Elon Musk said on Friday that he was temporarily halting his much-anticipated deal to buy Twitter for $44 billion, sending the social media giant’s shares plummeting.
“The Twitter deal is temporarily on hold pending details supporting the calculation that spam/fake accounts actually represent less than 5% of users,” the Tesla CEO said said in a tweet.
The impressive announcement sent Twitter shares down 20 percent in premarket trading, while Tesla — which Musk proposed to fund the mega deal — is up 5 percent.
In his tweet, the billionaire included a link to a May 2 Reuters article citing Twitter’s filing on Monday.
“Twitter Inc, in a filing Monday, estimated that fake or spam accounts accounted for less than 5% of its monetizable daily active users in the first quarter,” the Reuters article said.
It was unclear if the fake account issue could nullify the Twitter deal. Investors had to weigh legal issues for Musk as well as the possibility that acquiring the platform could be a distraction from running the world’s most valuable automaker.
Wall Street investors now see less than a 50% chance the deal will close, according to Dan Ives, an analyst at Wedbush. He added that Musk’s move would be tantamount to a “Twitter circus show,” as Wall Street is likely to view this deal as “likely to fall apart” or “Musk is negotiating a lower deal price.”
Ives said Musk may try to rearrange the deal’s funding so he doesn’t have to rely on leveraged shares in his electric-car company Tesla. Alternatively, Ives said, Musk could just walk away from the deal and pay a $1 billion breakup fee.
“Many will see this as Musk using these Twitter submission/spam accounts as a way to get out of this deal in a rapidly changing market,” he said.
On Thursday, Twitter said the company was pausing most hiring except for mission-critical positions, adding in a statement that “we are scaling back non-labor costs to ensure we are acting responsibly and efficiently.”
In a memo sent to employees and confirmed by Twitter, CEO Parag Agrawal said the company hasn’t hit growth and revenue milestones after the company began investing “aggressively” to expand its user base and revenue.
A day after firing two Twitter honchos, Musk hit the brakes.
Kayvon Beykpour, the company’s general manager, and Bruce Falck, Twitter’s chief financial officer, announced they were fired by Agrawal, who distributed a memo to employees on Thursday announcing the departures.
Jay Sullivan, Head of Consumer Product, will take over from Beykpour.
musk later tweeted that he was “still committed” to the deal.
Twitter has been in an uproar since the company’s board announced last month that it had accepted Musk’s $44 billion takeover bid.
He has said he intends to buy out shareholders and privatize the company.
Musk has promised to overhaul the company’s content moderation policy, which has led to bans targeting controversial figures, many of whom belong to the political right.
According to a regulatory filing filed this week, Twitter has feared staff resignations ahead of Musk’s proposed acquisition
On Tuesday, Musk told a Financial Times conference that Twitter’s decision to ban former President Donald Trump was “morally bad.”
He stressed on Twitter on Thursday that he does not support Trump as a presidential candidate.
“Even though I think a less divisive candidate would be better in 2024, I still think Trump should be restored on Twitter,” he wrote.
The former president has said he doesn’t want to return to Twitter, instead building his own Truth Social platform.
Because of the “risk of further incitement to violence” after the storming of the US Capitol, he was permanently blocked from Twitter in January 2021, the company said at the time.
Trump is reportedly considering another run for the White House in 2024.
With mail wires
https://nypost.com/2022/05/13/elon-musk-says-twitter-deal-temporarily-on-hold/ Elon Musk: Twitter deal “temporarily suspended”