Shares of Twitter (TWTR) are down nearly 5% on widespread media reports that Elon Musk’s
deal to buy the social media company is in jeopardy.
The deal was already in peril after Musk demanded more information on the percentage of fake
accounts on the platform. But there are now reports that Musk and his advisors have stopped
engaging in some funding discussions for the proposed $44 billion U.S. acquisition.
Musk’s team has determined it can’t verify the number of fake and spam accounts on Twitter
and are now preparing to make a change in direction.
If he walks away from the deal, Musk, who is the world’s richest person with a net worth of more
than $250 billion U.S., would be required to pay a $1 billion U.S. break-up fee. However,
Twitter’s management could try and hold Musk to the original terms of the deal.
Twitter held a virtual briefing with reporters earlier this week to explain how it calculates which
accounts on its platform are fake.
The company said that its staff uses internal data and signals to come up with the figure that
less than 5% of its monetizable daily active users are not real.
Twitter also reiterated that “We intend to close the transaction and enforce the merger
agreement at the agreed price and terms.”
Musk, who is the chief executive officer (CEO) of electric vehicle maker Tesla (TSLA), originally
agreed to buy Twitter for $54.20 U.S. a share, but has been threatening to walk away from the
deal for several weeks, citing concerns over the number of fake accounts on the social media
platform.
Year to date, Twitter stock is down 9% and currently trading at $38.79 U.S. a share.