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Musk puts Twitter buy ‘on hold,’ casting doubt on $44B deal

FILE - CEO Elon Musk departs from the justice center in Wilmington, Del., Tuesday, July 13, 2021. Musk says his planned $44 billion purchase of Twitter is "temporarily on hold" pending details on spam and fake accounts on the social media platform. The announcement that the Tesla billionaire tweeted Friday, May 13, 2022 is another twist amid signs of internal turmoil over his planned buyout of Twitter. (AP Photo/Matt Rourke, File)

Tesla billionaire Elon Musk has put his plan to buy Twitter on what he called a temporary “hold,” raising fresh doubts about whether he’ll proceed with the $44 billion acquisition.

Musk tweeted today that he wanted to pinpoint the number of spam and fake accounts on the social media platform. He has been vocal about his desire to clean up Twitter’s problem with “spam bots” that mimic real people, and he appeared to question whether Twitter was underreporting them.

But the company has disclosed in regulatory filings that its bot estimates might be low for at least two years, leading some analysts to believe that Musk could be raising the issue as a reason to back out of the purchase.

“Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users,” Musk tweeted, indicating he’s skeptical that the number of inauthentic accounts is that low.

Musk subsequently tweeted that he’s “still committed to acquisition.” Neither Twitter nor Musk responded Friday to requests for comment. Musk has conducted a long flirtation with Twitter that culminated in an April deal to acquire the social platform.

The problem of fake accounts on Twitter is not a secret.

In its quarterly filing with the U.S. Securities and Exchange Commission, Twitter itself expressed doubts 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.

A review of Twitter filings with the SEC shows that the company’s estimate of spam bot accounts and similar language expressing uncertainty about it have been in Twitter’s quarterly and annual reports for at least two years, well before Musk made his offer.

Sara Silver, a professor of business journalism and financial communication at Quinnipiac University, said it appears Musk is using the number of spam accounts as a pretext to pull out of the deal.

“To claim that this is the reason that he’s putting the deal on pause, it’s not credible,” Silver said. “This is not a new issue for him. It’s not just entering his consciousness now.”

Stock in both Twitter and Tesla swung sharply in opposite directions Friday, with Twitter stock falling 9.7% and shares of Tesla, which Musk has proposed using to help fund the Twitter deal, rising 5.7%.

But shares of Tesla, which Musk has been selling to fund some of the acquisition of Twitter, have tumbled since it was revealed the social platform had become a Musk target.

Tesla shares have lost a quarter of their value in the last month, and have fallen from about $1,150 in early April when Musk confirmed he had taken a huge stake in Twitter to $769.59 Friday.

“It’s become much more expensive for him to buy this company using his Tesla shares,” Silver said.

An SEC spokesperson declined to comment.

Musk’s net worth, estimated by Forbes earlier this week at $240 billion, was $232 billion as of Friday.

Academic researchers in 2017 attempted a census of all of Twitter’s active English-language accounts and estimated that up to 15% were bots of some kind. Emilio Ferrara, a professor at the University of Southern California who helped lead the research, said Friday that Twitter has gotten better at detecting and constantly deleting spam accounts – but they are added to the platform all the time.

“It’s really hard to pinpoint the figure overall,” he said. “It’s not possible — unless you are Twitter — to make a comprehensive estimate of the userbase.”

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