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Elon Musk says Twitter buy 'cannot move forward' until spam stats spat settled
A stunning surprise to no one in this Solar System
Elon Musk said his bid to acquire and privatize Twitter "cannot move forward" until the social network proves its claim that fake bot accounts make up less than five per cent of all users.
The world's richest meme lord formally launched efforts to take over Twitter last month after buying a 9.2 per cent stake in the biz. He declined an offer to join the board of directors, only to return asking if he could buy the social media platform outright at $54.20 per share. Twitter's board resisted Musk's plans at first, installing a "poison pill" to hamper a hostile takeover before accepting the deal, worth over $44 billion.
But then it appears Musk spotted something in Twitter's latest filing to America's financial watchdog, the SEC. The paperwork asserted that "fewer than five percent" of Twitter's monetizable daily active users (mDAUs) in the first quarter of 2022 were fake or spammer accounts, which Musk objected to: he felt that figure should be a lot higher. He had earlier proclaimed that ridding Twitter of spam bots was a priority for him, post-takeover.
After Musk kicked up a fuss and vowed to investigate, Twitter CEO Parag Agrawal on Monday responded with a string of tweets defending the less-than-five-percent figure, to which Musk replied with a poop emoji. As part of the takeover red-tape, the SpaceX supremo had promised not to disparage Twitter and its representatives.
Then on Tuesday, Musk said he's not just pausing his proposed purchase, it's on hold until he sees solid proof of that figure; he believes the real number could be 20 percent or more.
"My offer was based on Twitter’s SEC filings being accurate," the Tesla chief said.
"Yesterday, Twitter’s CEO publicly refused to show proof of <5%. This deal cannot move forward until he does."
In its latest earnings report [PDF] for its Q1 2022 results, Twitter said its average US mDAU was 39.6 million, up 6.4 percent from the previous year, and the average international mDAU was 189.4 million, bringing the quarterly total to 229 million. Musk has argued those figures are probably much lower due to a good number of those users being automated spam and bot accounts. In its last quarterly filing, Twitter did admit that an account linking error meant an "overstatement of mDAU from Q1'19 through Q4'21."
Twitter's Agrawal had said it was difficult to detect and remove bots. Not all accounts that spread spam are fake, some belong to real humans. He also said Twitter's estimates are based on sampling user behavior, and it'd be tricky to figure out the true number of mDAUs. Still, he claimed the internal estimates for the past four quarters have reported spam users make up less than five per cent of all accounts.
Twitter management is still keen on selling to Musk. Agrawal said he was looking forward to continuing talks with the billionaire. The biz filed a preliminary proxy statement with the SEC reiterating Musk's offer to purchase Twitter at $54.20 per share in cash. "Twitter is committed to completing the transaction on the agreed price and terms as promptly as practicable," it said in a statement.
"The transaction is subject to the approval of Twitter stockholders, the receipt of applicable regulatory approvals and the satisfaction of other customary closing conditions, and is expected to close in 2022," it added.
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Musk previously promised to front $21 billion from his own fortunes, while the remaining $25.5 billion will be backed by Morgan Stanley, Bank of America, Barclays, and others via debt financing. He sold $8.4 billion worth of Tesla shares to help finance the deal, too, and secured another $7.14 billion from investors. If he backs out of the deal, he may have to pay Twitter $1 billion in penalty fees.
Twitter declined to comment. Its share price is about $38.30 apiece, down 18 percent over the past five days. ®