Around a month ago, Tesla boss, Elon Musk, having recently taken a 9.2% stake in Twitter, made a bid to acquire the company outright, taking it back into private ownership. By April 25th, the board of the social media giant accepted Musk’s offer. However, now Musk has put the takeover on hold, but why? Read on to find out more.
Photo Credit: EU News
Why is this happening?
In the last week, Elon has put the deal for a Twitter takeover on hold, even threatening to pull out of the agreement concerning the number of bots and fake accounts on the platform. Specifically, a dispute between the Twitter board and Musk about the percentage of Twitter users these make up. Musk claims that bots are more of a problem than Twitter has revealed, posting this Twitter poll on May 17th.
Musk described the deal as “temporarily on hold” until Twitter can clarify details on the percentage these accounts make up. As it stands, Twitter stated that fake accounts make up fewer than 5% of the platform's users. Musk reckons that this figure stands at 20% or more by stark comparison. The impact of this could be vital to whether the deal goes ahead.
Elon Musk and twtData
Recently, several companies, including one currently working on Elon’s behalf to resolve some outstanding issues, approached us at twtData. We provided some sample raw data they needed relating to Musk's current issues with the acquisition, particularly relating to the number of fake/spam accounts on Twitter - a sticking point, as described above. In addition, we continue to provide other companies with related data when requested.
Being involved in resolving the current disputes regarding the number of fake accounts on Twitter gives us a unique insight into the current situation. We will attempt to keep this blog updated with any further developments. If anyone wants this data, relating to the current despite, please email us at firstname.lastname@example.org
What does this mean?
Firstly, it is entirely possible that the deal to acquire the social media giant could still go ahead. However, it comes at a financial penalty for Musk if it doesn't. The SEC (US Securities and Exchange Commission) set a termination fee as one billion dollars, payable to Twitter if the deal doesn’t go ahead.
Although somewhat less detrimental to either party, it would mean that Trump’s return to Twitter, something we have covered recently, could be put in jeopardy. After all, it is Musk’s plan to allow the former president back onto the platform, not Dorsey’s. Although, in a recent Twitter thread, Dorsey, the founder and former CEO of Twitter, did admit that the ban was “a business decision” and that he should never have allowed it to happen.
Beyond this, Musk’s tweets have an enormous effect on the financial markets. Upon the tweets about bots and fake accounts being posted, Twitter’s stock price dropped by 20%, as can be seen in the visualisation below.
The so-called “Elon Effect” has proven a reliable indicator of the crypto markets. In early 2021, his tweet about Dogecoin (DOGE) led to a near 50% hike in the price of the crypto. A later tweet in the same year, announcing that Tesla would accept Dogecoin as payment for Tesla Merch shot the price of the crypto up 43%.
Well, it could go several different ways. Much of this depends on who, eventually, turns out to be correct. As we continue to work with the data analytics company working on Elon’s behalf and will keep our readers updated, including an upcoming article on how we determine which accounts are fake and which are real. Check back soon for more!