Twitter shares plunge as Musk hits the brakes
Billionaire wants more details about the number of fake accounts but insists he’s committed to takeover
Elon Musk has put his $44billion (£36billion) takeover of Twitter “on hold” amid concerns over fake accounts, in a move that wiped billions of dollars off the social media behemoth’s share price. Shares in the company dropped by 10 per cent yesterday after Mr Musk said that he wanted more details on the number of real users. Shares traded at about $40.90, well below Mr Musk’s $54.20-a-share offer, valuing Twitter at just more than $31billion.
ELON MUSK has put his $44bn (£36bn) takeover of Twitter “on hold” amid concerns over fake accounts in a move that wiped billions of dollars off the social media behemoth’s share price.
Shares in the company dropped by 10pc yesterday after Mr Musk said that he wanted more details on the number of users that are real.
Shares traded at around $40.90, well below Mr Musk’s $54.20-a-share offer, valuing Twitter at just over $31bn.
Mr Musk, who has 92m followers on the site, said in a tweet: “Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5pc of users.”
He later added that he is “still committed to acquisition”.
However, the move sparked speculation that Mr Musk is prepared to negotiate over Twitter’s value amid a widespread technology sell-off.
Donald Trump wrote on Truth Social, the alternative platform the former president set up after being kicked off Twitter following riots on Capitol Hill, that Mr Musk would not buy the website for $44bn. He said: “There is no way Elon Musk is going to buy Twitter at such a ridiculous price, especially since realising it is a company largely based on bots or spam accounts.”
Mr Musk vowed this week to overturn Twitter’s permanent ban on Mr Trump, describing it at a conference as a “morally bad decision and foolish in the extreme”.
Investors have questioned Mr Musk’s commitment to buying Twitter since it emerged that he would have to borrow heavily against his Tesla shares to finance the deal and would only have to pay $1bn to walk away.
Mr Musk tweeted a news story from 11 days ago saying that spam and fake accounts represented less than 5pc of Twitter’s 229m users. He has said cracking down on fake accounts is a major priority, tweeting earlier this week: “I do think that Twitter should authenticate all real users.”
Twitter has repeatedly disclosed over the course of several years that spam and fake accounts make up less than 5pc of its users. Analysts speculated that Mr Musk’s tweet was a negotiating tactic aimed at getting a lower price.
Daniel Ives, an analyst at Wedbush, said: “Many will view this … as a way to get out of this deal in a vastly changing market. The nature of Musk creating so much uncertainty in a tweet (and not a filing) is very troubling to us and [Wall] Street and now sends this whole deal into a circus show.”
Mr Musk has raised $7.1bn of the cash he needs to buy Twitter from sources including Oracle boss Larry Ellison, tech investment funds Sequoia Capital
‘Many will view this as a way to get out of this deal in a vastly changing market’
and Andreessen Horowitz, and cryptocurrency exchange Binance.
A short presentation by Mr Musk, first reported by The New York Times, revealed that his post-buyout plans are reliant on advertising. He wants to quintuple Twitter’s revenues to $26.4bn by 2028, up from $5bn in 2020.
Shares in Tesla rose 5.8pc on yesterday. After Mr Musk’s interest in buying Twitter was made public, Tesla’s share price declined by about a fifth over several days. A significant part of the entrepreneur’s estimated $268bn net wealth is drawn from his 17pc shareholding in Tesla.
On Thursday, Twitter chief executive Parag Agrawal fired two of the company’s most senior executives and froze hiring.
Mr Agrawal’s future under Mr Musk’s potential ownership is unclear and his actions were seen as a potential sign that Twitter’s management is preparing for life without Mr Musk taking over.