Elon Musk Could Walk Away From Twitter Deal Due To This Reason

Elon Musk’s latest comments on the Twitter deal put his intentions of buying the social media giant in doubt. The Tesla and SpaceX exploration chief hinted at a “very significant” question about the number of fake users on the social network during the Qatar Economic Forum last month.

HIGHLIGHTS

• Elon Musk said he feared an abundance of fake accounts on Twitter
• The Tesla chief could end the deal by paying a $1 billion breakup fee
• Musk’s comments had a direct impact on Twitter shares that sled further

Why Is Elon Musk Concerned About Fake Accounts On Twitter?

The richest man in the world had previously said that he could walk away from the Twitter deal over concerns of fake accounts on social media. Also, he believes that fake accounts are abundant. But Musk has been unable to find the percentage of fake accounts despite being given access to internal data.

Twitter executives peg the percentage of fake accounts at less than 5% but Elon Musk believes the number to be much higher than what is claimed by Twitter executives.

What Did Elon Musk Say About The Twitter Deal?

A Washington Post report cited an anonymous source saying that Musk’s team is looking for a “change in direction”. Earlier Elon Musk raised his concerns about fake accounts via a video link to the Qatar Economic Forum last month. He said the Twitter deal was held up by “very significant” questions about the number of fake Twitter accounts.

How Did Share Market React To Musk’s Comments?

Washington Post reported that Twitter shares further lowered after Musk’s comments on ending the deal if the fake account issue wasn’t resolved. Twitter shares sank about 4% after Tesla chief’s comments. Twitter shares are already trading much lower than the price offered by Elon Musk.

What Is The Future Of the Twitter Deal?

Elon Musk bought Twitter at $44 billion but help up the deal due to fake accounts on the social media giant. According to Wedbush analyst Dan Ives, Musk could reveal details of his fake accounts concerns in the coming weeks. He predicted Musk to stay with a deal with a lower price or go.

Ives further maintained that chances of Elon Musk buying Twitter at the original price were slim. Probabilities of the deal happening at a lower price are 60%. Wedbush also predicted that Musk could end the deal by paying only a required $1 billion breakup fee.

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