By Barbara Kollmeyer and Emily Bary
As Tesla Inc. Chief Executive Elon Musk said he was unwilling to move ahead with his $44 billion purchase of Twitter Inc. until the company provided more information about the prevalence of spam on the service, the social-media company reiterated its commitment to closing the deal under its original terms.
Musk has been battling publicly with Twitter /zigman2/quotes/203180645/composite TWTR +2.25% in recent days over the presence of spam bots on the platform, suggesting that bots make up a greater portion of the Twitter user base than the company has disclosed in its filings. Parag Agrawal, Twitter’s current chief executive, maintained Monday that bots make up fewer than 5% of the platform’s monetized daily active users, and provided information about how the company assesses the legitimacy of accounts, but that discussion didn’t satisfy Musk.
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“Yesterday, Twitter’s CEO publicly refused to show proof” that spam bots represent less than 5% of users, Musk said in a Tuesday morning tweet. “This deal cannot move forward until he does.”
Musk said his original offer was “based on Twitter’s SEC filings being accurate” and floated the possibility that 20% or more of Twitter’s users could be fake or spam accounts.
Musk reportedly also addressed the issue at a Miami conference Monday , offering the same view that bots could make up at least 20% of Twitter users, according to Bloomberg News. He reportedly shared, as well, that a deal could be possible at a lower price.
“Twitter is committed to completing the transaction on the agreed price and terms as promptly as practicable,” the company said in a Tuesday morning release.
Musk’s beef over Twitter’s spam activity has been widely viewed as an attempt by the Tesla boss to negotiate a lower price for the deal or back out entirely. Shares of other social-media names have fallen since the deal was announced, as have shares of Tesla.
Twitter’s stock had fallen for seven straight trading sessions but was on track to snap that streak Tuesday.
“We believe that Musk is using his investigation into the % of fake TWTR accounts as an excuse to pay below $54.20/share,” Jefferies analyst Brent Thill wrote late Monday. “In reality, the NASDAQ COMP is down 25% YTD and Elon Musk realizes that he may be overpaying for the asset.”
Wedbush analyst Dan Ives added that “the chances of a deal ultimately getting done” are “not looking good now and it’s likely a 60%+ chance from our view Musk ultimately walks from the deal and pays the breakup fee.”
As for the funding of the tumultuous deal, the New York Post reported that SpaceX plans to sell existing shares starting Tuesday and Musk may be a seller of those shares. The article cited sources who said Musk has been finding it challenging and expensive to raise more cash for his Twitter takeout.