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Twitter takeover suspended: why Elon Musk doubts

How often, the information came from the main stakeholder… through a quick tweet. “The agreement with Twitter is temporarily suspended pending details that will establish that spam and fake accounts actually make up less than 5% of users,” Elon Musk said late this Friday, May 13, on the social network he longed for on for several years. weeks. Before adding: “I am still determined to acquire [Twitter].”

In relation to his first post, a Reuters article published ten days ago indicates a rather modest presence of these automated spam and fake accounts out of a total of 229 million “monetizable” users who are likely to receive ads in the 1st quarter of 2022 of the year. After all, good news for Elon Musk, who a month earlier claimed that these unwanted accounts, and in particular those associated with cryptocurrency scams, are one of “Twitter’s most annoying problems.”

So why was he suddenly doubtful today? Earlier this month, the more critical Twitter audit tool SparkToro said that nearly half of Elon Musk’s followers (nearly 93 million at the moment) were themselves spammers, bots, or simply inactive accounts. Worse, in a panel of 2,000 random Twitter users, SparkToro concluded that they each had between 5 and 30% unwanted followers.

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It’s impossible to know if Elon Musk is basing himself on these numbers. However, this moving data is hard to quantify: Twitter itself admits in its quarterly reports that “the actual number of fake or spam accounts may be higher” than its estimates. This is no less important in the context of an acquisition. “Counting the exact number of people who actually tweet is considered critical to the site’s future ad revenue streams or paid subscriptions,” Suzanne Streeter, market analyst at Hargreaves Lansdown, told AFP.

Protect Tesla

This announcement caused a bit of a shock to the stock market anyway. The group’s shares, listed on the New York Stock Exchange, fell about 10% at the Wall Street open, settling at just over $40. Well below Musk’s deal at $54.20 per share, totaling about $44 billion. Naturally, “this tweet could simply be used to lower the transaction price and secure a cheaper deal,” Alexandre Barades, a financial analyst at brokerage firm IG France, told L’Express. The fake account trick would only be a pretext to further his goals.

But isn’t the (real) reason more complex? Shares in the Tesla car company, another Elon Musk property, have lost nearly 30% of their value in the past month and nearly 40% since January 1. However, “Elon Musk’s financial package for the acquisition of Twitter includes Tesla shares as collateral,” recalls Alexander Barades. If this drop continues – Elon Musk himself has already admitted that Tesla shares have been overvalued – it could trigger a sale of shares to pay off his loan. Something that would destabilize his company, which had already warned him against this mechanism. Thus, Elon Musk’s statement could calm her down on this issue. Protect Tesla, mission accomplished? The group’s shares are up almost 6% this Thursday at the Wall Street open, at $770.

Consistency as a whole could send a signal to creditors: “Elon Musk seems to be looking for better terms for this Twitter takeover,” Judge Alexander Barades. And the auto magnate has every reason to believe it. “There are very successful funds that would be privileged to lend to such a large client who has the funds to buy what he wants.” In this case, Musk will just compete.

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Final hypothesis: The entrepreneur is setting the stage for a withdrawal from the Twitter takeover. It’s hard to believe when Elon Musk has already begun to understand the commands of the social network, and has just met with European Commissioner Thierry Breton to discuss with him the rules that are coming to the Old Continent. But at the same time, his retreat clause is valued at a small billion dollars. A drop of water for the richest man in the world.

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