Elon Musk says his Twitter deal is “temporarily on hold” pending a review of “spam/fake accounts”, but he is “still committed to acquisition”; stock drops 5%+

Elon Musk said on Friday his $44-billion deal for Twitter Inc (TWTR.N) was temporarily on hold … Source: @elonmusk and @elonmusk .

Reuters 2022-05-13 Nivedita Balu

Context & Ripple Effects

Before the pause, sources expected Musk to become Twitter’s temporary CEO after closing, making the acquisition central to the company’s near-term leadership plan. The stated review turns the quality of Twitter’s user base into a condition with immediate financial and operational weight.

The dispute did not end with the initial pause: Musk later tied progress to Twitter substantiating its bot estimate and said a lower purchase price was not out of the question. That sequence makes the account-data question a negotiating lever, not merely a diligence task.

First-order effects

Twitter shareholders immediately absorb greater closing uncertainty, reflected in the reported share-price decline after Musk’s statement.
Twitter must support Musk’s review of spam and fake accounts while the anticipated temporary-CEO transition remains contingent on the deal closing.

Second-order effects

Musk gains a basis to challenge the agreed price: his later demand that Twitter prove bots are below 5% turned the disclosed account estimate into a condition for proceeding.
Twitter’s reported user-quality data becomes material to both transaction confidence and the company’s bargaining position with Musk.

Third-order effects

If acquisition terms increasingly hinge on whether platforms can verify automated-account estimates, identity and account-quality measurement will become a more consequential layer of platform due diligence.
The episode points toward proof of personhood becoming not only a trust-and-safety concern but also a valuation issue for social platforms.

The trend: Platform account authenticity is becoming a transaction-level diligence issue, with bot estimates capable of shaping valuation and deal certainty.

