What you need to know
- Elon Musk has delivered another huge blow to the prospect of his Twitter acquisition.
- He says the deal cannot proceed without proof that less than 5% of accounts on the platform are fake accounts or spam bots.
- He says that his offer was based on that figure, and Twitter's SEC filings being accurate.
Elon Musk says that his deal to acquire Twitter "cannot move forward" until the CEO of Twitter proves the company's claims that the number of fake/spam accounts on the platform is less than 5%.
Musk's revelation follows an extensive public thread from current CEO Parag Agrawal regarding spam and fake accounts on Twitter. While Agrawal says the platform removes some half a million fake accounts every day, he cast some doubt on the company's estimates that less than 5% of the accounts on the platform are spam.
"Our actual internal estimates for the last four quarters were all well under 5% – based on the methodology outlined above. The error margins on our estimates give us confidence in our public statements each quarter," Agrawal said on Monday. He added, "unfortunately, we don't believe that this specific estimation can be performed externally, given the critical need to use both public and private information (which we can't share). Externally, it's not even possible to know which accounts are counted as mDAUs on any given day."
Suitor Elon Musk responded to this revelation with the poo emoji. He then TweetedTuesday morning stating that the number of 20% fake/spam accounts on Twitter was four times what Twitter claimed and that the number 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 <5%.This deal cannot move forward until he does.
Overnight, Wedbush's Dan Ives said that Wall Street had assigned a "more than 50% chance" that Musk walked away from the deal to market prices. Ives said the Twitter Board was "caught in a quagmire" because if it didn't accept a lower offer from Musk (based on the revelation about bots) then the price would likely plunge below $30.
Twitter remains one of the best iPhone apps for social media and connectivity on devices like the iPhone 13, however the tumultuous "off the field" issues pertaining to its acquisition and internal firings have marred the company in recent weeks. The value of Twitter's share price has fallen nearly 22% in the last five days, and sits at $37.39, well below the $54.20 valuation Musk's offer is based on. The acquisition agreement includes a $1 billion get out clause, so if Musk does walk from the deal it will still cost him a small fortune. On May 13 Musk said that he was "still committed" to the acquisition.
