May 20, 2022

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Elon Musk’s $44B Twitter Deal ‘Temporarily on Hold’

Elon Musk’s $44 billion deal to buy Twitter is “temporarily on hold, the tech entrepreneur tweeted early Friday, alongside a link to a Reuters article about spam accounts. 

In another tweet two hours later, Musk confirmed that he’s “still committed to the acquisition.” In the intervening period, Twitter share prices took a significant hit, tumbling over 20% in premarket trading. When markets closed Friday, shares were down nearly 10% to around $40.72, a steep discount from the $54.20 per share acquisition price.

The Reuters article reported that Twitter had said in a filing that false or spam accounts represented fewer than 5% of its monetizable daily active users during the first quarter of 2022. 

In Musk’s original tweet in the early Friday morning, he said the deal was on pause “pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users.” When Twitter released the figure as part of its quarterly results in late April, it acknowledged the number was an estimation and the actual number of fake accounts “could be higher.” 

Musk, who has almost 93 million followers, has been critical of Twitter’s moderation policies, especially its inability to get a handle on the number of bots. One of his ideas to tackle the problem is to authenticate all human users of the platform. He has also expressed his hope of relaxing Twitter rules that curb certain speech, a plan that includes reinstating the account of banned user and former President Donald Trump.

Musk’s deal came together in a hurry. But under the agreed terms, if either Musk or Twitter walks away, they must pay the other party $1 billion in termination fees. However, the widening gap between the offer price and Twitter shares has led some investors to speculate whether Musk might seek a lower price, according to Reuters. 

Twitter didn’t respond to a request for comment. In a series of tweets Friday, Twitter CEO Parag Agrawal said said he “expects the deal to close” but added the company will be “prepared for all scenarios.”

“Regardless of the company’s future ownership, we’re here improving Twitter as a product and business for customers, partners, shareholders, and all of you,” Agrawal wrote. 

The deal comes at a tumultuous time for Twitter. The company has struggled to expand both its user base and its ad sales as it competes with bigger social media companies. On Thursday, it announced the departure of two senior executives alongside a hiring freeze.