Discussion

@elonmusk Elon Musk on x
Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users https://www.reuters.com/...
@elonmusk Elon Musk on x
Still committed to acquisition
@claritytoast Nate Anderson on x
I'm looking on the bright side of life this morning
@parikpatelcfa @parikpatelcfa on x
The Twitter board to Elon Musk https://twitter.com/...
@willoremus Will Oremus on x
Elon Musk doesn't control Twitter yet. Maybe he never will. But he has already steered it toward the right. https://twitter.com/...
@loudmouthjulia Julia Alexander on x
Everyone: “Boy, the market sure is volatile right now. Be carefu-” Elon: “Twitter deal is on hold” World: “...why?” Elon: “Spam! Not too bad? Worse? Gotta know” World: “Twitter stock is now plummeting-” Elon: “I'm still buying Twitter!” World: “Elon, please. The volatility.” http…
@wsj @wsj on x
Elon Musk said he is still committed to buying Twitter, hours after saying the deal was on hold over questions about fake accounts https://www.wsj.com/...
@paleofuture Matt Novak on x
He's created a great template for how other rich people can destroy a company without actually committing to that much. https://twitter.com/...
@arashmassoudi Arash Massoudi on x
Elon has now tanked Twitter's share price, with a pretty questionable tweet on Friday the 13th. By doing so, he opens the door to re-cutting the deal at a much lower price or walking away. Has anyone on Wall Street ever toyed with stocks like Elon? https://www.ft.com/...
@carnage4life @carnage4life on x
Is Elon Musk going to buy Twitter? yes yes yesyes yesyes yes yes yes yes yes yes yes yes yes yesyes yes yes yes yesye yes yes yes yes yesyes
@digiphile Alex Howard on x
Today, @ElonMusk tweeted his deal for Twitter is “on hold,” but he's “still committed to the acquisition.” https://www.wsj.com/... TBD. FWIW, @Twitter estimated false or spam accounts are <5% of daily active users in 5/2022 — as on 2/2022. Musk may want to walk away, & TWTR lower…
@andyostroy Andy Ostroy on x
Jeez. Can he be more erratic? Having him run #Twitter would be like #Trump running America... #ElonMusk https://twitter.com/...
@sarafischer Sara Fischer on x
Musk's takeover bid has been wrought with so many twists and turns that Wall Street is beginning to feel skeptical that it will even happen. https://twitter.com/...
@hblodget Henry Blodget on x
Elon Musk realizing that 1) he overbid for Twitter, 2) it won't be so easy or fun to “fix” (there's already very free speech here and a lot of it is unpleasant, 3) he's already bored and ready to move on to the next thing, which hopefully will be more meaningful. https://twitter.…
@mims Christopher Mims on x
Surprise! Not actually a surprise: Musk may be getting cold feet about buying Twitter. Walking away from the deal will cost him 0.4% of his net worth. He stands to lose much more if the deal goes through, because investors will punish Tesla's stock. https://www.axios.com/...
@mgsiegler M.G. Siegler on x
https://twitter.com/... https://twitter.com/...
@0x Ezra ‘God’ Olubi on x
twitter's ceo (whose job is likely hanging by a thread depending on how musk feels after the acquisition closes) already fired two product leaders in what appears to be acquiescence to musk publicly disparaging the company's product strategy. then this. https://twitter.com/...
@alexweprin Alex Weprin on x
In fact I think the spam accounts thing could be a prelude to a lawsuit, even if the real reason for backing out of the deal could be the rapidly declining value of Tesla stock, which makes the margin loan required to buy Twitter too expensive.
@alexweprin Alex Weprin on x
Technically, according to the details of the contract Elon Musk signed with Twitter, the company can force him to close the deal... as long as the financing is in order. But Musk has a lot of control over the financing! So right now, I'd say this deal is on the ropes.
@psawers Paul Sawers on x
I also suspect that Musk is probably wondering whether he can really be arsed with all the distractions and hassle that owning Twitter would bring. https://twitter.com/...
@jeffjarvis Jeff Jarvis on x
He's a destructive little boy. He never wanted Twitter. He wanted attention. He wanted to break everybody else's toy. Elon Musk seeks Twitter investors as Tesla sheds $400 billion in value https://www.washingtonpost.com/ ...
@cristinacriddle Cristina Criddle on x
Pending clarification of Twitter stats which say less than 5% of monetisable daily active users are spam or fake accounts. In its Q1 results Twitter said its estimation of these figures “may not accurately represent the actual number of such accounts” https://twitter.com/...
@ben_mckenzie Ben McKenzie on x
https://twitter.com/... https://twitter.com/...
@paultassi Paul Tassi on x
I too would be looking for any excuse to back out of a $44 billion purchase of a social media company after I realized it was clearly a bad idea that was tanking my other businesses https://twitter.com/... https://twitter.com/...
