Elon Musk says Twitter takeover ‘on hold’, sending shares tumbling – business live


Elon Musk says Twitter deal is on hold until he gets more information about fake accounts

Just in: Elon Musk’s $44bn deal to buy Twitter is “temporarily on hold” until he gets more information about fake accounts on the platform.

The billionaire has tweeted that the deal is on hold, waiting for details supporting the calculation that fake and spam accounts represent less than 5% of the users on its platform, as Twitter said in a filing earlier this month.

Musk linked to a Reuters report from May 2, which said Twitter estimated that false or spam accounts represented fewer than 5% of its monetizable daily active users during the first quarter.

Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of usershttps://t.co/Y2t0QMuuyn

— Elon Musk (@elonmusk) May 13, 2022

n”,”url”:”https://twitter.com/elonmusk/status/1525049369552048129″,”id”:”1525049369552048129″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”af1b4a4f-b03b-4428-9ccc-7d29fb10ab66″}}”

Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of usershttps://t.co/Y2t0QMuuyn

— Elon Musk (@elonmusk) May 13, 2022

The news has sent Twitter’s shares plunging around 23% in pre-market trading, on concerns that the deal could collapse.

They’ve on track to open at $34.60, down from around $45 last night, and away from Musk’s agreed offer of $54.20.

Musk has previously said that one of his priorities once he bought Twitter would be to remove “spam bots” from the platform.

But he also warned earlier this week that the deal would take at least another two months to complate, and was “not a done deal.”

That takeover has already led Twitter to announce a hiring freeze, and the departure of two top leaders in a major shakeup.

Mirabaud: the Twitter tragi-comedy continues

The whole situation is ‘farcical’, and Twitter’s board must take some of the blame.

So explains Neil Campling, head of TMT research at Mirabaud Equity Research:

“The tragi-comedy continues and the Twitter situation is nothing short of laughable. We’d always said Musk may cut or run or change his tune at the 11th hour and 59 minutes and 59 seconds on the clock. We’re not even close to the 11th hour yet. Farcical.

Musk has never had the full funding – we know that from his constant attempts to get financial support – but he also held all the cards. The Twitter board have been held hostage and only have themselves to blame for this mess. No other buyer will emerge – if Musk decides he is still interested he can “name his price”… and it won’t be higher!

The board should have seen this coming. There was a specific performance clause in the merger agreement (section 9.9), which gave Twitter the right to “consummate the closing (of the deal)” but only if Musk had the financing – which, of course, he doesn’t.”

Elon Musk may be having second thoughts about the deal, says John Colley, Associate Dean at Warwick Business School:

‘Fake accounts’ were always a likely issue, but didn’t dissuade him from launching his bid. Bringing it up now may just be an excuse to withdraw gracefully.

“Maybe the true cost and extent of the risk involved in turning around a ‘break even’ Twitter may have dawned on Elon Musk. After all, $43Bn for what may be little more than a sideline does seem excessive. The collapse in Tesla’s shares following the original offer announcement underlines what the markets think.”

Musk’s move will be ‘highly frustrating’ for many at Twitter, says Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown.

‘’Musk’s Twitter takeover was always destined to be a bumpy ride, and now it risks hitting the skids over the number of fake accounts on the platform. Twitter’s share price plunged by around 18% in pre-market trading following his tweet indicating the deal was temporarily on hold.

He is clearly intent in querying the company’s estimate that spam accounts make up less than 5% of active daily users – a key metric given that establishing an accurate number of real tweeters is considered to be key to future revenue streams via advertising or paid for subscriptions on the site.

This is likely to come as highly frustrating for many in the company given that a number of senior executives have already been laid off in expectation of the takeover and the change in direction he was expected to pursue.

Twitter’s head of consumer product, Kayvon Beykpour, and head of revenue, Bruce Falck are among the departures.

Beykpour, who joined when Twitter bought his Periscope live video service, learned he was leaving while on paternity leave.

Interrupting my paternity leave to share some final @twitter-related news: I’m leaving the company after over 7 years.

— Kayvon Beykpour (@kayvz) May 12, 2022

n”,”url”:”https://twitter.com/kayvz/status/1524787800863744002″,”id”:”1524787800863744002″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”265913d7-b831-43fe-81f1-edc1e759a613″}}”

Interrupting my paternity leave to share some final @twitter-related news: I’m leaving the company after over 7 years.

