Elon Musk says Twitter deal on hold pending fake account details

Elon Musk, during an event at SpaceX headquarters in Hawthorne, California, United States, Thursday, October 10, 2019.

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Elon Musk announced Friday that his Twitter deal is on hold until he receives more information about the number of fake accounts on the social media platform.

In a follow-up tweet about two hours later, he added that he was “still committed to the acquisition.”

Twitter shares fell 18% in premarket trading after the initial announcement, but pared some losses after the second tweet. A spokesperson for the social media company did not immediately respond to a CNBC request for comment.

Tesla CEO Musk announced last month that he intended to buy Twitter for $44 billion and he previously tweeted that one of his top priorities would be to remove “spam bots” from Twitter. the platform.

Even before Friday’s announcement, the company’s market value had fallen to $9 billion below the offer price due to concerns over the deal.

Musk, who is expected to serve as Twitter’s temporary CEO if the deal goes through, would have to pay a $1 billion severance fee if he chooses to walk away. Musk is worth over $220 billion.

Twitter estimated in a filing earlier this month that less than 5% of its monetizable daily active users in the first quarter were bots or spam accounts.

Musk, who is the richest person in the world on paper, now wants the company to confirm this before pursuing the deal, which is partly funded by Oracle founder Larry Ellison and venture capital firm Andreessen Horowitz. .

The San Francisco-based social media company said in the filing that it had 229 million users in the first quarter who received advertising.

On Tuesday, Musk said he would lift the Twitter ban on former President Donald Trump if he takes over the company.

“Permanent bans should be extremely rare and really reserved for accounts that are bots, or scams, spam accounts… I think it was wrong to ban Donald Trump,” Musk said during the FT Live’s Future of the Car conference. “I think that was a mistake, because it alienated a lot of the country and ultimately didn’t stop Donald Trump from having his voice heard.”

Earlier this month, Bill Gates warned that Musk could make Twitter worse. Speaking at the Wall Street Journal CEO Summit, Gates said it was unclear how Musk would change Twitter if he took over, while raising concerns about the spread of misinformation on the platforms of social media.

Gates then asked what Musk’s goal was with Twitter and whether his push to promote free speech made sense. “What are his goals for what it ends up being? Does it fit with this idea of ​​less extreme lies spreading so quickly [and] strange conspiracy theories? Does he share that goal or not?” Gates said.

Before Musk made his bid to buy Twitter outright, he failed to disclose more than a 9% stake in the company within the SEC’s mandatory 10-day deadline.

The News reported that the Federal Trade Commission is investigating the timing of Musk’s disclosure. Bloomberg later said the FTC was separately reviewing the acquisition itself, although many experts do not expect the deal to raise antitrust concerns.

The FTC does not disclose ongoing investigations, and an FTC spokesperson declined to comment.

Tesla’s stock price climbed 7% in premarket trading on Friday.

Susannah Streeter, senior investment and market analyst at Hargreaves Lansdown, said some would likely wonder if the fake accounts are the real reason behind the delay tactic.

“The $44 billion price tag is huge, and it may be a strategy to get back on how much he’s willing to pay to acquire the platform,” she said in a statement.

Additional reporting by CNBC’s Lauren Feiner.

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