Elon Musk has again stated his Twitter deal ‘cannot move forward’ until the social media company shows proof of its spam account figures.
The Tesla CEO, who last month offered $44 billion for the tech platform, disputes their claims that bots represent around five percent of their users, believing the figures could be ‘much higher’ than 20 percent.
The world’s richest man fired off a tweet this morning stating: ‘20% fake/spam accounts, while 4 times what Twitter claims, 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.’
In a follow-up tweet, Musk speculated that bots could make up at least half of Twitter’s users, more than 10 times the company’s official estimate.
The latest tweet directed at Twitter CEO Parag Agrawal comes amid a bitter public row between the pair after Musk tweeted a poop emoji at the tech boss on Monday, May 16, 2022.
Shares have also been plummeting ever since the takeover bid was announced, with pre-market trading at $35.87 today, far below the $54.20 price agreed by Musk.
Analysts had claimed his statements could be an attempt by Musk to try to lower the price or pull out of the deal.
But Twitter quashed that today by saying they had filed a preliminary proxy statement with the SEC saying they intend the deal to go ahead at the agreed price of $54.20.
The company submitted the document, which updates the SEC about important changes ahead of shareholder meetings, saying they were committed to completing the deal at the agreed price and terms ‘as promptly as practicable.’
One of those terms also includes a billion-dollar breakup clause for Musk if he chooses to walk away from the deal.
Last week, Musk claimed he wanted to pause the deal to verify that false or spam accounts represented fewer than 5 percent of the company’s 229 million users during the first quarter.
The surprise tweet caused stocks to continue their nosedive since his deal was announced, as analysts speculated that Musk is trying to negotiate a lower price for the deal or pull out completely.
Though Twitter’s board agreed to the purchase last month, it still has not been approved by shareholders, and was not expected to close for at least several months. The legal and practical implications of Musk’s tweets remain unclear.
Shares closed Monday at $37.39, continuing the downward trend.
On Friday, they opened at $40.40, in a huge slump after Musk’s morning announcement that his deal was on hold pending the probe into bot accounts.
Speaking at the All-In Summit 2022 conference in Miami yesterday, Musk said: ‘You can’t pay the same price for something that is much worse than they claimed.’
Asked if the deal is viable at a different price, Musk said, ‘I mean, it is not out of the question. The more questions I ask, the more my concerns grow.
‘They claim that they have got this complex methodology that only they can understand… It cannot be some deep mystery that is, like, more complex than the human soul or something like that.’
He asked rhetorically if the figure could be as high as 90 percent, according to a live-streamed video of his remarks posted by a Twitter user, and obtained by Bloomberg.
‘Currently what I’m being told is that there’s just no way to know the number of bots,’ Musk said at the conference.
‘It’s like, as unknowable as the human soul.’
Analysts questioned why Musk would suddenly express concern about Twitter’s estimate that 5 percent of accounts are fake, an estimate that the company has included in regulatory filings for years.
Susannah Streeter, an analyst at Hargreaves Lansdown, said on Friday: ‘This 5% metric has been out for some time. He clearly would have already seen it… So it may well be more part of the strategy to lower the price.
‘It’s going to be highly frustrating for many in the company given that a number of senior executives have already been laid off,’ she said.
Neil Campling, head of TMT Research in London, said: ‘Laughable. We’d always said he may cut or run or change his tune at the 11th hour and 59 minutes and 59 seconds on the clock. It is farcical.
‘He has never had the full funding – we know that from his constant attempts to get financial support – but he also held all the cards.
‘And the Twitter board have been held hostage and only have themselves to blame for this mess. No other buyer will emerge – if he decides he is still interested he can name his price – and it won’t be higher!
‘They (the board) should have seen this coming. There was a specific performance clause in the merger agreement (section 9.9), which gave Twitter the right to ‘consummate the closing (of the deal)’ but only if he had the financing… which he doesn’t.’
Michael Hewson, chief markets analyst at CMC Markets, added: ‘Obviously, the markets are reacting as if he is going to pull out of the deal, otherwise why are Twitter shares down 20 per cent. So maybe he’s (Elon Musk) paving the ground for pulling out of the deal.
‘But the timing is curious given the lengths he’d gone to secure financing for the deal. So, maybe some share holders in SpaceX and Tesla said they want his attention on his primary concerns there. This is straight out of the Musk play book, keeping shareholders on their toes.’
Musk spoke at a conference hosted by the All In podcast, run by Chamath Palihapitiya, an entrepreneur, and early Facebook executive; Jason Calacanis, an angel investor; David Sacks, former chief operating officer at PayPal, which Musk merged his company within 1999, and David Friedberg, founder, and CEO of The Production Board, a company geared towards solving major problems in the world.
The $7,500-per-person event was sold out, and organizers said journalists were excluded from attending.
Musk appeared at the Miami summit via videoconference.
Over the weekend, Musk tweeted that he planned to do his own analysis of Twitter’s user base by using a random sample of 100 user accounts.
He said that he was then contacted by Twitter’s legal department and accused of breaking their non-disclosure agreement by publicly sharing the company’s methodology.
Agrawal, in response to Musk’s agitation, said on Monday that Twitter manually checks thousands of accounts every quarter to determine how many should be counted as spam.
Agrawal said Twitter ‘shared an overview of the estimation process with Elon a week ago.’
He tweeted that spam ‘harms the experience for real people on Twitter’ and that the company is ‘strongly incentivized to detect and remove as much spam as we possibly can, every single day.’
‘Anyone who suggests otherwise is just wrong,’ Agrawal tweeted.
Musk replied to the CEO’s tweet thread by first asking why Twitter doesn’t just call users to verify their identity – and then by posting a poop emoji.
Analyst Dan Ives said that the changing stock market and the challenge of financing the deal, ‘has caused Musk to get cold feet’ and that the issue of bots is ‘likely more of a scapegoat to push for a lower price.’
Ives argued that no one else is likely to match Musk’s deal, and Musk knows it
‘The elephant in the room for the Twitter board is Musk can walk away for a $1 billion as a small breakup fee (for Musk-all relative) and likely cite the bot/fake account issue as the reason, even though this likely would be contested by Twitter in the courts,’ he said, according to The New York Post.
