Elon Musk said overnight that his $44 billion acquisition of Twitter can’t move ahead unless the company backs up statements about the number of fake accounts on the platform, which the company has put at under 5%.
It’s something he’s been picking at for days but made explicit in a tweet early Tuesday as some estimates put the number of spam accounts at 20%.
“20% fake/spam accounts, while 4 times what Twitter claims, could be *much* higher. My offer was based on Twitter’s SEC filings being accurate. Yesterday, Twitter’s CEO publicly refused to show proof of <5%. This deal cannot move forward until he does,” Musk tweeted.
Cleaning up Twitter by eliminating BOTS and spammers was one of Musk’s goals in buying the company.
The board accepted his all-cash offer for $54.20 a share last month. The BOT issue surfaced last week and Musk said then the purchase was on hold until he had more information, but later tweeted that he was “committed” to the deal.
Twitter CEO Parag Agrawal in a Twitter thread yesterday discussed spam accounts as less than 5% of overall daily active users (DAU). Musk responded to Agrawal’s tweets with a ‘poop’ emoji.
The ball is in Twitter’s court now, says Wedbush analyst Daniel Ives, and the board is “in a tough spot with no one else waiting by the altar.”
“If they do not accept a lower price (after negotiations following the bot issue scrutiny over the coming weeks) for the deal and Musk does actually walk then the stock would likely see a sub $30 level with a broken deal in this shaky market backdrop.”
Twitter shares never hit the proposed deal price, indicating skepticism it would happen. They fell more than 8% yesterday and are down again in pre-market trading at about $37. Shares of Tesla, which have been pounded by all the noise around its founder-CEO and Twitter, are up this morning.
“The bot issue at the end of the day was known by the New York City cab driver and feels more to us like the “dog ate the homework” excuse to bail on the Twitter deal or talk down a lower price,” said Ives.