Friday, May 13th 2022

Elon Musk Places Twitter Acquisition on Hold as Doubts Emerge Over its Userbase Data

Elon Musk in a late-Thursday tweet announced that he is placing his Twitter acquisition bid on "temporary hold" over doubts about the platform's spam-bot data. Twitter, in a recent SEC regulatory filing, disclosed that spam bots made up less than 5% of its userbase. The filing revealed that Twitter has 229 million users that viewed consistent ads, while fewer than 5% of the "monetizable daily active users" were fake or spam-bot accounts. Financial analysts predict the substantial fall in cryprocurrency values, as well as a $400 billion drop in market-capitalization of the Tesla stock since Musk announced plans to buy Twitter, may have made the world's richest man squeamish about buying Twitter, and that he is probably looking for a legally safe escape route from the deal. Twitter shares plummeted in value since the Musk tweet.
Source: The Street
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67 Comments on Elon Musk Places Twitter Acquisition on Hold as Doubts Emerge Over its Userbase Data

#2
r9
cyberlonerdon't buy it... build it
+1
Posted on Reply
#3
btarunr
Editor & Senior Moderator
cyberlonerdon't buy it... build it
Yeah, for $44 billion, I'd build bigger datacenters/CDNs than what Twitter owns for 1/4th the money, spend no less than $10 billion on global marketing, and start my own platform.
Posted on Reply
#4
DeathtoGnomes
It took a deal like this for twitter to admit the use of those bots. 5%, about $2.2B, may be pocket change for Musk but the rabbit hole that twitter is, the old/current leadership didnt know how to get out of. I'd cringe at something like that too. There was speculation that Jack(ass) Dorsey has been used like a puppet on his trips to Congress to get yelled at.

Safe bet is for twitter is to cease and desist, close for remodeling.
Posted on Reply
#5
Chrispy_
I'd be amazed if that "less than 5%" is accurate.

Perhaps less that 5% of the spam bots are using Twitter developer accounts, but what about the more serious botters that code their own, more effective bots?
Posted on Reply
#6
DeathtoGnomes
Chrispy_I'd be amazed if that "less than 5%" is accurate.

I would have pegged it at 10% or more.
Yea if twitter didnt have to report that to the SEC, we would never have known the percentage, exact number might be available if that document is public.
Posted on Reply
#7
Chrispy_
DeathtoGnomesYea if twitter didnt have to report that to the SEC, we would never have known the percentage, exact number might be available if that document is public.
A different metric, but Pew Research suggested that two thirds of all Twitter content was bot-generated. It doesn't really imply anything about the number of bot accounts, but holy hell, that's worse that I thought. Maybe I'm way underestimating the number of spam bots too....
Posted on Reply
#8
ST.o.CH
It seems Elon Musk have a good reason to get out of this acquisition.
Posted on Reply
#9
Punkenjoy
The main reason is the collateral he used to loan the money are tesla stock and they just plummeted since he announced the deals. I think it lost 35%.

There are probably scenario that would force it to get rid of too much tesla stock to buy twitter and he want a way out. he probably thought that the stock would just skyrise.
Posted on Reply
#10
mouacyk
<5% is statistically insignificant ;)
He's also waiting to buy the dip
Posted on Reply
#11
the54thvoid
It was well known (as it is for FB and the rest) that bots make a substantial impact on the user base. I'm surprised it was assumed to be as low as 5%.
Posted on Reply
#12
halodies
cyberlonerdon't buy it... build it
He mostly buys stuff and acts like he built it :D
Posted on Reply
#13
Steevo
Of there is disparity in the user data that Twitter has been hiding and lying to its shareholders, customer and others about the whole of Twitter could be sued into oblivion and also they would have to pay Musk the earnest money for cooking the books.

