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Musk “holds” Twitter purchases and questions $ 44 billion in transactions – Reading Eagle

By KELVIN CHAN and TOM KRISHER

Detroit (AP) — Tesla’s billionaire Elon Musk plans to buy Twitter for what it calls a temporary “hold”, raising new questions about whether to proceed with the $ 44 billion acquisition. I’m throwing.

At the beginning of Friday, Musk tweeted that he wanted to identify the number of spam and fake accounts on social media platforms. He has voiced his desire to solve Twitter’s problems with “spambots” that imitate real people, and seems wondering if Twitter underreports them.

However, the company said in a regulatory filing that the bot’s quote could be low for at least two years, and some analysts have raised this issue as a reason for Mask to cancel the purchase. I think it may be.

“Twitter transactions are temporarily suspended, supporting the calculation that spam / fake accounts are actually less than 5% of users,” Musk tweeted Friday morning, counting the number of fraudulent accounts. Said he was skeptical that there were so few.

On Friday, Musk then tweeted that he was “still working on an acquisition.” Neither Twitter nor Mask responded to requests for comment on Friday. Musk had a long flirtation on Twitter and culminated in an April deal to buy a social platform.

The issue of fake Twitter accounts is not a secret.

Twitter itself, in its quarterly submission to the US Securities and Exchange Commission, raises questions about whether the number of bot accounts is correct and acknowledges that estimates may be low. “Because we have made important decisions in making this decision, estimates of fake or spam accounts may not accurately represent the actual number of such accounts, and of fake or spam accounts. The actual number can be higher than the estimate, “says Filing.

According to a Twitter filing review to the SEC, company quotes for spambot accounts and similar terms for uncertainties about them have been published in Twitter’s quarterly and annual reports for at least two years long before Musk made an offer. was.

Sarasilil, a professor of business journalism and financial communications at Quinnipiac University, said Musk seems to be using the number of spam accounts as an excuse to get out of the deal.

“It’s unreliable to claim that this is the reason he’s suspending trading,” Silver said. “This is not a new issue for him. It’s not just in his consciousness right now.”

On Friday, both Twitter and Tesla stocks fluctuated sharply in the opposite direction, with Twitter stocks surpassing 9% and Tesla stocks that Musk proposed to use to finance Twitter transactions rose about 6%. ..

However, Tesla’s stock, which Mask was selling to fund some of Twitter’s acquisitions, has fallen since it became clear that social platforms were targeted by Mask.

Tesla’s stake lost a quarter of its value last month, dropping from about $ 1,150 in early April to $ 771.41 on Friday, when Musk confirmed that it had acquired a huge stake on Twitter.

“It’s much more expensive for him to buy this company using Tesla’s stock,” Silver said.

Forbes estimated net worth of Mask was $ 240 billion earlier this week, which was $ 232 billion as of Friday.

Tesla shares may have benefited from Twitter bot accounts for years. Researchers at the University of Maryland have recently used such bots to generate hundreds of thousands of positive tweets about Tesla, which could boost its inventory in the years under pressure. I concluded.

Neither Tesla nor its supporters are responsible for these bots.

Investors evaluating transactions must weigh the legal issues of Mask and the fact that the acquisition of Twitter can be distracting from running the world’s most valuable carmaker. did not.

Musk has already sold over $ 8 billion in Tesla shares to raise money for Twitter’s purchase.

Initially, Musk promised to borrow $ 12.5 billion with Tesla shares as collateral. He borrowed another $ 13 billion from the bank and invested $ 21 billion in Tesla shares that went to the bank in exchange for cash when the deal was closed.

Last week, Musk announced more than $ 7 billion in commitment from investors. This reduces the number of Tesla shares that must be pledged as collateral.

Dan Ives, a Wedbush analyst who follows both Tesla and Twitter, called Musk’s tweet “strange” and said Wall Street was skeptical. “Street View is basically trying to find an excuse for him to talk about trading prices and walk,” Ives said.

If the transaction fails, Mask may have to pay a $ 1 billion split fee.

He finds it awkward to use Twitter instead of financial documents to make an announcement, saying, “I sent the entire transaction to a circus show, and I have many questions about the path of this transaction in the future, and the specific answer is. No, “he added.

Using Twitter to make big announcements that move the stock prices of the two companies can be a problem for Musk. Under the 2018 securities fraud settlement with the SEC, Musk must seek approval from a Tesla lawyer before tweeting anything that could affect the company’s stock price. It wasn’t clear if Musk had such approval for announcing the suspension of Twitter transactions in an EDT tweet at 5:44 am on Friday.

The SEC has already issued a subpoena to Tesla and Mask in a tweet from last fall, asking followers if they should sell Tesla shares. The court filing states that the mask did not obtain the required pre-approval.

Last month, a federal judge in New York rejected Musk’s attempt to break the settlement because he was forced to sign and violated his right to free speech. The judge also upheld the musk subpoena.

The dispute stems from an October 2018 agreement with the SEC signed by Musk. He and Tesla each agreed to pay a $ 20 million fine for Mask’s tweet about “securing” to keep Tesla private for $ 420 per share. However, no funds have been prepared and Tesla remains a public company.

On Thursday, Twitter fired two of its top managers. According to Twitter, the company has suspended most hires except for important roles, “reducing non-labor costs to ensure responsibility and efficiency.”

In a note sent to employees and confirmed on Twitter, CEO Parag Agrawal has begun investing “aggressively” to expand its user base and revenue, after which the company has reached a milestone in growth and revenue. Said not reached.

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Chan reported from London. New York AP business writer Michelle Chapman contributed to this report.

Musk “holds” Twitter purchases and questions $ 44 billion in transactions – Reading Eagle

Source link Musk “holds” Twitter purchases and questions $ 44 billion in transactions – Reading Eagle

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