Elon Musk Announces Suspension of Twitter Takeover As Wall Street Crashes

“The Twitter acquisition is temporarily on hold pending details that spam and fake accounts make up less than 5% of the user base,” Elon Musk tweeted. (Photo: 123RF)

New York – Elon Musk is sending mixed signals about his plan to take over Twitter: Two hours after he said he was putting the acquisition on hold pending details on the number of fake accounts, the quirky boss assured he was “still committed” to completing deals. deal.

“The Twitter acquisition is temporarily on hold pending details that spam and fake accounts account for less than 5% of users,” Musk first wrote on the Twitter platform, where he has nearly 93 million followers.

He then confirmed his intention to acquire the social network, but the market questioned his true intentions.

Statements that had a strong impact on the stock market, where action began with a 25% drop after the suspension was announced, before limiting its losses by dropping about 13% in electronic trading ahead of the Wall Street opening.

Contacting AFP, Twitter did not immediately respond.

After initially opposing it, the Twitter social network’s board of directors accepted a $44 billion takeover bid formulated by the eccentric South African-born leader in late April.

Mr. Musk promised to rid Twitter of spam, authenticate users and increase transparency, without specifying how he intends to implement this project.

The company indicated in early May during the presentation of its quarterly results that it averaged 229 million daily users from January to March, called monetized, that is, exposed to advertising.

In this case, she calculated that less than 5% of them were spam or fake accounts.

The share of fake accounts is “a key metric” for Twitter, explains Suzanne Streeter, market analyst at Hargreaves Lansdown, because “counting the exact number of people who actually tweet is considered to be decisive for the site’s future ad revenue streams or paid subscriptions.” .

In addition to his desire to fight spam, Musk has said he wants to make Twitter a bastion of free speech and has said he is ready to reinstate former US President Donald Trump, whose account was permanently suspended following the January attack on the Capitol. 2021.

“Horror movie”

After the Tesla and SpaceX boss’ takeover bid, Twitter’s market value plummeted by billions of dollars, following the same downward slide as most tech stocks and the stock market as a whole.

On Friday, the stock traded at just over $40, well below the billionaire’s proposed purchase price of $54.20 per share.

Dan Ives of Wedbush Securities said that Elon Musk’s latest tweet “will turn the Twitter takeover circus into a Friday the 13th horror movie.”

“Wall Street will now consider 1) the deal is about to get blown, 2) is Musk trying to negotiate a lower purchase price, or 3) Musk just wants to exit the deal with a $1 billion gap fee. US dollars,” the analyst clarifies in a note.

However, the leader attempted to secure funding for the operation, planning to draw on a significant personal contribution and request a bank loan as well as a secured loan in which he would pledge his Tesla shares as collateral.

Earlier this month, Musk said he had raised just over $7 billion from various investors, including Oracle co-founder Larry Ellison and Saudi prince and businessman Alwaleed bin Talal.

“While we never doubted Musk’s ability to complete the deal financially, we felt the biggest risk was Elon himself changing his mind,” CFRA’s Angelo Zino said.

According to Dan Ives, the entrepreneur has overestimated the strength of his Tesla shares, whose price has plummeted after the Twitter takeover announcement, and may try to protect the electric car maker.

“The fact that Musk is creating such uncertainty with a tweet (and not a stock document) is very worrying for us and Wall Street” and raises “a lot of questions, but there are no concrete answers as to whether the deal will take place,” the analyst emphasizes.


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