Elon Musk’s internet popularity gathered steam once again after Twitter accepted his offer to buy the company for $44 billion and take it private. In a couple of tweets on Friday, the entrepreneur explains that the acquisition is “temporarily on hold.” Here’s why.
Twitter boldly claimed that spam and fake accounts form less than 5 percent of its user base. Citing a Reuters report highlighting this claim, Musk says he wants to see data backing up this claim. He adds that the deal is on hold until the evidence is furnished.
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
Why Has Musk Put the Deal on Hold?
Musk continued the thread, clarifying that he is still “Committed to [the] acquisition.” However, theories about the possible reason why Musk has put the deal on hold have started surfacing.
Still committed to acquisition
— Elon Musk (@elonmusk) May 13, 2022
Vanity Fair summarized a report from Hindenburg Research suggesting that the billion has no reason to follow through on the $44 billion offer.
“Hindenburg Research, a firm that has a short position on Twitter’s stock, published a report on Monday stating that there is “a significant risk that the deal gets repriced lower.” While Hindenburg voiced support for “Musk’s efforts to take the company private” and said it believes Musk “could get it done,” it also wrote that he has no reason to follow through with his initial offer. The report went on to question how Musk would finance the buyout, writing that “placing both Twitter (and ultimately Tesla’s) future on a foundation of further equity-backed margin loans, or potentially more sales of Tesla equity amidst a volatile market, adds risk to both enterprises.”
Meanwhile, Reuters suggests Musk will use the data to negotiate a lower acquisition price to avoid overpaying for the microblogging platform.
“While Musk has said he does not care about the economics of buying Twitter, some investors think the 27% drop in Tesla shares since he revealed his stake is driven partly by concerns he may have to sell more shares. Therefore Tesla’s stock would be under less pressure if Musk can negotiate a lower acquisition price. Some co-investors may egg him on if they become concerned about overpaying.”
In the wake of Musk’s tweets, the share price for the social media company fell by as much as 25 percent in pre-market trading.
