Elon Musk Pauses Twitter Buyout After Major Roadblock: What Happened?
Tesla CEO Elon Musk faced a hindrance to his $44 billion Twitter buyout deal, tweeting that he had put the deal "temporarily on hold."
ABC News reported that the reason behind the pause was concerns over the prevalence of bot and spam accounts on the social media platform.
Musk had cited a Reuters report about a public filing from Twitter, saying that fake accounts make up less than five percent of users of the platform.
Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of usershttps://t.co/Y2t0QMuuyn
— Elon Musk (@elonmusk) May 13, 2022
The billionaire said that he wants details "supporting calculation that spam/fake accounts do indeed represent less than 5% of users."
Musk promised that he will be committed to the buyout deal. However, its effects have already been seen, with Twitter's shares losing more than nine percent down.
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Elon Musk Buys Twitter
NPR reported that Twitter's shares had dropped more than nine percent on Friday, marking their lowest level since the Tesla CEO first announced that he would become Twitter's largest individual shareholder in early April.
Angelo Zino, an analyst at CFRA Research, said that the combination of the "wider market drop" and Tesla's decline would naturally give Musk cold feet.
Zino said that Musk could be using concerns over fake accounts as an excuse to cut his offer price of $54.20 a share.
The analyst added that Musk is giving himself more options and more leverage. Zino said that Musk appears to be paying more than he needs to for the Twitter deal.
Musk's concern over fake accounts was worries that the fake accounts could pose a threat to the company's business model.
In addition, there is a possibility of undermining the credibility of the platform as a site of authentic discourse between real users.
Elon Musk Twitter
Elon Musk is expected to be Twitter's temporary CEO if the deal goes ahead. However, he would have to pay a $1 billion breakup fee should he choose to walk away, according to a CNBC News report.
The Tesla CEO had made a number of promises once his buyout deal is finished. One of those was his recent announcement that he would lift Twitter's ban on former U.S. President Donald Trump.
Musk said that permanent bans should be extremely rare and reserved for accounts that are bots, scams, or spam.
Meanwhile, Bill Gates warned that Musk could make Twitter "worse" during a Wall Street Journal's CEO Summit. Gates said it is not yet clear how Musk will change Twitter if he takes ownership while also citing concerns about the spread of misinformation.
Zino said that there is a "significant amount of uncertainty and chaos" when it comes to the Twitter deal at this moment in time.
Meanwhile, Musk is facing a probe from the Securities and Exchange Commission over a delay in notifying regulators of a 9.2 stake in Twitter he took earlier this year.
The Federal Trade Commission is also assessing the acquisition over possible violation of an antitrust reporting rule.
READ MORE: Twitter Net Worth 2022: How Much Is Twitter Valued After Elon Musk Made $43 Billion Offer?
This article is owned by Latin Post.
Written by Mary Webber
WATCH: Elon Musk says $44B Twitter deal 'temporarily on hold' - from CBC News
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