Billionaire Elon Musk announced on Friday he had temporarily placed his highly anticipated $44 billion deal to buy Twitter on hold until he can get verify the true number of spam and bot accounts on the social media platform.
“Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users,” Musk tweeted.
Twitter stock initially fell after news that Musk’s Twitter purchase deal was on hold. In a follow-up tweet two hours after his first, Musk said, “Still committed to acquisition.”
In April, Twitter submitted its latest quarterly Securities and Exchange Commission (SEC) report. The company’s metrics are based on monetizable daily active usage or users (mDAU), which are the number of people, organizations, or other accounts that use Twitter on a day-to-day basis.
“We have performed an internal review of a sample of accounts and estimate that the average of false or spam accounts during the first quarter of 2022 represented fewer than 5% of our mDAU during the quarter,” the company’s April SEC report said.
Twitter warned that the true number of bot accounts may differ from their estimated.
“In making this determination, we applied significant judgment, so our estimation of false or spam accounts may not accurately represent the actual number of such accounts, and the actual number of false or spam accounts could be higher than we have estimated,” the company said.
Musk has said he wants to do away with fake or spam Twitter accounts when his purchase of the company goes through. On Tuesday, Musk said he would favor reinstating former President Donald Trump on the platform after he was permanently banned in 2021. Musk said, “Permanent bans should be extremely rare and really reserved for accounts that are bots, or scam, spam accounts.”
Susannah Streeter, an investment analyst at Hargreaves Lansdown, told the Wall Street Journal that Musk may be using the delay to bring down the price of his Twitter buyout.
“The $44 billion price tag is huge, and it may be a strategy to row back on the amount he is prepared to pay to acquire the platform,” Streeter said.
Daniel Ives, a technology analyst at Wedbush Securities, also told the Wall Street Journal Musk may be trying to renegotiate or get out of the deal altogether. Ives suggested one reason Musk may try to get out of the deal is because of the 29 percent drop in Tesla stock prices in the past month. Musk, who is the CEO of Tesla, has been using his Tesla holdings to help fund the Twitter purchase deal.
“Leveraging his stock and potential sales of Tesla is a huge overhang on the stock,” Ives said.