why is Elon Musk hesitant about his plan to take over Twitter?

Twitter retrieval is on hold pending details that spam and fake accounts account for less than 5% of users“, Elon Musk first wrote on the platform, where he has nearly 93 million subscribers.

He then reiterated his promise to take over the social network, but the market questioned his true intentions.

His statements had a strong impact on the stock market where the action started by falling 25% after the announcement of the suspension before limiting its losses by giving approximately 13% to electronic trading before the opening of Wall Street. .

Spam removal

After initial objections to it, the tweeting social network’s board of directors accepted a $ 44 billion takeover offer from the bizarre South African -born leader in late April.

Musk promised to remove Twitter spam, authenticate users and increase transparency without specifying how he intended to implement this project.

The company indicated at the beginning of May 2022, during the presentation of its quarterly results, to count, on average from January to March, 229 million daily users were said to be profitable, i.e., exposed to advertising.

He estimated this time that less than 5% of them were spam or fake accounts. The proportion of fake accounts is “a key indicator“for Twitter, explains Susannah Streeter, market analyst for Hargreaves Lansdown, because”calculating the accurate number of people who actually tweeted is considered important for future revenue streams through advertising or paid subscriptions to the site.

In addition to his desire to fight spam, Elon Musk said he wanted to make Twitter a bastion of freedom of expression and said he was ready to bring back former U.S. President Donald Trump, whose account was permanently suspended after the crackdown. attack on the Capitol in January 2021.

“Horror movie”

Since the boss takeover of Tesla and SpaceX’s bid, Twitter’s market value has fallen by billions of dollars, following the same downward movement as most technology stocks and the stock market as a whole.

The title was exchanged on May 13 for more than $ 40, which is less than the purchase price of $ 54.20 per share proposed by the billionaire. For Dan Ives of Wedbush Securities, Elon Musk’s latest tweet “the circus taken to Twitter will be made into a horror film worthy of Friday the 13th.

Wall Street will now review 1) the deal is about to be fulfilled 2) it is an attempt by Musk to negotiate a lower purchase price or 3) Musk just wants to get stuck in the deal. transaction with a $ 1 billion severance fee“, the analyst details in a note.

However, the leader sought to secure the financing of the operation, planning to seek help with a large personal contribution and request a bank loan as well as a margin loan on which he would pledge his shares of Tesla as collateral guarantee. .

Earlier this month, Musk claimed to have just raised more than $ 7 billion from various investors, including Oracle co-founder Larry Ellison and Saudi prince and businessman Al-Walid bin Talal.

“BWhile we never doubted Musk’s ability to complete the deal financially, we felt that the biggest risk was that Elon might change his mind himself.“, estimates Angelo Zino of CFRA.

For Dan Ives, the businessman has boosted the strength of his shares in Tesla, whose price has fallen sharply since announcing the acquisition on Twitter, and may seek to protect the electric vehicle manufacturer.

The fact that Musk creates such uncertainty in a tweet (and not a stock document) is extremely disturbing for us and for Wall Street ”and raises“ many questions but no concrete answers if the transaction will take place.“, underlined the analyst.

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