Business|Musk Says His Twitter Takeover Is ‘On Hold,’ Then Says He’s ‘Still Committed’
Elon Musk escalated the drama surrounding his $44 billion bid to purchase Twitter on Friday, saying in a pre-dawn tweet that the deal was “temporarily on hold” until he could get more details about the volume of spam and fake accounts on the platform, and two hours later tweeting that he was “still committed” to the acquisition.
The announcements mark the latest chapter in an unfolding corporate saga that has raised questions about free speech online and the ramifications of putting the world’s richest person in charge of one of the most influential social media platforms.
Mr. Musk, the chief executive of Tesla, has said that ridding the platform of fake accounts, bots and spam would be one of his top priorities after taking over. In his tweet, Mr. Musk made reference to a May 2 regulatory filing by Twitter that included an estimate that fewer than 5 percent of Twitter’s users were spam and fake accounts.
Known for his freewheeling and sometimes impulsive business style, Mr. Musk’s comments left many wondering about the future of the deal.
Shares in Twitter had fallen about 20 percent in premarket trading after Mr. Musk’s initial tweet. He then posted again that he was “still committed to acquisition.”
Twitter has few restrictions on signing up for an account, and the company has long struggled with spam and bots. But it has been difficult to put an exact figure on the scale of the problem. In a May 2 regulatory filing, Twitter said that it had estimated that less than 5 percent of its users were fake or spam, a figure it had disclosed previously. Twitter cautioned that it had applied “significant judgment” in making the calculation and that its “estimation of false or spam accounts may not accurately represent the actual number,” language similar to that used in past filings from the company.
Mr. Musk’s comments were seen as either a tactic to drive down the price of the acquisition or a pretext for eventually backing out altogether.
“Many will view this as Musk using this Twitter filing/spam accounts as a way to get out of this deal in a vastly changing market,” Daniel Ives, an analyst with Wedbush, said in a note to investors.
Twitter did not respond to a request for comment.
Mr. Musk’s surprise bid for Twitter has sparked considerable debate about the role of a social media platform to police what is said by its users. Twitter has spent years trying to combat hate speech, harassment and other online abuse, but Mr. Musk, who has a history of using the platform to attack and belittle critics, has pledged to loosen the company’s content moderation policies. On Tuesday, he said he would lift a ban on former President Donald J. Trump.
How Elon Musk Bought Twitter
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A blockbuster deal. Elon Musk, the world’s wealthiest man, capped what seemed an improbable attempt by the famously mercurial billionaire to buy Twitter for roughly $44 billion. Here’s how the deal unfolded:
Backing out of the deal could get messy. The purchase agreement includes a $1 billion fee that Mr. Musk would have to pay if he terminated the deal, though it was unclear how such a clause would apply if Mr. Musk could prove Twitter’s user figures were incorrect. If Mr. Musk’s debt financing is intact, Twitter could also take the billionaire to court to force him to pay for the deal.
Mr. Musk has pledged to use his personal fortune to finance the deal for Twitter, a plan that has been impacted by a recent plunge in stock prices, including Tesla’s. Tesla’s stock has fallen nearly 30 percent in the past month. Mr. Musk is both selling Tesla shares and putting them up as collateral for personal loans to raise cash.
If a deal were to be completed, business challenges at Twitter could force Mr. Musk to draw further on his stock in the electric carmaker to plug potential financial holes. And any problem at Tesla that caused its stock to fall far enough could trigger clauses in Mr. Musk’s personal loans that would require him to add more collateral, limiting his ability to invest in Twitter.
Tesla’s stock rose on Friday after Mr. Musk’s comments.
Mr. Musk’s bid has created uncertainty within Twitter, a company already struggling to add users and generate more revenue. On Thursday, Twitter’s chief executive, Parag Agrawal, fired two top executives, halted new hiring and pledged to slash spending.