Twitter shares plunged late Thursday following The Washington Post reported that Elon Musk’s $44 billion deal to buy the social media platform was in jeopardy.
The billionaire had previously expressed hesitation regarding the purchase and even hinted that he might back out, arguing that the platform contained a large number of fake accounts.
However, Musk was unable to determine the percentage of fake Twitter accounts, despite being granted access to the company’s internal data.
While Musk made comments that raised doubts regarding his commitment to the acquisition deal, the newspaper report quoted an unnamed source as saying that his team is preparing for a “change in the situation.”
Twitter shares, which are already trading at a price lower than what Musk suggested, fell by regarding 4% as a result of news related to their price following the acquisition deal.
“It is clear that the Musk takeover of Twitter is coming to a close in the coming months with Musk deciding whether to close the deal (at the low price) or walk away from it,” Wedbush analyst Dan Ives said in a note to investors.
He added, “This acquisition deal obviously caused chaos in the company.”
Musk’s withdrawal cost him a billion dollars
Ives expected Musk to announce in the coming weeks details of his concerns regarding the fake accounts.
Musk said at the Qatar Economic Forum last month that his acquisition of Twitter is on hold due to his “very big” concerns regarding the number of fake accounts the social network contains.
“I am still waiting for solutions to this issue, which I consider very important,” the president of Tesla and SpaceX said in a video statement.
Although Twitter officials confirmed that the percentage of fake accounts on the platform does not exceed 5%, Musk expressed his conviction that the percentage of these accounts is much greater.
Musk also raised questions regarding Twitter’s debt.
Deal
Ives explained that the chances of Musk taking over the platform the way it was originally negotiated are slim.
And Wedbush considered that the deal may be done at a price that is 60% lower, while Musk is likely to withdraw and have to pay only the amount of one billion dollars in order to finish the deal.
Delete fake accounts
Twitter executives told reporters Thursday that more than a million fake accounts are deleted from Twitter every day, shedding light on efforts to curb bot users following billionaire Elon Musk demanded more details from the social media company.
This statement comes following Musk threatened to block a $44 billion deal to buy Twitter unless the company provides evidence that less than five percent of users who see ads on the social networking service are fake and bot accounts.
Musk previously said that one of his top priorities following acquiring Twitter was to “beat bot and fake accounts.”
In a conference call, the company reiterated that fake accounts were significantly less than 5% of the number of users viewing ads, a figure that has not changed in the company’s data since 2013.
Twitter said that human reviewers manually scan thousands of Twitter accounts at random and use a mix of public and private data to estimate the proportion of fake and bot accounts on the service and report them to contributors.
The company said it did not believe that estimating the size of such accounts might be done externally, because it would require private information, but it declined to comment on the type of data it would provide to Musk.
(agencies)