If the Twitter deal doesn’t go down I expect there to either not be a Twitter when it’s done, or it to be a shell with a terrible reputation (not that it had a great one to begin with) where only the truly fringe stay active.
Posted on Reply
#14
tomc100
Has twitter ever made money since its inception?
Posted on Reply
#15
Steevo
tomc100Has twitter ever made money since its inception?
I believe they made some small profits, but no, its never made any money by any metric, they have been supported by lies to advertisers, and donations from people who wanted to support a cause at any cost. Thus the huge drop in followers for specific political party people, and a increase for the other side due to unshadow banning and unhiding followers in their attempt to change the discourse from free speech to stifled and repressed to represent a narrative and party ideology.

But its a private company that can do as it wishes, except when it was being publicly traded and they lied to their shareholders.
Posted on Reply
#16
Fatalfury
lmao.. when reality and trying to be cool on the Internet are both Different things.
looks like these 1 liner deals to impress the world was too good to be true to go on smooth and trouble free..
Posted on Reply
#17
ThrashZone
the54thvoidIt was well known (as it is for FB and the rest) that bots make a substantial impact on the user base. I'm surprised it was assumed to be as low as 5%.
Hi,
Yeah bots 5% doing 66% of twitters activity :laugh:

Like buying followers
Posted on Reply
#18
R0H1T
I wonder if Musk or Tesla saw (any?) massive losses due to the recent crypto crash, Elon's turning out to be quite a basket case for foot in the mouth disease :slap:
Posted on Reply
#19
dragontamer5788
ST.o.CHIt seems Elon Musk have a good reason to get out of this acquisition.
Yeah. Musk doesn't have the money after TSLA's stock price collapsed to $700. So he's looking for excuses to get out of the $1 Billion walk-away clause. (Whoever walks away from the deal owes the other party $1 Billion).

Good reason to leave the deal, since he can't afford it anymore. Or what, do you think Musk **didn't** do his research before announcing the deal two weeks ago?

Like, how dumb does he think we are? That two weeks of "research" was everything he needed to do to suddenly become disinterested in the deal? That's not what happened. 2-weeks worth of stock drops and Fed rate +50 BPS increases happened. That's the new news.
Posted on Reply
#20
trsttte
Chrispy_I'd be amazed if that "less than 5%" is accurate.

Perhaps less that 5% of the spam bots are using Twitter developer accounts, but what about the more serious botters that code their own, more effective bots?
I'm in the same boat, but I think more concerning is how active that 5% is vs the rest of the users. If someone smart enough to look goes and finds that maybe 20% or 30% of the traffic is being generated by bots twitter is pretty much done for. Whatever way the aqcuisition turns some "pretty" interesting stuff will come out of it.
SteevoIf the Twitter deal doesn’t go down I expect there to either not be a Twitter when it’s done, or it to be a shell with a terrible reputation (not that it had a great one to begin with) where only the truly fringe stay active.
I can't decide if this is a good thing or not :D
dragontamer5788Yeah. Musk doesn't have the money after TSLA's stock price collapsed to $700. So he's looking for excuses to get out of the $1 Billion walk-away clause. (Whoever walks away from the deal owes the other party $1 Billion).

Good reason to leave the deal, since he can't afford it anymore. Or what, do you think Musk **didn't** do his research before announcing the deal two weeks ago?

Like, how dumb does he think we are? That two weeks of "research" was everything he needed to do to suddenly become disinterested in the deal? That's not what happened. 2-weeks worth of stock drops and Fed rate +50 BPS increases happened. That's the new news.
He absolutely still has more than enough money, he just doesn't want to give it up. He likely doesn't want to either tie or sell more Tesla stocks to finance this deal and the drop in value from Tesla made the math more difficult for the loans he had planned for. From the start it was also known he was overpaying for a pretty shitty company, I think he only realised it too late and may be trying to get a lower price or something, whatever way this turns out I'm sure he'll be able to soak the tears just fine even if he has

Posted on Reply
#21
dragontamer5788
trsttteHe absolutely still has more than enough money, he just doesn't want to give it up. He likely doesn't want to either tie or sell more Tesla stocks to finance this deal and the drop in value from Tesla made the math more difficult for the loans he had planned for. From the start it was also known he was overpaying for a pretty shitty company, I think he only realised it too late and may be trying to get a lower price or something, whatever way this turns out I'm sure he'll be able to soak the tears just fine even if he has

Yeah, I've begun to follow people who are reading the contract.

