Business

Elon Musk Ruffles Twitter’s Feathers


Twitter‘S

TWTR -9.67%

The field perch has lost everything and has not found a safe landing.

Elon Musk

tweeted early Friday morning that his deal to buy the social network was “temporarily hold“Pending details on how the company calculates its user base.

His tweet is linked to May 2 Reuters article about how spam and fake accounts make up less than 5% of Twitter’s reported daily active users, based on figures from the company’s 10-Q filing that day — a preliminary disclosure. The set has been included in all of Twitter’s quarterly and annual results since the company went public in 2013.

Two hours later, Mr. Musk tweeted, “Still committed to acquisition.” Twitter CEO Parag Agrawal also tweeted later in the day that he still hoped the deal would close.

But the damage has been done: Shares of Twitter fell nearly 10% on Friday to close at $40.72, only about 4% higher than the price the stock was buying before Mr. Musk. revealed on April 4 that he already owns a large stake in the company. . That turned out to be a prelude to an offer to buy the company outright next week that culminated in a deal announced on April 25 for $54.20 per share in cash. face.

Twitter shares are about 17% below Thursday’s close – an unusually large spread reflects growing skepticism with which Mr. Musk will make the transaction, at least at the agreed-upon price. But captures the long-revealed issue of fake versus real users — a murky matter hanging on every social media platform-is an odd number. Regardless, the world’s richest mind-changer could use the issue to negotiate a deal price down or as an excuse to walk away altogether, with uncertain legal consequences.

In the latter case, Twitter’s stock will almost certainly fall more – possibly more.

Consider that since April 1, the S&P 500 is down 11% while the Nasdaq Composite is down 17%. Internet Warehouse even worsewith the Nasdaq CTA Internet Index down 24% during that time.

Alphabet Inc.

and

Meta . Platform

—The parent companies of online advertising giants Google and Facebook — have lost about 17% and 12% of their value respectively during that time

Snap

chat-parent Snap Inc. fell 34%.

Without Mr. Musk’s offer, Twitter might not have succumbed to the same gravity. The company’s first-quarter revenue reported April 28 fell slightly short of Wall Street expectations despite a surprising spike in daily active users. Online Advertising widely is under pressure from the combined weight of rising inflation, supply chain challenges, and the war in Ukraine.

The industry is also still digesting the changes

Apple

created for its mobile operating system last year making it harder to track users. There are also TikTok’s growing competitive forcethe app has quickly become the third most used social networking app, according to a survey by Edison Research.

A drop that reflects only the Nasdaq Composite from Twitter’s pre-Elon levels would leave the stock at $32 a share — about 22% below where it changed hands on Friday. And the stock could be even more bearish than its peers because the loss of a contract will focus on Twitter Internal Disturbance. Mr. Musk could still get the deal done, but that’s unlikely to be certain in the first place. Looks like there’s even less than one now.

Elon Musk has built a close relationship with Beijing to build Tesla’s business in China. Now that he’s buying Twitter and focusing on free speech, the WSJ looks at how China has used the social media platform to promote its views and why that has raised concerns. Photo illustration: Sharon Shi

Write letter for Dan Gallagher at [email protected]

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