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Friday, May 27, 2022

Elon Musk paralyzes Twitter purchase until he learns more details about the social network’s fake profiles

Latest NewsElon Musk paralyzes Twitter purchase until he learns more details about the social network's fake profiles

The image shows the billionaire Elon Musk’s Twitter profile.DADO RUVICH (REUTERS)

The sudden corrections and changes of opinion he knows make doing business with Elon Musk a difficult task. And even more so in the case of a multi-million dollar purchase, like Twitter, the operation is estimated at $ 44 billion. The American company checks this on its own experience. The richest man in the world surprised this Friday by announcing that the acquisition agreement is on hold. “The Twitter deal is temporarily on hold pending details supporting calculations that fake/spam accounts make up less than 5% of users,” he wrote in a post posted on the same social network he claims to own.

Twitter deal temporarily on hold pending details supporting calculations that spam/fake accounts do represent less than 5% of users

— Elon Musk (@elonmusk) May 13, 2022

The market reaction to these words was immediate. Shares of Twitter fell 20% to $35.95 ahead of the session, well below the $54.20 a share the mogul offered for it.

Musk used as an excuse to suspend his offer the company’s announcement to the U.S. Securities and Exchange Commission that it calculated it had less than 5% active false profiles or accounts.

The purchase was already considered almost certain. Musk has frequently mentioned his plans to overhaul the way the company operates, including allowing former US President Donald Trump to access the social network again. However, the market did not fully trust Musk, and prior to today’s announcement, the stock was already trading well below the offer price. If, finally, false reports become an obstacle for him, the valuations that are processed in the stock market will no longer make sense.

The spread is now a clear reflection of growing distrust of the operation. Musk made his offer shortly before the decline in tech stocks and Nasdaq began, and he probably exceeded the amount now required to pay for a takeover of the company.

He thoroughly knows all sides of the coin.


Though Musk could also use the argument that not all of the users that Twitter assumes in its numbers are actually active and real accounts to try and bring down the price to pay.

Given the high investment to buy Twitter — even for the world’s richest man, $44 billion is a hefty sum — Musk doesn’t intend to go it alone, so his final decision could impact other fortunes. A few days ago, Musk submitted to the United States Securities and Exchange Commission (SEC) a list of 19 investors who will participate in the purchase with him. It includes everything from tycoons like Larry Ellison to classics from the world of institutional investment flowing through Qatar’s sovereign wealth fund, Saudi prince Alwaleed bin Talal bin Abdulaziz Alsaud, or cryptocurrency platform Binance.


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