Businessman and billionaire Elon Musk caused confusion on the stock exchange by temporarily suspending the acquisition of Twitter. The deal is temporarily on hold pending details on how the social network counts the number of fake and spam accounts, Musk tweeted on Friday, May 13. A little later, he announced that he still intended to buy the online service.
Twitter shares immediately collapsed
Musk justified the temporary suspension of the deal pending receipt of details confirming the calculations, according to which fake accounts and accounts used for spam “really represent less than five percent of all users.” Shares of Twitter fell about 25 percent in premarket trading. However, after Musk’s next tweet, about two hours later, that he was still aiming to buy Twitter, the company’s stock rebounded somewhat, resulting in a 9.7 percent drop in the end.
In April, Musk announced that he wanted to buy Twitter for about $44 billion (€42 billion). The board of directors of the company initially opposed this, but then approved the acquisition.
On Friday, Twitter CEO Parag Agrawal shared a sense of uncertainty caused by Musk’s tweets. “While I assume the deal will go through, we need to be prepared for all scenarios and always do what’s right for Twitter,” Agrawal said.
The amount of spam matters for advertising
Quantity spam and fake accounts on Twitter matters, among other things, to attract advertising. The company recently announced that an average of 229 million daily users of the social network are “monetizable”, that is, they respond to advertising. According to Twitter estimates, the proportion of spam and fake accounts among them was less than five percent.
Musk himself said in late April that after the purchase he intends to make Twitter “better than ever before.” To do this, he said, he would like to propose new features and make public the algorithms of the service – and as a result achieve “increased trust” in Twitter from users. He also intends to authenticate accounts and rid the social network of spam bots.
Musk himself is an avid Twitter user. Almost 93 million people have subscribed to his account. He has repeatedly accused the microblogging service of restricting freedom of speech, promising in the event of the acquisition of the company fight censorship. Critics fear that if Musk takes over Twitter, he could limit the moderation of potentially dangerous content, such as hate and fake content. Activist groups have urged advertisers to boycott the platform if Musk opens the gate to offensive messages or misinformation.