Elon Musk sent mixed messages Friday about his
proposed Twitter acquisition, pressuring shares of the microblogging platform
amid skepticism on whether the deal will close.
In an early morning tweet, Musk said the $44
billion takeover was “temporarily on hold,” pending questions over the social
media company’s estimates of the number of fake accounts or “bots.”
That sent Twitter’s stock plunging 25 percent.
Two
hours later, the unpredictable Tesla chief executive added a tweet, saying
“Still committed to acquisition.”
Shares recovered a bit, but traded in the red
throughout Friday’s session, finishing down nearly 10 percent at $40.72.
While the reliability of user figures is an
important benchmark for assessing revenues of Twitter and other social media
companies, analysts generally interpreted Musk’s messages as an attempt to pull
out of the deal or to try to force a lower price.
“Although we never questioned Musk’s ability
to complete such a transaction from a financial perspective, we thought the
biggest risk was Elon himself having a change of heart,” CFRA Research’s Angelo
Zino said in an analyst’s note.
He said the move gives Musk “leverage” and
increases the chance “that he either adjusts his offer price downward or just
completely walks away.”
Meanwhile, Chief Executive Parag Agrawal took
to the platform to explain moves earlier this week to shake up company
leadership and freeze most hiring.
“While I expect the deal to close, we need to
be prepared for all scenarios and always do what’s right for Twitter,” Agrawal
said. “Im accountable for leading and operating Twitter, and our job is to
build a stronger Twitter every day.”
– Skepticism in market –
The chief of SpaceX as well as Tesla, Musk is currently
listed by Forbes as the world’s wealthiest person, with a fortune of some $232
billion, much of it in Tesla stock.
Seen by his champions as an iconoclastic genius and by his
critics as an erratic megalomaniac, Musk surprised many investors with his
pursuit of Twitter.
Musk has described his motivation as stemming from a
desire to ensure freedom of speech on the platform and to boost monetization of
an Internet site that is influential in media and political circles but has struggled
to attain profitable growth.
On Tuesday, Musk said he favored lifting the ban on Donald
Trump, who was kicked off the platform in January 2021 shortly after the former
US president’s efforts to overturn his election defeat led to the January 6 assault
on the US Capitol.
Analysts also have said the site can boost Musk’s other
ventures, including Tesla, which so far has grown without following the
auto-industry custom of spending heavily on marketing.
But markets have shown skepticism since the April 28
announcement that the Twitter board agreed to sell at $54.20 a share.
The share price has lagged that level, suggesting
investors viewed deal closure as not assured, and has fallen further as the
broader tech market retreated this week.
– ‘Horror show’ –
In his first tweet about the deal Friday, Musk linked to
an article from May 2 referencing Twitter’s latest filing to US regulators.
The document said an internal review showed Twitter had
229 million “monetizable daily active users” in the first quarter of this year,
and just five percent were regarded as false or spam accounts.
Analyst Dan Ives from Wedbush said the “circus show” was
likely to translate into a “Friday 13th horror show.”
“The nature of Musk creating so much uncertainty in a
tweet (and not a filing) is very troubling,” he said.
Musk has gotten into hot water with regulators over his
tweets in the past, but the Twitter purchase agreement includes a clause
specifying that he is free to tweet about the deal provided his posts “do not
disparage the company or any of its representatives.”
Market analyst Susannah Streeter of Hargreaves Landsdown
said the takeover bid “risks hitting the skids.”
There will be questions “over whether fake accounts are
the real reason behind this delaying tactic,” Streeter said, adding that “it
may be a strategy to row back on the amount he is prepared to pay to acquire
the platform.”
Musk’s potential stewardship of the social media site has
hit several bumps since the takeover attempt was made public, and sparked worry
from activists, over lifting of the Trump ban as well as the possibility the
new owner would open the gates to abusive and misinformative posts.
US media have reported that the transaction is being
investigated by regulators, including the Securities and Exchange Commission
with which Musk has frequently clashed.
The SEC is probing Musk’s tardy disclosure of his stake in
Twitter, according to The Wall Street Journal.
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