@carnage4life @carnage4life on x
It's increasingly likely that Elon Musk will just pay the $1B break up fee and move on. In the meantime Parag fired both the head of revenue products and the head of consumer experience during the latter's parental leave. I'm actually worried about the future of this app. https:/…
@arthurschwartz Arthur Schwartz on x
Twitter is down 20% in premarket trading. Twitter execs & board need to spend more time protecting their shareholders and less time protecting democrats. https://twitter.com/...
@garyblack00 Gary Black on x
$TSLA +5.6% to $769 pre-mkt after Elon Musk temporarily put the Twitter deal on hold. Equities rebounded (SPX +1.0% NDX +1.6%) after Powell pushed back against speculation of steeper interest-rate hikes. 10yrTY +4.7bp to 2.89%. Risk sentiment improved as crypto prices stabilized.
@matt_levine Matt Levine on x
this is pretty obviously a joke no?
@ankaman616 Carl Anka on x
Benedict Evans once called Musk a “bullshitter who delivers.” Sometimes. https://twitter.com/...
@loganbartlett Logan Bartlett on x
Elon trying to figure out what excuse will let him walk away without paying a $1B break-up fee.
@samro @samro on x
$TWTR down 25% in premarket trading https://twitter.com/...
@parmy Parmy Olson on x
Elon Musk taking a step that *could* lead to him walking away completely from his Twitter deal here, saying it's “temporarily on hold.” 👇 If Musk is looking for a way out, he may point to the proliferation of spam bots. https://twitter.com/...
@robtfrank Robert Frank on x
So @elonmusk would walk away from Twitter with $8.4 billion in cash, after selling his $TSLA shares. Even if he pays the $1B breakup fee, it's $7.4B in tax-free cash, since he likely sold the stock purchased through options last year. https://twitter.com/...
@wongmjane Jane Manchun Wong on x
@elonmusk But that <5% are pretty targeted. They aim at accounts with large followings, such as yourself. This problem still needs to be fixed
@parmy Parmy Olson on x
Musk said a few weeks ago that he would “defeat the spam bots or die trying.” https://twitter.com/...? Now he sounds a lot less enthusiastic about that, because the ACTUAL BID hinges on how bad the spam bots are.
@markets @markets on x
NEW: Tesla shares gain in premarket trading after Elon Musk says Twitter deal temporarily on hold https://www.bloomberg.com/... https://twitter.com/...
@clairecmc Claire McCaskill on x
Is this kind of market moving tweet allowed? Weird. 🤷🏼‍♀ ️ https://twitter.com/...
@parmy Parmy Olson on x
If real, this is truly weird. Purging spam bots was Musk's top objective in buying Twitter. Now he's positioning himself to argue the problem is worse than he was led to believe? Twitter said they represent less than 5% of daily users. Musk now wants more evidence, “or else.”
@kantrowitz Alex Kantrowitz on x
Maybe Parag knew where this was going and decided to consolidate power yesterday 🤔
@tbraithwaite Tom Braithwaite on x
Oh look. He's grabbed the chute https://twitter.com/...
@kayvz @kayvz on x
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.
@caseynewton Casey Newton on x
I'm just now learning that Parag fired Kayvon while he was on paternity leave, which is truly awful. Parag is on his way out too. Why is he firing his product leaders during his lame-duck period?
@boo @boo on x
addendum: taking inspiration from my good friend @kayvz I'll clarify that I too was fired by @paraga
@mikeisaac @mikeisaac on x
big news inside twitter, per a memo: CEO Parag Agrawal is pushing out the leaders of Twitter Consumer and Revenue product, Kayvon Beykpour and Bruce Falck, per a very blunt internal memo. Also freezing hiring and cutting spending. Agrawal rolling heads. https://www.nytimes.com/..…
@kayvz @kayvz on x
Thank you to @dickc for taking the bet on @periscopeco and bringing us to Twitter in 2015, and to @jack for the opportunities and trust you gave me since.
@adambain Adam Bain on x
One of the best product leaders AND trampolinists in the business. (Thanks @kayvz for all of your work at Twitter!) https://twitter.com/... https://twitter.com/...
@kayvz @kayvz on x
As for what's next for me: well, I'm still on paternity leave! Looking forward to my first break since co-founding @periscopeco with @joebernstein, and sinking my teeth into something new eventually
@_dml Dave LaMacchia on x
Before @kayvz led product at Twitter people used to joke that the role was cursed. A lot of people rotated through that position in a short period of time. I can't begin to explain how much better things got under his leadership. https://twitter.com/...
@kimmasters Kim Masters on x
I didn't exactly have tons of faith in this website but what faith I had is fading by the hour. https://twitter.com/...
@lindseyboylan Lindsey Boylan on x
Ummm, isn't it employment law 101 that you can't do this? Or shouldn't it be? https://twitter.com/...
