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Musk: Twitter deal on hold pending investigation into spam, fake accounts

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Elon Musk tweeted that his deal to buy and take over Twitter is “temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users.” In the Friday tweet, Musk linked a Reuters report from earlier this month. The report focused on a Twitter quarterly report that estimated false or spam accounts made up less than 5% of the company’s “monetizable daily active users (mDAU)” in the first quarter.

“Still committed to acquisition,” Musk said in a reply to his Friday tweet.

Musk has been vocal about his desire to clean up Twitter’s problem with “spam bots” that mimic real people. He has appeared to question whether the company was underreporting them. In its quarterly filing with the SEC, even Twitter doubted that its count of bot accounts was correct, conceding that the estimate may be low.

“In making this determination, we applied significant judgment, so our estimation of false or spam accounts may not accurately represent the actual number of such accounts, and the actual number of false or spam accounts could be higher than we have estimated,” the filing says. “We are continually seeking to improve
our ability to estimate the total number of spam accounts and eliminate them from the calculation of our mDAU, and have made improvements in our spam detection capabilities that have resulted in the suspension of a large number of spam, malicious automation, and fake accounts.”

Stock in both Twitter and Tesla swung sharply in opposite directions Friday, with Twitter’s stock falling nearly 6% and Tesla shares jumping nearly 7% in trading before the opening bell. Musk had proposed using Tesla shares to help fund the Twitter deal.

Wedbush analyst Dan Ives said Musk’s “bizarre” tweet about spam accounts will lead Wall Street to think the deal is likely falling apart, Musk is attempting to negotiate a lower deal price, or he is simply walking away from the deal.

“Many will view this as Musk using this Twitter filing/spam accounts as a way to get out of this deal in a vastly changing market,” Ives wrote.

The Associated Press contributed to this report.

Shannon Longworth: Elon musk is hitting pause on his push to buy Twitter weeks after agreeing to take the social media company private in a 44 billion dollar deal.
And of course, his announcement came in the form of a tweet–
— saying he was waiting on details about the number of fake accounts on the platform.
Exactly why the estimated number of spam accounts would put the deal on hold is unclear–
But Friday’s news sunk Twitter shares more than 20 percent in premarket trading.
In the past Musk has blasted automated Twitter accounts – saying after the takeover he wanted to improve things by quote “authenticating all humans”.
He’s agreed to pay a one-billion-dollar break fee to Twitter if he walks away from the deal.

Elon Musk tweeted that his deal to buy and take over Twitter is “temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users.” In the Friday tweet, Musk linked a Reuters report from earlier this month. The report focused on a Twitter quarterly report that estimated false or spam accounts made up less than 5% of the company’s “monetizable daily active users (mDAU)” in the first quarter.

“Still committed to acquisition,” Musk said in a reply to his Friday tweet.

Musk has been vocal about his desire to clean up Twitter’s problem with “spam bots” that mimic real people. He has appeared to question whether the company was underreporting them. In its quarterly filing with the SEC, even Twitter doubted that its count of bot accounts was correct, conceding that the estimate may be low.

“In making this determination, we applied significant judgment, so our estimation of false or spam accounts may not accurately represent the actual number of such accounts, and the actual number of false or spam accounts could be higher than we have estimated,” the filing says. “We are continually seeking to improve
our ability to estimate the total number of spam accounts and eliminate them from the calculation of our mDAU, and have made improvements in our spam detection capabilities that have resulted in the suspension of a large number of spam, malicious automation, and fake accounts.”

Stock in both Twitter and Tesla swung sharply in opposite directions Friday, with Twitter’s stock falling nearly 6% and Tesla shares jumping nearly 7% in trading before the opening bell. Musk had proposed using Tesla shares to help fund the Twitter deal.

Wedbush analyst Dan Ives said Musk’s “bizarre” tweet about spam accounts will lead Wall Street to think the deal is likely falling apart, Musk is attempting to negotiate a lower deal price, or he is simply walking away from the deal.

“Many will view this as Musk using this Twitter filing/spam accounts as a way to get out of this deal in a vastly changing market,” Ives wrote.

The Associated Press contributed to this report.

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