— Kayvon Beykpour (@kayvz) May 12, 2022

The truth is that this isn’t how and when I imagined leaving Twitter, and this wasn’t my decision. Parag asked me to leave after letting me know that he wants to take the team in a different direction.

— Kayvon Beykpour (@kayvz) May 12, 2022

n”,”url”:”https://twitter.com/kayvz/status/1524787801757126656″,”id”:”1524787801757126656″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”dd49a855-475c-4056-a6b0-aab800ebb3d9″}}”

The truth is that this isn’t how and when I imagined leaving Twitter, and this wasn’t my decision. Parag asked me to leave after letting me know that he wants to take the team in a different direction.

— Kayvon Beykpour (@kayvz) May 12, 2022

Also, what’s Musk’s real motive, Streeter adds:

There will also be questions raised over whether fake accounts are the real reason behind this delaying tactic, given that promoting free speech rather than focusing on wealth creation appeared to be his primary motivation for the takeover.

The $44bn 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.’’

“This is a full on Friday the 13th circus show”

Wedbush Securities analyst Dan Ives says it’s “a full on Friday the 13th circus show”.

Speaking to CNBC’s SquawkBox show as news broke that the deal was on hold, Ives called Musk’s move ‘a shocker’.

He explained it’s not OK to simply put a deal on hold with a tweet. You’d expect a regulatory filing with a deal of this type, or something else more formal.

Ives explains.

To come out in a tweet, it sends this whole thing into a circus show.

Because now, the Street’s initial reaction is going to be, ‘he’s looking for a way to get out of this deal’.

Ives points to the big fall in Tesla’s share price (down a quarter in the last month). The deal’s finances included a margin loan secured against some of Musk’s Tesla shares.

Ives also points out that Twitter’s filing, stating false or spam accounts represented fewer than 5% of daily users, came out on May 2nd, so isn’t a sudden development.

"This is a full on Friday the 13th circus show," says @DivesTech on @ElonMusk $TWTR. "Now the street's initial reaction is going to be he's looking for a way to get out of this deal." pic.twitter.com/gSugxtLiW9

— Squawk Box (@SquawkCNBC) May 13, 2022

n”,”url”:”https://twitter.com/SquawkCNBC/status/1525056984806039552″,”id”:”1525056984806039552″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”97e6e6aa-5593-4127-9f53-c2d0644a8222″}}”/

Parmy Olson of Bloomberg Opinion has a good take too:

Elon Musk taking a step that *could* lead to him walking away completely from his Twitter deal here, saying it's "temporarily on hold." 👇

If Musk is looking for a way out, he may point to the proliferation of spam bots. https://t.co/1qMk5eA2Pv

— Parmy Olson (@parmy) May 13, 2022

n”,”url”:”https://twitter.com/parmy/status/1525058387985289217″,”id”:”1525058387985289217″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”1c119a43-f077-4c56-a320-3a16cb50d478″}}”

Elon Musk taking a step that *could* lead to him walking away completely from his Twitter deal here, saying it’s “temporarily on hold.” 👇

If Musk is looking for a way out, he may point to the proliferation of spam bots. https://t.co/1qMk5eA2Pv

— Parmy Olson (@parmy) May 13, 2022

The big question: is he joking?? Well #TWTR just dropped 20% #TSLA up 5%. So investors think this is real. Of course, the market has been burned before by Elon, see: https://t.co/63hVX95SH8

— Parmy Olson (@parmy) May 13, 2022

n”,”url”:”https://twitter.com/parmy/status/1525058389923008513″,”id”:”1525058389923008513″,”hasMedia”:false,”role”:”inline”,”isThirdPartyTracking”:false,”source”:”Twitter”,”elementId”:”a25ed1de-e8c3-4de4-b793-6ee358976a60″}}”

The big question: is he joking?? Well #TWTR just dropped 20% #TSLA up 5%. So investors think this is real. Of course, the market has been burned before by Elon, see: https://t.co/63hVX95SH8

— Parmy Olson (@parmy) May 13, 2022

If real, this is truly weird. Purging spam bots was Musk's top objective in buying Twitter. Now he's positioning himself to argue the problem is worse than he was led to believe?

Twitter said they represent less than 5% of daily users. Musk now wants more evidence, "or else."

— Parmy Olson (@parmy)



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