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Elon Musk’s Twitter Purchase ‘Temporarily on Hold’ Due to Report on Fake Accounts

Elon Musk’s Twitter Purchase ‘Temporarily on Hold’ Due to Report on Fake Accounts

“Still committed to acquisition.”

Elon Musk still wants to buy Twitter but wants more information about the spam accounts. From Bloomberg:

The billionaire initially sent an early tweet saying the $44 billion deal is pending until he receives more information about the proportion of fake accounts on the social media site, which sent Twitter stock tumbling as much as 25% in premarket trading. A few hours later he sent another tweet saying he is “still committed” to the deal. Twitter’s shares recouped some of their losses but were down about 10%.

Musk said he was waiting for details on a recent filing from Twitter that fake accounts on the social media platform contributed less than 5% of its users. Twitter said in its latest quarterly results “that the average of false or spam accounts during the first quarter of 2022 represented fewer than 5% of our monthly daily active users during the quarter.” However, Twitter said it applied “significant judgment” to its latest estimate, and the true number could be higher.

Musk has made spam and fake accounts a priority once he takes over. Twitter requires the owner of automated accounts to label the account as one.

Spam accounts are annoying and fill mentions and timelines to sell items or services. The accounts could also lure people to websites that will hack into their computers and steal information.

Some analysts think Musk might be doing this as a way to get out of the deal (even though he reiterated his commitment to buy it) or lower the $44 billion price tag:

Mr. Musk might be using Twitter’s recent disclosure as a means to get out of or renegotiate the deal, said Daniel Ives, a technology analyst at Wedbush Securities. One reason is the impact on Tesla shares since the deal was announced.

“Leveraging his stock and potential sales of Tesla is a huge overhang on the stock,” Mr. Ives said.

Susannah Streeter, an investment analyst at Hargreaves Lansdown, said there will be skepticism whether the fake accounts are the real reason for the delaying tactic. “The $44 billion price tag is huge, and it may be a strategy to row back on the amount he is prepared to pay to acquire the platform,” she said.

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Comments

I bet those who are responsible for signing off on revenue numbers are nervous or gone. These numbers are shown on twitter’s tax filing yearly.

Tech company fudging the number of users/subscribers to make their rate of growth and market penetration appear larger? No way, they would never attempt to deceive or mislead investors or regulatory bodies. /S

Twitter’s not worth $44 Billion. Musk is having second thoughts and realizes his money would be better spent elsewhere.

    Mike-in-Mass in reply to Peabody. | May 13, 2022 at 9:51 am

    This will help expose the massive fraud in other areas of the stock market. The market will have to collapse first though. Buckle up!

    Who is Peter Strzok’s wife?

    Ans: https://www.sec.gov/news/press-release/2021-15

    henrybowman in reply to Peabody. | May 13, 2022 at 7:53 pm

    If a significant percentage of users are indeed “cemetery voters,” it is dead right and just for Musk to lower his bid. The old guard is not delivering the audience they claimed to.

    The exposure will cause Twitter stock to tumble, whereupon Musk can safely lower his bid and still remain the current stockholders’ best route out of the hole the old guard put them into.

    And the best part about this is that the ensuing flurry of furious litigation will all be between the investors and the former directors, and shouldn’t even touch Elon.

It’s not the fake accounts that are the problem. It’s the lie that they’re less than 5% of the total. Just glancing at any twitter feed, I would expect the number to be closer to 50%.

    AnAdultInDiapers in reply to irv. | May 13, 2022 at 11:06 am

    Proportion of the accounts doesn’t directly correlate to the proportion of the traffic.

    Fake accounts are more likely to be active than real ones.

    A forum I once frequented was put up for sale. The owner boasted of 100k+ accounts. I knew better from observing site activity for the 10 years I was a member. A simple review of the user list, sorted by number of posts, date of last activity, etc., showed that there were about 500 active accounts. The rest were duplicates, people who joined to access software downloads, or people who posted a single tech question and once they had their answer, never returned. I posted as much publicly in calling out the dishonest owner and was told to leave with my post deleted. In the end, the owner held the forum hostage to an imminent shut down date, and a member who wanted to sustain it for the e-relationships long established there, bought it for a few $k. Even in the few music/songwriting forums I’ve run, it’s a familiar pattern of users. A small percentage are active and vocal, the rest are lurkers – and that seems to be driven by the, um, tone/friendliness of the active members. Is there help for a newbies questions, or do they get a hostile “RTFM, you idiot!”

    I suspect you are right with 50% or more, irv.

    healthguyfsu in reply to irv. | May 13, 2022 at 2:09 pm

    I think you are underestimating how many genuinely fake people there are out there writing legitimate tweets from their hollow bodies.

    henrybowman in reply to irv. | May 13, 2022 at 7:59 pm

    “Just glancing at any twitter feed, I would expect the number to be closer to 50%.”

    Wow!

    I WANT THAT ON A T-SHIRT!

Twitter said it applied “significant judgment” to its latest estimate
Is that what you call that? We always called it the “fudge factor”. (In astronomy it’s called “dark matter”.)

If Twitter has been padding the numbers significantly, that means that they have been defrauding the advertisers.
Not good.
Also, it begs the question(s):
No profits?
Not even running a scam fraud?

Let’s say fake accounts are really 15%. Pick one – the deal price is cut 10% or Musk pays a $1B breakup fee and walks away altogether. However, IMO tech stocks are down so much that the $44B is too high and this is just maneuvering to get a lower price.

Either way (bought or discredited) the Republic wins.

    Twitter’s income is based on the ads they sell based on real eyeballs, not bots. It appears that Musk may in fact walk away regardless of what he says. He’s no fool. I can’t imagine that all of those advertisers who paid for eyeballs that weren’t there are going to walk away. Musk exposing that would utterly destroy Twitter for good under an avalanche of lawsuits. There is no way to recover. Musk walks away unscathed, Tesla stock recovers once it is no longer at risk to Twitter exposure.

    I hope that is the way it works out.

Colonel Travis | May 13, 2022 at 12:53 pm

Is Twitter worth buying? Does anyone think it is the future, vs. TikTok or Instagram or something else? The only people who care deeply about Twitter are middle aged leftists. I’m not sure why it’s worth buying in the first place, it seems like it could go the way of MySpace sooner than later.

    I believe Musk is gonna make money.
    He is going to completely change the mission of the company, and transform it into a software company. With the basic Twitter as a base.
    Right now, he is contesting fraudulent memberships and he will then press on to re-negotiate the value of the offer.

      Colonel Travis in reply to snowshooze. | May 13, 2022 at 10:58 pm

      His plan is certainly to make money. And if he does, that doesn’t necessarily mean Twitter remains relevant. It could. Do 15-year-olds care about Twitter over TikTok? No. The cultural relevance isn’t the same, which is why I ask my question. Maybe I’m wrong about its viability. It’s just that the group I see crying over Musk possibly buying Twitter = twits who are but a fraction of a sliver of a slice of the American culture. I think that company’s importance is exaggerated.

Twitter provided fraudulent user data.
It’s time to re-visit the offering.

Twitter may end up like that house at the end of the block which seems to have the offers withdrawn shortly after the pre-purchase inspection. To me, it sounds like perhaps there are some disclosures which weren’t made in a timely fashion, and if Musk were smart (he is) there would be a clause for a no-penalty withdrawal that is the result of fraud. At the very worst, it has forced a massive examination of certain institutions which thought they were too big to get examined.

When the hype outdistances the reality.

https://www.youtube.com/watch?v=OWwzQyXAvXI