He’s still looking for additional financing as the stock market continues to tumble
It’s been less than three weeks since Elon Musk’s plan to buy Twitter for $44 billion was accepted by the company’s board, and already, it’s running into a few issues. On the heels of a filing in which Twitter stated less than 5% of its users were bots or spam, Musk announced his purchase is on ice while the veracity of this claim is investigated.
The latest chapter surrounding the social network everyone loves to hate kicked off with its Q1 earnings report in April, days after both parties confirmed the deal was moving forward. Following this report, the company issued a filing stating that bots and spam accounts made up for less than 5% of its users — in other words, accounts that are meaningless to advertisers. However, without independent verification, Musk and other shareholders were forced to take Twitter’s word on these numbers.
On Friday morning, the Tesla CEO tweeted he’d placed the acquisition on ice for the time being, with its resumption dependent on whether those statistics were proven correct. Unsurprisingly, Twitter’s stock fell harshly following the news, down about 8% for the day. Musk later issued a follow-up tweet, simply stating he was “still committed to [the] acquisition.”
On its face, these concerns match up with statements Musk has made concerning his plans for the future of Twitter. Reducing bots and spam accounts has been one of the billionaire’s priorities since he first began discussing acquiring the company last month. In Twitter’s press release announcing the acquisition, Musk stated he’d be pushing not just to tamper down on bots but to authenticate and verify every human user on the site. Today’s statement aligns with his concerns about Twitter, especially if the company’s filing isn’t as accurate as they’ve previously implied.
Of course, this is an Elon Musk tweet we’re talking about, making it hard to take at face value. The stock market has taken a significant tumble recently, with Tesla, in particular, taking nearly a 24% drop over the last month. A large portion of Musk’s financing comes from a personal loan taken against Tesla stock, which could require the billionaire to sort out additional backers before the deal can go through. Indeed, The Washington Post reports Musk disclosed $7 billion in the last week from several investment firms and individuals like Larry Ellison, and he’s continuing to look for more funding in the wake of hard times on Wall Street.
This move could be Musk looking for an easy exit route — he’d still be on the hook for a $1 billion breakup fee, but he’d escape looking innocent to his fans and followers online. It could also be an effort to reduce the actual price he’s paying for Twitter, especially as nearly all tech stocks continue to fall. Musk could be trying to position himself for renegotiations, scoring the social network for well below his original (420-themed) share price.
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