Twitter’s share price falls 18 percent after Elon Musk places his takeover on hold, until more data is provided about fake accounts on the platform
Elon Musk has once again shocked the stock markets with his announcement that he is putting his $44 billion takeover of Twitter temporarily on hold.
The reason Musk cited was him waiting for more information about spam and fake accounts, after Twitter late last month said that less than 5 percent of Twitter users are spam or fake accounts.
Meanwhile it is reported that Twitter has instituted a hiring freeze, and two senior executives have left the social networking platform, which was not their decision, ahead of the takeover.
Takeover on hold
Musk announced his decision to place the Twitter deal “temporarily on hold” in a tweet on Friday morning.
Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of usershttps://t.co/Y2t0QMuuyn
— Elon Musk (@elonmusk) May 13, 2022
Shares in Twitter fell 17.7 percent to $37.10 in premarket trading, their lowest level since Musk disclosed his stake in the company in early April and then made his ‘best and final’ offer to take it private for $54.20 per share.
Twitter had disclosed its spam and fake account problem in its quarterly SEC filing on 28 April, when it estimated that fake or spam accounts made up fewer than 5 percent of the platform’s active users during the first three months of the year.
Twitter said at the time that its estimates were based on a review of sample accounts and it believed the numbers to be ‘reasonable.’
But its estimate had not been independently verified, and there is the risk that the true figure could be higher.
But this is not that surprising as Twitter has previously acknowledged it has a spam problem.
And it is unclear why it has taken a couple of weeks since Twitter’s latest disclosure, for Musk to react to it.
In July 2018 for example Twitter said that it had carried out a wide ranging purge of what it called fake and suspicious accounts.
Indeed from May to July 2018, Twitter had reportedly deleted 70 million fake and suspicious accounts.
Twitter was also said to be suspending close to 1 million accounts a day at the time.
A month later in August 2018 Twitter (and Facebook) collectively removed hundreds of accounts tied to an alleged Iranian propaganda operation.
Meanwhile as Twitter prepared for the Musk takeover, the platform has reportedly imposed a hiring freeze, except for business critical roles.
“We are pulling back on non-labour costs to ensure we are being responsible and efficient,” a Twitter spokesperson told the BBC.
And the firm confirmed that two senior executives are leaving the platform. Elon Musk last month had been slammed by former Twitter CEO Dick Costolo for engaging with a number of tweets that were openly critical of Twitter senior management.
Shortly after that, Twitter current CEO Parag Agrawal tweeted that he was proud of Twitter’s people.
But Agrawal has now this week also demonstrated his ruthless side, after two senior Twitter executives left the firm, which apparently was not their decision.
Kayvon Beykpour, who led Twitter’s consumer division and is currently on paternity leave, and Bruce Falck, who oversaw revenue, both tweeted on Thursday about their departures.
The truth is that this isn’t how and when I imagined leaving Twitter, and this wasn’t my decision. Parag asked me to leave after letting me know that he wants to take the team in a different direction.
— Kayvon Beykpour (@kayvz) May 12, 2022
Bruce Falck tweeted he was fired by CEO Parag Agrawal.
“I’ll clarify that I too was fired by (Parag),” he tweeted, but later appeared to have deleted that tweet.
Instead he thanked his team at the firm, but his Twitter status has been changed to “unemployed.”
I wanted to take a moment to thank all the teams and partners I’ve been lucky enough to work with during the past 5 years. Building and running these businesses is a team sport
— bruce.falck() ? (@boo) May 12, 2022
Parag tweeted his thanks.
Thanks for everything you have done for Twitter – your impact will be felt for a long time, by many people. On a personal note, it has been so great to see how you have always led with your heart, with relentless focus, and a deep care for our teams.
— Parag Agrawal (@paraga) May 13, 2022