It looks pretty solid. Musk very well is on grounds to be sued to be forced to buy Twitter for $54.20, if Twitter's Board wants to go through that process. As one of the richest people in the world, he almost certainly can afford it.

But he's probably done some calculations here and is feeling like maybe its not as good of a buy as he thought. This is kinda late to be getting cold feet on this, He should have carefully thought about the buyout before signing the buyout contract.

In any case, this is popcorn moment. Musk is trolling the Twitter board with these tweets... but likely has no legal recourse should the Board "force" him into finishing the contract. (EDIT: Forcing Elon Musk to own Twitter, when he doesn't want to own Twitter, is a bad idea. I think the Twitter Board will use that as a threat and push for an alternative plea-bargain instead)

The contract is public after all, we all know what he agreed to two weeks ago:
d18rn0p25nwr6d.cloudfront.net/CIK-0001418091/e61e4376-e2c5-4d54-8782-d63fc5e096e9.pdf
Posted on Reply
#22
PCL
Weird... He said he could unlock its potential. Potential changes with a revelation about percentage of bots?
Posted on Reply
#23
Punkenjoy
ST.o.CHIt seems Elon Musk have a good reason to get out of this acquisition.
Like i said, the main good reason is the TSLA stock crash, but he need to figure out a way to get out of the deal without whitdrawing himself as the penality for cancelling the deal are quite high. I think it's 1.5 billions from memory but it's around that.

It's worth trying to find a reason to get out of the deal but like many said, Twitter was not really profitable and the bot was really well know. he just want to get out now that it might cost him a much larger portion of his fortune.
mouacyk<5% is statistically insignificant ;)
He's also waiting to buy the dip
Normally, acquisition deal are set to be done at a specific price. he can't renegotiate that because the market crashed. he would have to find a way to get out of the deal and get a new deal. i doubt they will deal with him a second time if he cancel.
Posted on Reply
#24
dragontamer5788
PunkenjoyLike i said, the main good reason is the TSLA stock crash, but he need to figure out a way to get out of the deal without whitdrawing himself as the penality for cancelling the deal are quite high. I think it's 1.5 billions from memory but it's around that.
$1 Billion penalty.

Except it turns out he can't just take the $1 Billion penalty. Only in certain situations is Musk allowed to take the $1 Billion penalty and leave (!!!). Meaning Twitter's Board can sue him to finish the deal / buyout at $54.20.

Matt Levine, a columnist at Bloomberg puts it like this:
Another possibility is that Musk really is laying the groundwork to walk away from his deal with Twitter. There is a popular view that Musk has the option to abandon the deal if he pays a $1 billion breakup fee. As we have discussed around here, that just isn’t true: The contract gives Twitter the right to force him to close, and put up the $27.5 billion of equity[1] that he has committed to the deal, as long as his debt financing is available. (Section 9.9(b).) The contract also gives Twitter the right to go to court to force him to try to get that debt financing. (Sections 6.10(a) and 9.9(a).) There is, so far, no reason to think the debt financing won’t be available — his banks are large and solvent and have signed reasonably unconditional commitment letters[2] — and so no reason to think he can get out of the deal.
EDIT: Copy/pasted wrong section at first

TL;DR: Musk can't just leave this deal, even with the $1 Billion fee. He's in too deep.
Posted on Reply
#25
R0H1T
dragontamer5788He's in too deep.
Probably should stop tweeting then, oh wait :wtf:
Posted on Reply
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May 28th, 2022 02:47 EDT change timezone

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