Elon Musk warns Twitter takeover could fail over fake accounts
By Abigail Townsend
Date: Tuesday 17 May 2022
(Sharecast News) - Elon Musk has warned that his $44bn takeover approach for Twitter could fail if the social media platform is unable to prove how many accounts are fake.
The Tesla and SpaceX billionaire, who first announced on Friday that the deal was "on hold", tweeted on Tuesday: "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 [less than] 5%.
"This deal cannot move forward until he does."
Twitter has said that "well under 5%" of its accounts are fake or spam, included so-called bots, although it has conceded that removing them completely is an ongoing issue. But Musk believes the figure could be closer to around 20%. The number of fake accounts is a major issue for advertisers who pay to use the platform.
He told the All-in-Summit in Miami on Monday that reducing the agreed price of $54.20 per share would not be "out of the question".
He continued: "You cannot pay the same price for something that is much worse than they claimed. The more questions I ask, the more my concerns grow."
In a statement issued on Tuesday, Twitter said it was "committed to completing the transaction on the agreed price and terms as promptly as practicable".
Shares in Wall Street firm closed 8% lower on Monday and by 1100 BST on Tuesday were down a further 3% in pre-market trading.
Victoria Scholar, head of investment at Interactive Investor, said: "It looks like these spam accounts are creating a convenient excuse for Musk to either walk away or at least to negotiate a better price.
"Remember Twitter was relatively quick to accept Musk's first offer. Perhaps Musk now thinks he shot too high, particularly given the recent sharp slump in Tesla's share price since the deal materialised."
Neil Wilson, chief market analyst at Markets.com, said: "Musk now says the deal cannot move forward until Twitter proves that fewer than 5% of accounts are fake, since he based his offer on their SEC filings being accurate.
"Sounds reasonable, no? Except Musk waived his right to carry out due diligence. The point is, Musk doesn't really follow any rules, so it kind of doesn't matter what he has said or done before, or is supposedly bound by legally."
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