In a development we all probably should have see coming, Elon Musk’s bid to buy Twitter is “on hold,” he tweeted Friday.
“Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users,” he tweeted before following up by saying he’s “still committed to acquisition.”
Part of the reason the deal is on hold is likely that Tesla stock, a major part of the financing deal Musk worked out to make the $44 billion purchase of Twitter, is down about 25% since Musk announced he had bought a major stake in the social media company. Shares were worth $1,150 in early April and $771.41 on Friday.
The spam account question is not a new one for Musk, and Twitter executives have publicly expressed doubt that their estimates of how many of the site’s users are bots are accurate. But it seems more like an excuse than the real reason to put the deal on hold.
“To claim that this is the reason that he’s putting the deal on pause, it’s not credible,” professor of business journalism and financial communication at Quinnipiac University Sara Silver told The Associated Press. “This is not a new issue for him. It’s not just entering his consciousness now.
“It’s become much more expensive for him to buy this company using his Tesla shares,” Silver said.
Musk’s financing plan called for $12.5 billion worth of Tesla stock as loan collateral and another $21 billion is Tesla stock that banks would cash out when the Twitter deal closes.
Wedbush analyst Dan Ives told the AP that Wall Street is not sure of the deal’s validity.
“The street view is that he’s trying to find an excuse to basically talk down the deal price or walk,” Ives said.
Until Musk does one or the other, things will continue to be “on hold.”