Musk says takeover of Twitter on hold

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The drama of Musk’s acquisition of Twitter has suddenly taken a turn. On May 13, Musk tweeted that the acquisition of Twitter will be suspended in order to verify the proportion of fake accounts and spam accounts among Twitter users. Twitter’s stock price fell sharply before the market, with a drop of more than 28% at one point, and the decline narrowed to 14.75% as of press time. Tesla’s stock price rebounded strongly before the market, up 5.18% as of press time.

Musk made the remarks while retweeting a news report published by Reuters on May 2. According to the news report, Twitter estimated in documents released on May 2 that of the site’s roughly 230 million daily active users in the first quarter, fake and spam accounts accounted for no more than 5 percent.

Musk said that the suspension of the acquisition is due to waiting for more detailed information to verify whether Twitter’s calculation of less than 5% of fake accounts/spam accounts is correct.

Musk’s tweet came just hours after Twitter was working to cut costs to close the deal. An executive in charge of consumer products and an executive in charge of revenue growth products was also fired after Twitter announced it was halting new hires.

On April 25th, after Musk and Twitter reached an acquisition agreement for $54.2 per share and a total price of $44 billion, Musk tweeted that one of his top priorities in the future is to clear the “spam” on Twitter. Robot account “(Spam bots), real-name authentication of users, and promote the open source of Twitter’s algorithm.

Although Musk has come up with a complete set of financing plans including a combination of bank loans and equity financing, and has continued to make progress in equity financing, the market has recently become increasingly skeptical about whether the deal will be finalized.

Twitter’s closing price on May 12 was $45.08, a difference of $9.12 per share from Musk’s offer, the largest difference since the deal was announced, compared to Musk’s May 4 announcement of a $7.1 billion commitment to equity financing. The share price difference has since doubled. The widening spread reflects a decline in investor confidence in the deal.

On May 9, Hindenburg Research, known for its aggressive shorting, said that due to the current sharp decline in technology stocks and Twitter’s weak first-quarter earnings report, Musk is likely to reset a lower transaction price.

Tesla shares, on the other hand, have been under pressure since Musk announced his plans to buy Twitter on April 14, as investors worry that Musk will sell Tesla shares because he has little free cash flow. to raise funds.

On May 12, Tesla closed at $728.00 per share, down 26.09% from April 14. The market is worried that Tesla’s stock price may fall below the $700 mark. Shares of Tesla have fallen about 39.3% this year. According to the Bloomberg Billionaires Index, Musk, the world’s richest man, has lost a total of $54.1 billion (about 364 billion yuan) in personal assets this year, making him the richest loser this year.

Previously, according to the stock pledge loan terms signed by Musk and the bank and Tesla’s stock mortgage policy, once the value of the Tesla stock pledged by Musk continued to decline, Musk would face margin call pressure or sell Tesla Pull the stock, causing the stock price to spiral downward.

Source: Daily Economic News

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