Elon Musk said his $44 billion bid for Twitter Inc (TWTR.N) will not go through unless the firm can verify that spam bots represent for less than 5% of its total users, hours after hinting that he could seek a lesser price for the company.
“My offer was based on the accuracy of Twitter’s SEC filings. Twitter’s CEO openly declined to present proof of a 5% increase yesterday (spam accounts). This agreement cannot be finalized unless he performs “In a tweet, Musk stated.
After a few hours, Twitter stated it was committed to completing the purchase “as soon as practical” at the agreed price and terms.
Its stock recovered some of its losses in premarket trade, but it was still down roughly 3% at $36.31, lower than the price the day before Musk revealed his Twitter position, creating worries about whether the billionaire entrepreneur would go through with his $54.20 per share offer.
Musk said he assumed spam accounts represent for at least 20% of users, compared to Twitter’s official estimate of 5%, after putting his offer on hold last week seeking details on spam accounts.
He remarked on Monday at the All-In Summit 2022 conference in Miami, “You can’t pay the same amount for something that is considerably worse than they said.”
When asked if the sale might be made at a lower price, Musk answered, “That is to say, it is not impossible. My fears increase as I ask more inquiries.”
“They claim to have developed a complicated approach that only they can comprehend… It can’t be some great secret that’s more complicated than the human soul or whatever.”
Responding to Musk’s criticism of the company’s treatment of bogus accounts, Twitter CEO Parag Agrawal tweeted on Monday that internal estimates of spam accounts on the social media network for the previous four quarters were “far under 5%.”
Given the requirement to utilize both public and private information to assess if an account is spam, Agrawal said Twitter‘s estimate, which has been the same since 2013, could not be replicated elsewhere.
Musk reacted with a feces emoji to Agrawal’s justification of the process. “So, how do marketers know what they’re paying for? This is important to the financial health of Twitter,” he said.
Musk has promised to overhaul Twitter’s content moderation policies, describing judgments like the exclusion of US President Donald Trump as unduly extreme and promising to crack down on “spam bots.”
Musk has proposed that random sampling of Twitter users be tested to identify bots. “There’s a potential it might be above 90% of daily active users,” he stated.
He predicts that the overall number of Twitter users would reach approximately 600 million in 2025, and 931 million in six years.
“Given Musk’s estimate that only about 80% of Twitter’s current 229 million (users) are humans, it’s much more difficult to imagine the firm can meet its long-term goals,” said Jefferies analyst Brent Thill.