declared temporarily suspended on Friday. Musk wrote that he first wanted to wait for calculations to show that accounts without real users actually make up less than five percent
. The online service published this estimate a few days ago in its detailed quarterly report.
Twitter named the number of 229 million users for the first quarter that the service can reach with its ads. The service does not count clearly identified fake accounts in the user numbers. However, Twitter recently had to admit that slightly inflated user numbers have been reported since 2019 due to an error. However, the deviations were rather small with a maximum of almost two million users.
Twitter named the number of 229 million users for the first quarter that the service can reach with its ads. The service does not count clearly identified fake accounts in the user numbers. However, Twitter recently had to admit that slightly inflated user numbers have been reported since 2019 due to an error. However, the deviations were rather small with a maximum of almost two million users. Twitter published the five percent estimate a few days ago in its detailed quarterly report.
It’s unclear whether Musk could use the accusation that Twitter provided inaccurate information about the number of fake accounts to exit the deal or lower his bid. After all, he had waived the usual pre-agreement review of the Twitter books.
Twitter and Musk both agreed to a $1 billion fine if either side canceled the deal. But experts didn’t think that meant Musk could just change his mind without explanation and be off the hook with a billion dollars.
The head of the electric car manufacturer Tesla had agreed on a deal worth around 44 billion dollars (around 42.3 billion euros) with the Twitter board of directors. But he is still dependent on enough shareholders wanting to sell him their shares. Twitter and Musk previously wanted to complete the acquisition by the end of the year. In the past few months, he has already bought a good nine percent stake in Twitter on the stock exchange.
In the past few days, other problems for the deal have also become apparent. Musk originally wanted to borrow around $12 billion of the purchase price, which would be secured with his Tesla shares. But after Tesla stock plummeted from around $1,000 to just $728 on Thursday, that plan became increasingly unfavorable to him. Financial service Bloomberg reported on Thursday that Musk is looking for alternative sources of funding instead of the equity-backed loan.
Musk’s announcement also sheds new light on radical moves by Twitter CEO Parag Agrawal on Thursday. He had pushed out the person responsible for the product and the top manager responsible for sales development and imposed a hiring freeze.
Musk: Still wants to take over Twitter
Tech billionaire Elon Musk has said he remains interested in Twitter after previously unilaterally shelving the deal. Musk wrote on Twitter on Friday without further details that he was sticking to the takeover plans.
Twitter stocks plummet
Twitter’s takeover, temporarily suspended by Elon Musk, caused shares in the online service to plummet on Friday. At the end of trading, shares on the New York Stock Exchange fell 9.67 percent to a closing price of $40.72. In premarket trading, Twitter had even collapsed by up to 25 percent.
Musk had promised Twitter shareholders $54.20 per share in the event of a takeover. However, the paper went out on Thursday at a good $45, a sign of skepticism among investors as to whether Musk would actually go through with the deal.
Things could get even worse for shareholders as Twitter’s share price plummeted. The analysts at Hindenburg Research had already warned at the beginning of the week that the head of the electric car manufacturer Tesla held all the trumps in his hand since the Twitter management accepted his offer after initial hesitation. Experts predict that if Musk withdraws his offer, Twitter’s shares would probably drop in value by half. Twitter closed at just under $50 last Friday. If the experts are right, the value would be around $25 per share. For comparison: After Musk’s takeover bid, the average price target of analysts for Twitter shares jumped to a good $53 and thus to the level of the purchase price proposed by Musk.
It was foreseeable that Musk’s takeover of Twitter would be a “bumpy ride,” commented Hargreaves Landsdown analyst Susannah Streeter. The number of actually active users of the service is a key indicator for assessing future income from advertising and paid subscriptions. The question should also be asked whether the number of so-called fake accounts, which are not backed by real users, is the real reason for Musk’s hesitation. Because Musk wanted to promote freedom of expression with Twitter rather than raise financial values with the social network. The purchase price of 44 billion US dollars is high, and the company may now want to row back on the price.
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