@thauburger Tom Hauburger on x
When we lost @cbrewsayso, Kayvon sent an Uber 80 miles to my house with homemade bread. I will remember that example of leadership far longer than any quarterly result. Best of luck @kayvz 🙏 https://twitter.com/...
@financialtimes @financialtimes on x
Twitter chief's $30mn pay package is at risk, as shareholders recommended voting against his remuneration plan, saying there was a ‘misalignment between CEO pay and company performance’ https://www.ft.com/...
@reckless Nilay Patel on x
Here's what @kayvz told me on Decoder last year when I asked how he'd gotten Twitter's product team unstuck and shipping on a cadence again. Guess we're in for some more stasis. https://www.theverge.com/... https://twitter.com/...
@film_girl Christina Warren on x
I dunno. I feel like it's a dick move to fire your biggest rival while you're a lame duck CEO while he's on paternity leave. Even if the intentions were supposedly good, the optics are just really grotesque.
@reckless Nilay Patel on x
Brutal to fire @kayvz while he's on parental leave. What a miserable look. https://t.co/ZSwv9jJmlN
@caseynewton Casey Newton on x
Remembering fondly when Parag's paternity leave got a nice write-up in the Washington Post https://www.washingtonpost.com/ ... https://twitter.com/...
@panzer @panzer on x
Twitter remains a stable and well run company.
@rmac18 @rmac18 on x
It's only been a few months since Elon Musk tweeted a photo of Twitter's CEO Parag Agrawal as Joseph Stalin. https://twitter.com/...
@karaswisher Kara Swisher on x
I love a man who admits what happened at the circus of drama that is Twitter. https://twitter.com/...
@carnage4life @carnage4life on x
A few years ago @jack tried to recruit me to join Twitter. We met and Facetimed a few times then I interviewed with a dozen people on the team. @kayvz decided to pass because he didn't think I was a culture fit. Despite that history, I'm livid that he was fired during pat leave
@jessicalessin Jessica Lessin on x
Now is when we see who the wartime CEOs are... @bchesky earned the title recently. @zuckd has a history as one. Who else is on the list?
@mikeisaac @mikeisaac on x
Agrawal has made it very clear he's just pushing out who he wants and elevating his own people. (Beykpour is currently on paternity leave. The person who is interim in charge of Twitter consumer product is taking over)
@samsheffer Sam Sheffer on x
this is insane kayvon was one of the best things that ever happened to twitter this is a very bizarre thing to see unfold sorry kayvon, you deserve better read this thread https://twitter.com/...
@grahamstarr Graham Starr on x
This is really flabbergasting. Kayvon was pivotal to most of the company's key changes the past few years, was largely seen as a possible CEO successor before Parag's pick, and was just in December put in charge of all Consumer teams at Twitter. https://twitter.com/...
@alexrkonrad Alex Konrad on x
could be wrong but didn't @kayvz launch a ton of new products for twitter in recent years? wow https://twitter.com/...
@chadloder Chad Loder on x
Twitter CEO firing senior employees while they're on paternity leave sends a great message to other employees about the safety of using their benefits. https://twitter.com/...
@martinsfp Martin Sfp Bryant on x
A real moment. Kayvon was the face of a consumer product-focused thrust at Twitter over the past couple of years. https://twitter.com/...
@caseynewton Casey Newton on x
Per an email to staff, @jaysullivan is Twitter's new head of product. @boo, who ran revenue, is also leaving the company. “We are in a time of change right now, historically, Twitter often is.” —> real sentence from this email
@willoremus Will Oremus on x
@kayvz @paraga It seems Parag fired Beykpour while he was on paternity leave. But also, Elon Musk staged his takeover bid while Parag was on paternity leave. Twitter has very generous parental leave policies, but its execs haven't had the best luck taking advantage of them lately…
@carnage4life @carnage4life on x
Twitter's head of Consumer product pushed out during his paternity leave. This company hasn't found an opportunity for drama it isn't willing to take. This is sad to see. https://twitter.com/...
@sal19 @sal19 on x
One of Twitter's top executives, the general manager of consumer, announces he is leaving the company after being asked to leave by CEO Parag Agrawal https://twitter.com/...
@nickstatt Nick Statt on x
This is uhhh kinda ridiculous. Twitter CEO fires its top product chief, who is on paternity leave and is responsible for actually helping develop and roll out more new features in the last few years than basically all of Twitter's entire existence. Okay then... https://twitter.co…
@kurtwagner8 Kurt Wagner on x
Longtime product boss is leaving Twitter. Kayvon held this job longer than anybody that I can think of. Twitter product headed in a “different direction” https://twitter.com/...
