Elon Musk has temporarily suspended shopping on Twitter

DEntrepreneur Elon Musk has temporarily suspended his deal to buy Twitter. Musk wrote on Twitter that he first wants to wait until calculations show that accounts without real users are actually less than 5%. The online service published this estimate a few days ago in its detailed quarterly report.

Twitter’s stock price quickly fell nearly a quarter in premarket trading after Musk’s tweet, trading at levels around $34.50. The price then recovered somewhat to reach around $38. That’s a far cry from the $54.20 per share Musk promised shareholders. The newspaper closed Thursday at $45.08 – a sign of skepticism from investors that Musk is closing the deal. Musk, in turn, briefly assured his first tweet in another post that he was still interested in taking over Twitter.

Problem with fake accounts

The short message service named the number of 229 million users for the first quarter that it can reach with its advertisements. The service does not count false accounts clearly identified in user numbers. However, Twitter recently had to admit that slightly inflated user counts have been reported since 2019 due to an error. However, the spreads were rather small with a maximum of almost two million users.

It shouldn’t have surprised Musk that there are also fake accounts on the platform. Because he had stated as one of his goals for buying Twitter that he wanted to ban profiles that are used to send spam messages from the platform.


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For a detailed view

It’s unclear whether Musk could use the accusation that Twitter provided inaccurate information about the number of fake accounts to get out of the deal or lower his offer. After all, he had waived the pre-review of the usual Twitter books deal.

Both Twitter and Musk agreed to a $1 billion fine if either party canceled the deal. But experts didn’t think that meant Musk could simply change his mind without explanation and be off the hook with a billion dollars.

The boss of electric car maker Tesla had agreed with Twitter’s board of directors on a deal worth around $44 billion. But he still depends on a sufficient number of shareholders willing to sell their shares to him. Twitter and Musk previously wanted to complete the acquisition by the end of the year. In the past few months, he has already purchased a healthy nine percent stake in Twitter on the stock market.

Over the past few days, other issues with the deal have also surfaced. Musk originally wanted to borrow about $12 billion of the purchase price, which would be secured by his Tesla stock. But after Tesla stock fell from around $1,000 to just $728 on Thursday, that plan became increasingly unfavorable to it. Financial service Bloomberg reported on Thursday that Musk was looking for alternative sources of funding instead of the equity-backed loan. Tesla shares jumped toward the $770 mark in premarket trading after Musk’s tweet.

Musk’s announcement also sheds new light on the sweeping actions taken by Twitter CEO Parag Agrawal on Thursday. He had ousted the person responsible for product and the top manager responsible for sales development and imposed a hiring freeze.

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