Key points:
- Elon Musk’s bid for Twitter was nearing the final hurdles
- However, further investigation has shed new light on fake or spam accounts
- What will this mean for the transaction?
- Can Elon Musk Even Afford Twitter As Tesla Shares Tank?
In an acquisition that could completely reshape the landscape of social media, Elon Musk’s ambitious bid for Twitter (NYSE: TWTR) was nearing the final hurdles. However, further investigation has shed new light on the user consistency of the famed social media platform, after a refusal to show Musk that less than 5% of its users were fake or spam accounts. What will this mean for the transaction? Either Musk turns his back on the deal, Twitter is able to deliver on his demands, or perhaps a re-negotiation is on the cards.
It was announced this morning that Musk’s $44B bid for Twitter is on thin ice, with the Tesla CEO stating the deal “cannot move forward” if the company could prove its lack of fake users. Musk’s bid was based on Twitter’s sec filings being factually accurate, yet an aversion of transparency has weighed on the proposed takeover. The deal is officially ‘on hold’ until the Twitter CEO is able to provide clear numbers of fake users.
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Fake accounts are becoming an increasing problem on Twitter and throughout social media. Known as ‘bots’, the accounts are fully automated, used for replies and general messaging; often scam related or used for political propaganda.
TWTR shares have sunk a further 2% premarket on the growing uncertainty surrounding the deal. Peaking at $51.70 towards the end of April, shares have since lost momentum as bears hang on recent news. A walk away from the deal will likely trigger a further downside, but much of the ambiguity has been priced into shares over the last few days. Equally, a re-negotiation could take place as Musk gains the vantage point.
