Elon Musk’s deal to buy Twitter is on hold until Twitter provides more data on the number of spam and fake accounts on the social networking platform.
On April 26, 2022, billionaire Elon Musk received the attention and followers of tens of millions of people worldwide when he officially received the “nod” of the Twitter Board of Directors on the acquisition of all shares. company at $54.2 per share. However, this deal is currently on hold until Elon Musk has more detailed and accurate information about the number of spam and fake accounts on Twitter.
Elon Musk’s real motives?
Immediately after Elon Musk‘s announcement, investors, banks or Twitter’s board of directors are also skeptical and guessing about the billionaire’s real motives. Some experts think that Elon Musk is trying to reduce the price of his acquisition or even abandon his deal altogether. Others think that Elon Musk is looking more closely because he had no previous plans when he made an offer to buy Twitter last month.
Currently, Twitter’s stock is hovering around $38 per share. This price is only about 70% of the figure of 54.2 USD/share that Elon Musk agreed to earlier.
Spam and fake account problems
In a legal filing with the SEC, Twitter said the social networking platform has less than 5% of accounts that are spam and fake. However, Elon Musk did not believe that number. The world’s richest billionaire believes that Twitter’s rate of spam and fake accounts is about 20%, which is four times higher than Twitter’s announcement.
The reason why the problem of spam and fake accounts emerged was that Elon Musk did not conduct due diligence before agreeing to buy the company. Typically, investors will do in-depth research on the performance as well as predictions about the growth potential and the price of the stock. However, Elon Musk has told Twitter that completing due diligence is not required prior to signing the deal.
Erik Gordon – Professor at the University of Michigan said:
“If the rate of fake accounts is so important that a company’s value must be reassessed, he (e.g. Elon Musk) should take a closer look before signing the deal.”
If the deal to acquire Twitter is cancelled, then…
It is known that in the acquisition agreement, Elon Musk and Twitter agreed to a contract cancellation fee of $ 1 billion if either party does not come to the same transaction. However, this 1 billion USD does not mean that Elon Musk left without any consequences.
In addition to the above breakup fee, the agreement also specifies a specific provision that allows Twitter to have the right to sue Elon Musk and this billionaire could lose billions of dollars more in damages.
Because if the deal is not done, Twitter’s stock price will surely drop significantly. This directly affects the interests of shareholders and investors as well as gradually reduces their confidence in the long-term development of this social networking platform.
At the same time, the uncertainty in the transaction can greatly affect the morale of the employees in the company. It is known that two Vice Presidents and a department head have announced that they will leave the company to look for new opportunities.
In short, Elon Musk’s deal of the century when he agreed to buy Twitter has not come to an end. And in the process of completing the agreement, there will certainly be many factors arising that change a part of the previously signed terms. So, if you are interested in this deal, please follow our website to stay updated with the latest news.