Elon Musk says Twitter deal on hold pending fake account details

Elon Musk announced on Friday that his Twitter deal is on hold pending more information about how many fake accounts exist on the social media platform.

In a follow-up tweet about two hours later, Musk added that he’s “still committed to the acquisition.”

Twitter stock plummeted 18% after the initial announcement in premarket trading, but pared some losses after the second tweet. Shares ended down 9.7%. A spokesman for the social media company did not immediately respond to a CNBC request for comment.

Tesla CEO Musk announced last month that he intends to buy Twitter for $44 billion, and he previously tweeted that one of his top priorities would be removing “spam bots” from the platform.

Prior to Friday’s announcement, the company’s market value had fallen to $9 billion below the asking price due to concerns about the deal.

Musk, who is expected to serve as Twitter’s interim CEO if the deal goes through, would have to pay a $1 billion breakup fee should he decide to leave. Musk is worth more than $220 billion.

Twitter, in a filing earlier this month, estimated that less than 5% of its monetizable daily active users in the first quarter were bots or spam accounts.

Musk, who is the world’s richest person on paper, now wants the company to confirm that before proceeding with the deal, which is being funded in part by Oracle co-founder Larry Ellison and venture capital firm Andreessen Horowitz.

The San Francisco-headquartered social media company said in the filing that it had 229 million users served ads in the first quarter.

On Tuesday, Musk said he would lift the ban on Twitter against former President Donald Trump if he took over the company.

“Permanent bans should be extremely rare and should really be reserved for accounts that are bots or scam or spam accounts… I don’t think banning Donald Trump was right,” Musk said at FT’s Future of the Car conference Live. “I think that was a mistake because it alienated a large part of the country and didn’t result in Donald Trump having no voice.”

Earlier this month, Bill Gates warned that Musk could make Twitter “worse.” Speaking at the Wall Street Journal’s CEO summit, Gates said it’s unclear how Musk will transform Twitter once he takes ownership, while also raising concerns about the spread of misinformation on social media platforms.

Gates went on to question what Musk’s goal is with Twitter and whether his quest to promote freedom of speech is reasonable. “What are its goals for what it ultimately is? Does this fit with this notion that less extreme untruths spread so quickly [and] weird conspiracy theories? Does he share that goal or not?” Gates said.

Before Musk made his bid to buy Twitter outright, he failed to disclose ownership of more than 9% in the company within the SEC’s mandatory 10-day window.

The Information reported that the Federal Trade Commission is investigating the timing of Musk’s disclosure. Bloomberg later said the FTC itself was reviewing the acquisition separately, though many experts don’t expect the deal to raise antitrust concerns.

The FTC does not disclose any ongoing investigations, and an FTC spokesman declined to comment.

Tesla’s stock price rose nearly 7% in premarket trading on Friday.

Susannah Streeter, senior investment and market analyst at Hargreaves Lansdown, said some are likely wondering if fake accounts are the real reason for these delaying tactics.

“The $44 billion price tag is huge and it could be a strategy to backtrack on the amount he’s willing to pay to acquire the platform,” she said in a statement.

Additional coverage by CNBC’s Lauren Feiner.

https://www.cnbc.com/2022/05/13/elon-musk-says-twitter-deal-on-hold-pending-details-on-fake-accounts.html Elon Musk says Twitter deal on hold pending fake account details

Jane Marczewski

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