Elon Musk puts Twitter deal on hold over spam bot data - but he 'remains committed' - National |  Globalnews.ca

Elon Musk puts Twitter deal on hold over spam bot data – but he ‘remains committed’ – National | Globalnews.ca

Elon Musk said Friday that his planned $44 billion purchase of Twitter is “temporarily on hold” pending details about spam and fake accounts on the social media platform, later adding that he “remains committed” to the acquisition.

Musk tweeted that he wanted to limit the number of fake and spam accounts on the social media platform. Musk has been vocal about his desire to get rid of Twitter’s issue with “spam bots” that mimic real people and appears to question whether the company is under-reporting it.

But Twitter revealed in regulatory filings that its bot estimates may have been low for at least two years, leading some analysts to believe that Musk could raise the issue as a reason to back out of the deal.

Noting that he suspects the number of non-genuine accounts is that low, Musk wrote on Twitter Friday morning, “The Twitter deal is temporarily on hold pending account-supporting details that spam/fake accounts already account for less than 5% of users.”

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Musk later tweeted that he “remains committed to the acquisition.” Neither Twitter nor Musk on Friday responded to requests for comment.

The problem of fake accounts on Twitter is no secret.

In its quarterly filing with the Securities and Exchange Commission, Twitter doubted that the number of bot accounts was correct, acknowledging that the estimate may be understated. “In making this decision, we applied significant judgment, so our estimate of miscalculations or unwanted may not accurately represent the actual number of such accounts, and the actual number of miscalculations or unwanted may be higher than we estimated,” he says.

A review of Twitter’s filings with the US Securities and Exchange Commission shows that an estimate of spam accounts and similar language expressing skepticism has been in Twitter’s quarterly and annual reports for at least two years, long before Musk made his presentation, known to him and his advisors.

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Sarah Silver, professor of business journalism and financial communications at Quinnipiac University, said it appears that Musk is using the number of spam accounts as an excuse to opt out of the deal.

“Claiming that this was his reason for stopping the deal is unreliable,” Silver said. This is not a new issue for him. It’s not just entering his consciousness now.”

Shares in both Twitter and Tesla swung sharply in opposite directions on Friday, with Twitter plunging more than 9 percent and Tesla, which Musk suggested using to help fund the Twitter deal, tumbling about six percent.

But shares of Tesla, which Musk has been selling to fund some of his Twitter acquisition, have plummeted since it was revealed that the social platform had become a target of Musk.

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Those shares have lost a quarter of their value in the past month, dropping from about $1,150 in early April when Musk confirmed he had acquired a massive stake on Twitter, to about $762 on Friday.

“So buying this company with Tesla stock has become a lot more expensive for him,” Silver said.

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Musk’s net worth, which Forbes estimated earlier this week at $240 billion, fell to $223 billion as of Friday.

Tesla stocks may have benefited from Twitter bot accounts over the years, too. A University of Maryland researcher recently concluded that such bots have been used to generate hundreds of thousands of positive tweets about Tesla, potentially boosting its stock in years when it was under stress.

Neither Tesla nor its supporters are responsible for these bots.


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Investors evaluating the deal had to weigh Musk’s legal woes as the possibility that acquiring Twitter would be a distraction from operating the world’s most valuable automaker. The proposed deal continued to pressure shares of Tesla, which had already fallen 16 percent this week.

The sharp jump in Tesla stock prices before the opening bell on Friday signaled growing doubts about the Twitter acquisition.

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Musk has already sold more than $8 billion of his Tesla stock to fund the purchase.

Originally, Musk committed to borrowing $12.5 billion of Tesla stock as collateral for the purchase of Twitter. It will also borrow $13 billion from banks and float $21 billion in Tesla stock.

Last week, Musk boosted the equity stake in his Twitter offering with commitments of more than $7 billion from a variety of investors including Silicon Valley hitters like Oracle co-founder Larry Ellison.

Funds from new investors reduce the amount borrowed from the value of Tesla’s stock to $6.25 billion, according to the filing. Tesla’s stake could rise from $21 billion to $27.25 billion.

Wedbush analyst Dan Ives, who tracks both Tesla and Twitter, said Musk’s “weird” tweet would either lead Wall Street to believe the deal was likely to collapse, or Musk would try to negotiate a lower price for the deal, or he would simply walk away from the deal. A fine of $1 billion.

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“Many will see this as a catcher using these Twitter deposit/spam accounts as a way to get out of this trade in a wildly changing market,” Ives wrote.

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He added that Musk’s use of Twitter in place of a financial deposit to advertise was annoying and “sends this entire deal to a circus show with many questions and no definitive answers regarding the future course of this deal.”

Musk’s tweet comes a day after the social media company fired two of its top managers. Twitter said the company is temporarily halting most hiring, except for critical roles, and is “stepping back on non-labor costs to ensure our responsibility and efficiency.”

In a note sent to employees and confirmed by Twitter, CEO Paraj Agrawal said the company had not achieved growth and revenue after the company began investing “vigorously” to expand its user base and revenue.


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2022-05-13 11:30:45

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