When I spoke to a Wall Street analyst on Thursday Roger Kay about the trembling of Elon MuskTaking over Twitter for $44 billion, he notes that “you really don’t know what to expect from him.” In keeping with that analysis, at 5:44 a.m. Friday, Musk warning His 92.8 million Twitter followers that his bid for the social media giant was “temporarily held pending details that aid in the calculation that spam/fake accounts are indeed representation of less than 5% of users.”
Musk’s freezing of the deal shouldn’t come as a shock to Wall Street, although his stated rationale is surprising. Since shares of Tesla and Twitter posted big gains this week, analysts have questioned the viability of the deal and predicted that Musk might renegotiate his offer. Concerns about spam and fake accounts on the platform were not an issue that forecasters cited when noting why Musk might pull out.
The announcement, which marked another unexpected turn in the dramatic ordeal, was followed two hours later by Musk’s insistence that he “remain committed to [the] acquisition.” In his first tweet, Musk pointed to a line in Twitter’s quarterly financial report estimating that in the first three months of 2022, less than 5% of the platform’s active users were financial. fake or spam accounts.It’s not clear why Musk suddenly raised this concern, as the estimated number was revealed 11 days ago.
Kay, founder and president of Endpoint Technologies Associates, explained to me on Thursday that there are ways for Musk to “put up terms that could make the deal fall apart” if he believes the board of Twitter “somehow not acting in good faith”. Kay also noted that he “wouldn’t be surprised if [Musk] suddenly reconfigured his offer and downplayed it. “If Musk bails out the acquisition, he’ll have to pay a $1 billion breakup fee, according to an agreement he made with Twitter’s board last month. But he has may try to circumvent that charge by accusing Twitter of reporting inaccurate user estimates.
On Friday, Wedbush . CEO and analyst Daniel Ives notes that some may believe Musk is “using this Twitter spam/submission account as a way to get out of this deal in a vastly changing market.” Ives, who made the observation in a note to investors, went on to write that “the nature of Musk creating so much uncertainty in a tweet (and not a profile) is very difficult for us… and now put this whole deal into a circus show with many questions and no concrete answers about the path of this deal going into the future. “
Shares of Twitter immediately felt the impact of Musk’s announcement, falling more than 8% Friday morning.
https://www.vanityfair.com/news/2022/05/elon-musks-twitter-takeover-on-ice Elon Musk’s Twitter Takeover Is Officially on Ice