market trading after Musk tweeted the deal was suspended pending details on the company’s assertions that fake accounts contributed less than 5% of its users.
Twitter said in a previous filing “that the average of false or spam accounts during the first quarter of 2022 represented fewer than 5% of our monthly daily active users during the quarter.”
Musk announced his purchase of Twitter in a statement last month, stating that he would defeat spam bots, verify all users and open the source code to its algorithms. Musk has also said he’d like to make the platform a bastion of free speech, taking the guardrails off of content moderation.
Bots are currently allowed on Twitter, though under the company’s policy, such accounts are supposed to indicate that they’re automated. The platform has even launched a label for “good” bots, such as @tinycarebot, an account that tweets self-care reminders. Spam bots are forbidden and policies have been established to address them.
In recent times, doubts have grown about Musk’s ability for Twitter to be acquired.
Spread on the deal, which gives Wall Street an indicator of Wall Street’s belief that the takeover will succeed, increased further to $9.11 on Thursday, from $8.11 the previous session. That was the widest level since the billionaire launched his bid last month to purchase the Twitter for $54.20—and double where it was last week when he announced a roughly $7.1 billion financing commitment.
According to sources familiar with the matter, Musk is also in negotiations with investors for preferred financing and equity to fund his planned buyout of Twitter. This will eliminate any need to borrow any margin loans related to Tesla shares.
Recent disclosures by Larry Ellison and Sequoia Capital as well as Qatar Holding, Saudi Prince Alwaleed bin Talal of $7.1 billion equity commitments were made to him. The latter also included his Twitter stock in the deal.
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