Elon Musk Says Twitter Deal “Cannot Move Forward” Until CEO Proves Fake Account Numbers
Elon Musk’s tweets last Tuesday cast doubt on the $44billion deal to acquire Twitter. His purchase of Twitter will be halted until Parag Agrawal, Twitter’s CEO can prove that less than 5% of Twitter users are bots.
Musk stated in a tweet that there are “20% fake/spam accounts” on the platform. This is four times the official Twitter number. Many spam accounts are bots, which is an automated account that is not managed by humans.
Musk tweeted that Tuesday morning, “My offer was based upon Twitter’s SEC filings being correct.” Yesterday, Twitter’s CEO refused to provide proof of 5%. This deal can’t move forward until he does.
Another problem is one of the most popular acquisitions worldwide.
Agrawal had posted a thread on Monday, May 16 in which he rejected Musk’s method of evaluating the number of spam accounts on the platform. It was viewed by him as “flawed.” Musk likely was referring to that tweet in which he stated that the CEO had “publicly declined to show proof.”
Reuters reported Tuesday that Twitter remains committed to completing the deal at the agreed price and terms, as long as Twitter shareholders approve it. According to Reuters, the deal is expected close in the new year.
It is not known how Musk came to his conclusion that 20% of fake accounts exist. Twitter doesn’t make its data available for inspection to the public. The actual number of spam accounts and fake accounts is therefore unknown.
Forbes reports that Musk’s team “evaluates a random sampling” of accounts in order to follow Twitter’s official account. This method is “statistically questionable” and it remains to be determined how an account was faked.
How does this Affect Tesla Shares and Twitter?
The Musk Twitter deal has caused “significant shifts in Tesla’s value.” Twitter shares fell around 2% in pre-market trading Tuesday morning, while Tesla shares rose about 4% the same Tuesday morning.
Musk stated that the problem of spam and fake accounts on Twitter will be one of his top priorities when he takes over the company.
Twitter isn’t the only one to have problems with mathematical errors. It reported more users than it actually had for three consecutive years. The Verge reports that Twitter overstated its daily users for three consecutive years, exceeding 1.9 million users per quarter. Multiple accounts belonging to the same user were counted even though none were in use. Musk insists that he will see it through, despite this latest setback. It is unclear if Musk is trying to negotiate a better deal or walk off. He will be required to pay $1 billion in termination fees if he chooses to walk away.