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Apr 12, 2001
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Elon Musk is putting his $44 billion takeover of Twitter "temporarily on hold" after the company claimed that less than 5% of its users are spam or fake accounts.

twitter-elon-musk.png

The Tesla chief tweeted on Friday that the deal was being frozen while he waited for details backing up Twitter's claim:
"Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users."
Musk linked his decision to a May 2 Reuters report referring to a filing with the US financial regulator, in which Twitter asserted that fake and spam accounts represented less than 5% of its daily average users:
We have performed an internal review of a sample of accounts and estimate that the average of false or spam accounts during the first quarter of 2022 represented fewer than 5% of our mDAU during the quarter. The false or spam accounts for a period represents the average of false or spam accounts in the samples during each monthly analysis period during the quarter. In making this determination, we applied significant judgment, so our estimation of false or spam accounts may not accurately represent the actual number of such accounts, and the actual number of false or spam accounts could be higher than we have estimated.
Following Musk's announcement in April that he was offering to buy Twitter, the Tesla CEO said that he wanted to make the social media platform "better than ever" with new product features that will defeat spam bots and authenticate all humans.

As Friday's story broke, Twitter's share price fell by as much as 25% in pre-market trading, and is currently down around 15%.

Update 4:53 a.m.: In a follow-up tweet, Musk says he is "still committed to the acquisition."

Article Link: Elon Musk Puts $44 Billion Twitter Deal 'On Hold' [Updated]
 
Last edited:

LukeHarrison

macrumors 6502
May 11, 2007
255
73
So am I getting it right - he now considers to NOT buy it, because Twitter has "only so little fake accounts"?
(my question is genuine, because english is not my 1st language and I really don't get it).
I think the point is Twitter themselves say there are so few fake accounts, but Elon (and the rest of us, frankly) think that there's many more than that.
 

LoveTo

macrumors member
Oct 3, 2021
53
283
Wonder if he’s having cold feet. How does it matter how many accounts are fake? Once he takes over, he can check and change anything he wants. Doesn’t seem like a substantial reason to put the deal on hold. Or probably there’s some angle I don’t understand.
 

laptech

macrumors 68000
Apr 26, 2013
1,568
1,954
Earth
Amongst other things, the valuation of Twitter depends on the the size of it's user base. Every social media service has it's fair share of fake accounts or spam accounts and these accounts are taken into consideration when the size of the userbase is ever discussed. A social media companies worth can be based on the size of it's userbase BUT the userbase has to have 'active real posters' and each one is worth x amount to the company. Every spam or fake account is a negative towards the company which can devalue it's userbase. So, the more spam/fake accounts the company has, the least worth it is. So in Twitters case, it is important that what ever figure they told Musk was spam and fake accounts, they stick to that figure because if that figures turns out to be false then Musk could calim that the valuation of the company is wrong and therefore needs to be adjusted.
 

raybo

macrumors regular
Dec 4, 2007
234
243
Saint Petersburg, FL
Wonder if he’s having cold feet. How does it matter how many accounts are fake? Once he takes over, he can check and change anything he wants. Doesn’t seem like a substantial reason to put the deal on hold. Or probably there’s some angle I don’t understand.
It's illegal for a publicly traded firm to overstate its value. If the fake accounts were found to be 15% or 20%, for example, the stock price would be overvalued.
 

Abazigal

Contributor
Jul 18, 2011
16,133
15,896
Singapore
Wonder if he’s having cold feet. How does it matter how many accounts are fake? Once he takes over, he can check and change anything he wants. Doesn’t seem like a substantial reason to put the deal on hold. Or probably there’s some angle I don’t understand.

My guess is Elon is running into trouble raising the necessary funds and is looking for a way to walk away from the deal without “losing face”. Part of the money is going to come from his existing Tesla stock, which I believe to be insanely overpriced, and Tesla stock price has been falling of late.
 

Kierkegaarden

macrumors 65816
Dec 13, 2018
1,178
1,882
USA
It's illegal for a publicly traded firm to overstate its value. If the fake accounts were found to be 15% or 20%, for example, the stock price would be overvalued.
Good point — there will probably be some sort of audit to determine this, and the sale price could be altered accordingly — or he might drop out completely. I’m sure this would have come up at some point during the due diligence period anyway.
 
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