@kayvz @kayvz on x
While I'm disappointed, I take solace in a few things: I am INSANELY proud of what our collective team achieved over the last few years, and my own contribution to this journey.
@alex @alex on x
a mystery that has one obvious answer that i have no evidence to support https://twitter.com/...
@kantrowitz Alex Kantrowitz on x
Twitter is the weirdest company seriously https://twitter.com/...
@karaswisher Kara Swisher on x
big deal — who am I going to complain to @kayvz about @TwitterSpaces glitches? (Seriously a very good guy and a loss.) https://twitter.com/...
@film_girl Christina Warren on x
Kayvon is the best. As an outsider, he's done more for Twitter product than almost anyone. Hell of a run. https://twitter.com/...
@willoremus Will Oremus on x
@kayvz @paraga I'd heard rumblings that Agrawal and Beykpour didn't always see eye-to-eye, but it seemed Agrawal was prepared to roll with him. I guess either Agrawal changed his mind, something changed in their relationship, or this is just the other shoe dropping belatedly from…
@meganmorrone Megan Morrone on x
to let someone go in the middle of their paternity leave is not the best look for a company https://twitter.com/...
@katies Katie Jacobs Stanton on x
☀️ Kayvon is the most brilliant product leader, entrepreneur and human! I've loved every moment working with you, @kayvz, and can't wait to see what you do next! Scotch and @tacopuppy playdate soon? ❤️🐶👊 https://twitter.com/...
@kvlly Kelly Vaughn on x
Who the hell fires someone while they're on paternity leave? Huge loss for Twitter. https://twitter.com/...
@kantrowitz Alex Kantrowitz on x
Kayvon was the most effective product head Twitter's had in its modern era. As he says in the thread, Twitter's DAU grew 87% since 2018, yet Twitter CEO @paraga asked him to leave. https://t.co/UR5k0Uyf5M
@willoremus Will Oremus on x
@kayvz Context: When @paraga took over Twitter, he quickly announced a major reorg that saw the departures of engineering head Michael Montano and design chief Dantley, but (surprisingly to some) elevated Beykpour to GM, as we reported in December: https://t.co/k51AtlIgd3
@caseynewton Casey Newton on x
A huge loss for Twitter. One of the company's longest-serving heads of product, and a person who deserves a lot of credit for it finally starting to ship features on a faster cadence. https://twitter.com/...
@jess Jessica Verrilli on x
Kayvon is an extraordinary leader and product innovator. Incredible run and hard to fathom Twitter without him. Bravo on 7 years, friend. https://twitter.com/...
@willoremus Will Oremus on x
Twitter's hard-charging product chief @kayvz, the former Periscope founder who led development of new products such as Spaces and Fleets, says he has been fired by CEO Parag Agrawal 👇 https://twitter.com/...
@boo @boo on x
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
@boo @boo on x
I dedicate this Tweet to those engineers and thank you ALL for the opportunity to serve alongside you. It's been awesome. There is a lot more to do so get back to work, I can't wait to see what you build #TIF
@oneunderscore__ Ben Collins on x
Hard to yell “please quit of your own accord so we can save cash for this sale and I can get my buyout” louder than this memo. https://www.theverge.com/...
@jordanzakarin Jordan Zakarin on x
Everything Elon Musk winds up spinning out and crashing into a ditch https://twitter.com/...
@ericajoy @ericajoy on x
“We will also be reviewing all extended offers to determine criticality and those that should be pulled back.” translation: twitter is rescinding offers. 😶 https://www.theverge.com/...
@alexeheath Alex Heath on x
Here's the full memo Twitter's CEO sent employees today detailing the firing of the two product chiefs, @kayvz & @boo, a hiring freeze, and pullback in spending https://t.co/ETW51VDt03
@willoremus Will Oremus on x
@kayvz ... Twitter's head of revenue products, @boo, is also out. That means two of the three general managers that @parag installed in the December reorg are now gone. @jaysullivan will replace both on an interim basis, Twitter confirms. Falck's thread here: https://twitter.com/…
@gossithedog Kevin Beaumont on x
Twitter are rescinding job offers they made. https://twitter.com/...
@kantrowitz Alex Kantrowitz on x
Well, the next Twitter book is going to be good
@sarthakgh @sarthakgh on x
What's is going on over there? Head of Product and Revenue Product Lead are out https://t.co/FNq7xOlUbe
@w7voa Steve Herman on x
#Twitter execs for consumer products and revenue are departing and most hiring will be paused, @paraga tells staff in an e-mail, reports @Reuters.
@lorakolodny Lora Kolodny on x
(If he raises from 2,000 qualified purchasers who only meet the minimum? That's $500 million.) And hey, Miami tweeps - Elon Musk is expected to speak at @Jason 's All In Summit event in coming days... https://summit.allinpodcast.co/

Chronicles