Posted at 7:30 am.
On Friday, Elon Musk escalated the drama surrounding his $44 billion Twitter takeover bid by saying in a pre-dawn tweet that the deal was “temporarily on hold” until he could get more details about the volume of spam and fake accounts on Twitter. platform. , and tweeted two hours later that he was “still committed” to the acquisition.
The announcements are the latest chapter in a corporate soap opera that raises questions about online free speech and the implications of appointing the world’s richest man to head one of the most powerful social media platforms.
Musk, Tesla’s CEO, said ridding the platform of fake accounts, bots and spam will be one of his priorities once he takes over. In his tweet, Mr. Musk referred to a regulatory filing filed by Twitter on May 2, which estimated that less than 5% of Twitter users are fake accounts.
Known to come from a free and sometimes impulsive spirit, Mr Musk’s comments have left many wondering about the operation’s future.
Twitter shares fell about 20% after Musk’s first tweet. The latter then repeated that he was “still acquiring”. Twitter shares ended Friday’s session down 9.7% to $40.72.
Twitter imposes several restrictions on account creation, and the company has a long history of fighting fake accounts and bots. But it was difficult to pinpoint the extent of the problem. In a May 2 regulatory filing, Twitter stated that it estimates that less than 5% of its users are fake, a figure that has been previously disclosed. Twitter warned that it used “significant judgment” in its calculations and that its “estimation of the fake counts may not accurately reflect the actual number,” wording similar to that used in previous company filings.
Musk’s comments were seen as a tactic to lower the acquisition price, or as an excuse to pull out of the deal entirely.
“Many believe that Musk is citing this situation of fake Twitter accounts and spam as a way to get out of a deal in a changing market,” Wedbush analyst Daniel Ives said in a statement to investors.
Twitter did not respond to The New York Times’ request for comment.
Musk’s surprise bid on Twitter sparked a major debate about the social media platform’s role in controlling what its users say. Twitter has been trying to crack down on hate speech, harassment and other online abuse for years, but Musk, who has a history of using the platform to attack and belittle his critics, has vowed to soften the company’s content moderation policy. On Tuesday, he said he would lift the travel ban on former President Donald Trump.
Getting out of the agreement can be complicated. The purchase agreement includes a $1 billion fee that Musk would have to pay if he canceled the deal, though it’s not clear how that clause would apply if Musk could prove Twitter user numbers were inaccurate.
If Musk’s debt financing remains intact, Twitter could also sue the billionaire to force him to pay for the operation.
Mr. Musk has pledged to use his personal fortune to fund a deal to buy Twitter, a plan that has been hurt by the recent plunge in stock prices, including Tesla shares. Tesla shares have fallen nearly 30% over the past month. Mr. Musk sold Tesla stock and pledged it for personal loans to raise cash.
If the deal goes through, Twitter’s business troubles could force Musk to dive deeper into his shares in the electric car maker to plug any financial holes. And any trouble at Tesla that sends its stock down hard enough could trigger covenants in Musk’s personal loans that would require him to add additional collateral, limiting his ability to invest in Twitter.
Tesla shares rose 5.7% on Friday after Musk’s comments on Twitter.
Musk’s proposal has sparked uncertainty at Twitter, a company already struggling to attract users and increase revenue. On Thursday, Twitter CEO Parag Agrawal fired two top executives, halted new hires and vowed to cut costs.
This article originally appeared in The New York Times.