Yahoo Finance’s Daniel Howley joins the Live show to break down the latest surrounding Elon Musk’s Twitter takeover deal.

Video Transcript

- Third thing on our list here this morning, Elon Musk's $44 billion deal for Twitter is reportedly in serious jeopardy. Yahoo Finance tech editor Dan Howley has been tracking this one for us. Dan?

DAN HOWLEY: That's right, Brian. Essentially what's going on here is Elon Musk is still with the cold feet as far as the Twitter deal goes. Apparently, and this is according to reports, that Twitter had sat down with members of the media and said, look, we're continuing to go forward. We provided some data to Elon Musk, that so-called firehose of tweets.

And essentially that is just an ongoing run of this conversation about bots. Back in May, Elon Musk had said that he couldn't verify or that Twitter's claims that bots make up less than 5% of daily monetizable users is unverifiable. So Twitter went ahead and said, look, this is really our numbers. This is what we do. We use some human search to make sure that that's an accurate number, as well as automated. We shut down people that try to make bots every day.

And so they eventually provided Musk with the data that they have. There was no confirmation on whether or not that included private data. Twitter had previously said that if they did that, they would break some of their policies. But regardless, despite Twitter coming forward and saying that they had that data, they provided that data, it appears as though Musk is getting cold feet still. And so that leaves this $44 billion deal hanging in the balance.

And according to Dan Ives over at Wedbush, there's basically three ways that this is going to shake out. The smallest percentage is that the deal actually does get done as is. And he says that's about a 5% chance if that happens, so basically a snowball's chance in hell at this point. He also says that the deal could get done, but at a renegotiated lower price than that $54.20 that Elon Musk had originally agreed to.

And the final is that the deal doesn't get done and Musk decides to fight in court. Now, there's a $1 billion breakup clause that either side would have to pay. So Elon Musk would be on the hook for $1,000,000,000. The world's richest person doesn't usually have to worry about $1,000,000,000, you would think.

But, I mean, this is something that obviously is going to continue to go back and forth until we get some kind of resolution here as to whether Musk is actually going to pull the trigger on a deal or if he is going to back out and have to fight Twitter. Twitter basically standing firm and saying, look, he agreed to this deal. We're sticking to it. There's no such thing as anything being on hold.

We're moving forward. Shareholders are going to vote. And chances are shareholders will approve the buyout.

- A snowball's chance in hell, all right, Twitter executives sounds like they're going to be hoping for a Shadrach-Meshach type of moment here, Dan. While we have you, how they make money right now, it's advertising. Advertisers, if they look at this data, if they are able to know-- because Elon Musk is very vocal about any type of and the back and forth that has been going on with him and Twitter as they try to secure this deal, if they look at this data, do they see the bots as an issue for them on the platform, even if they've already been advertising there for years?

DAN HOWLEY: Yeah, look, bots don't only impact Musk, right, and his stance about-- really this goes to Musk and the crypto schemes that were being run on the platform claiming to be him, right? They were fake accounts that were saying that you can get crypto or give this amount of money to us and we'll invest it in crypto and send it back, basically masquerading as Elon Musk, which, obviously, would annoy anybody, let alone the guy that runs Tesla and SpaceX. So that's where this originated, this issue with the bots.

Now, as you said, you're accurate that if advertisers see that it's more than 5% of daily monetizable active users, then they're going to just have a conniption, basically, because they're throwing money away then. There's no reason for them to be putting money into a platform where they're not guaranteed this less than 5% number. And so basically that would mean that they're just advertising or a portion of their advertising is going into bots, more so than they expected.

Now, you would understand that these companies would recognize that a portion at least does go to the eyes of bots or the synthetic eyes of bots. But really, what they're banking on is that 5% or less number, or less than 5% number to be what Twitter accurately says is the number that are not real daily monetizable active users. And if they're not, well, that hurts advertisers in the end. And they may end up wanting to pull out. So it's really important for Twitter not only to have that number be accurate for Elon Musk, but also for the advertisers, as you point out.

- Yeah, extremely low spending power for a bot. And advertisers won't like that. Thanks so much, Dan, for breaking this down for us. We know you'll continue to keep tabs on the deal, as we will.