Twitter’s Spam/Bot Boilerplate, Which Elon Musk Says He’s Paused Deal Over, Goes Back Nearly a Decade

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Is Elon Musk getting cold feet over his $44 billion bid for Twitter — or is he just trying to drive the price tag down?

Early Friday, the mega-billionaire tweeted that his deal for the social network was “temporarily on hold,” citing the need to conduct due diligence on Twitter’s claim that fake and spam accounts represent less than 5% of its active user base. He linked to a Reuters story based on Twitter’s latest quarterly 10-Q with the information.

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However, that disclosure has been in Twitter’s SEC filings for years — literally since the company first went public in 2013. It’s right there in the Twitter S-1 registration statement: “We currently estimate that false or spam accounts represent less than 5% of our [monthly active users].” Since then, Twitter has regularly reported that same stat in its filings, updated for when it shifted from reporting monthly to daily active users starting in Q4 2018.

Musk shouldn’t have been surprised by Twitter’s spam/bot estimate. So what’s really going on?

“Many will view this as Musk using this Twitter filing [about] spam accounts as a way to get out of this deal in a vastly changing market,” Wedbush Securities analyst Dan Ives wrote in a research note. “The implications of this tweet will send this Twitter circus show into a Friday the 13th horror show as now the Street will view this deal as 1) likely falling apart, 2) Musk negotiating for a lower deal price, or 3) Musk simply walking away from the deal with a $1 billion breakup fee.”

In a follow-up tweet Friday, Musk said he was “still committed to [the] acquisition.” Still, on the announcement that he was pausing the Twitter deal, shares of the company plunged more than 9% in early trading. Musk has offered $54.20/share for Twitter. The stock was trading at under $41/share Friday as investors reacted to a growing possibility the deal won’t happen.

Because Musk is using Tesla shares as leverage to secure loans for the Twitter deal, Ives wrote, “the massive sell-off seen in Tesla and the overhang created by this deal has turned into a life of its own. The initial reaction will be positive for Tesla shares as now the Street will view the chances of a [Twitter] deal as less than 50%.” Indeed, Tesla shares were up more than 6% Friday.

Musk has said he wants Twitter to authenticate “all real humans” on the platform and tweeted last month, “If our Twitter bid succeeds, we will defeat the spam bots or die trying!”

In filings, Twitter says its estimated tally of spam and fake accounts “is based on an internal review of a sample of accounts and we apply significant judgment in making this determination” and notes that “our estimation of false or spam accounts may not accurately represent the actual number of such accounts, and the actual number of false or spam accounts could be higher than we have currently estimated.”

Twitter has, by its own admission, miscounted user stats before.

In announcing Q1 results, Twitter said it had overstated DAU counts going back to the first quarter of 2019 because of an error in an account-linking feature it launched in March 2019. The error resulted in Twitter restating monetizable DAU figures for the past five quarters that were 0.7%-0.9% below what it previously reported.

In other Twitter developments, on Thursday CEO Parag Agrawal fired two senior execs — product chief Kayvon Beykpour and revenue product lead Bruce Falck — and said in a memo that the company was freezing hiring and cutting spending, as Twitter is falling short of user and revenue growth targets.

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