San Francisco tech billionaire Elon Musk is biting his teeth on the accusation that the online service claims too low numbers of fake accounts in his announced Twitter purchase. The deal cannot go ahead until Twitter CEO Parag Agrawal proves that such profiles actually made up less than five percent of the user base, Musk wrote on Twitter on Tuesday.
He had made his approximately $ 44 billion purchase offer in the belief in the accuracy of the official information from Twitter. The company announced on Tuesday that it would hold on to the acquisition at the agreed price and terms, and recommended that shareholders accept the offer.
Twitter shares then narrowed their pre-market losses and were slightly up in early trading on Tuesday. On Monday, the paper closed with a loss of just over eight percent at $ 37.38.
However, this is a far cry from the $ 54.20 per share that the head of the electric car manufacturer Tesla has so far promised to Twitter’s shareholders. Musk had sent the stock on its own down to the weekend by declaring the deal to buy Twitter “provisionally suspended”. It is still unclear whether Musk can even put his agreement with the Twitter Board of Directors on hold from a legal point of view.
Earlier, Musk had hinted that he might try to push down the purchase price for Twitter. A deal on a lower bid is “not out of the question,” Musk said in a video interview at a conference on Monday. “The more questions I ask, the bigger my worries become,” Musk said at his appearance. He estimated that fake profiles accounted for at least a fifth of all Twitter accounts – but did not give a basis for this. Musk had declined an in-depth review of the books before the takeover deal.
Earlier, Twitter CEO Agrawal tried to explain the service’s methodology in estimating the number of spam and bot accounts in a series of tweets. He also wrote that such estimates are difficult to make from outside the company. Musk countered with a pile of feces emoji and asked, among other things, whether Twitter had tried to simply call users with suspicious-looking accounts.
This idea was immediately ridiculed by experts. Twitter cites the number of 229 million daily users that the service can reach with its advertising. The fake accounts identified by Twitter have already been deducted in this number.
Disputes over bot accounts
Musk said at the conference that in his view, a significantly higher proportion of bot accounts than reported would be a serious misinformation. He estimated the expected share of bot accounts at 20 percent and more. The agreement with Twitter provides that the sides can withdraw from the deal in case of massive deviations.
However, it is not clear whether extremely incorrect figures on Twitter accounts would be accepted in court as sufficient reason for a dissolution of the deal in a dispute between Musk and Twitter. The agreement provides for a penalty of one billion dollars each if one of the sides breaks the agreement.
The discussion about the bot accounts is a diversionary maneuver by Musk, suggests Wedbush analyst Dan Ives. He estimates the probability that the purchase will come about at less than 50 percent. “Twitter’s board of Directors is in a difficult situation,” Ives said.
But the consequences of a failure are likely to be serious for Twitter, Ives suspected. “The share price is likely to fall below $30,” Ives said.
Musk had agreed to a roughly $44 billion deal with Twitter’s board of directors. However, he is still dependent on the fact that enough shareholders want to cede their shares to him. Twitter and Musk have so far wanted to complete the acquisition by the end of the year. In recent months, he has already bought a share of a good nine percent of Twitter on the stock exchange together.