Elon Musk is well on his way to making mincemeat out of the Twitter board, as the CEO of Tesla’s near-constant bad-mouthing of the social media giant continues to exact a hefty toll on the perception of investors. The latest drama around the much-anticipated Twitter takeover deal began last Friday when Musk placed the deal on a “temporary hold” while citing the need to verify whether the proportion of bots or fake accounts does indeed number less than 5 percent of Twitter’s 229 million monetizable daily active users in Q1 2022, as was recently claimed by the social media giant. On Sunday, Musk upped the ante when he claimed that the proportion of fake accounts plaguing Twitter’s daily active user count might be as high as 90 percent. Since then, the CEO of Tesla has publicly speculated that the bot count might be around 20 percent of Twitter’s DAUs while hammering the point home that this metric is likely to be much higher than Twitter’s own claims. Of course, given this slow-motion PR trainwreck, Twitter’s CEO Parag Agrawal was forced to jump into the fray by publishing a long thread on the social media platform, essentially stating that it was impossible to perform a third-party audit of the company’s DAUs, “given the critical need to use both public and private information (which we can’t share)”.
— Parag Agrawal (@paraga) May 16, 2022 This brings us to today when Elon Musk has point-blank stated that he can’t move forward on the Twitter takeover deal until the social media giant’s CEO provides “proof” regarding his company’s estimation of a bot count of less than 5 percent of DAUs.
My offer was based on Twitter’s SEC filings being accurate. Yesterday, Twitter’s CEO publicly refused to show proof of <5%. This deal cannot move forward until he does. — Elon Musk (@elonmusk) May 17, 2022
Implication for Twitter: A Hardball Negotiation Tactic or the Moment of No Return?
As we’ve continued to point out in recent articles on this subject, Elon Musk appears to be utilizing his sizable leverage over the Twitter board to drive a much more aggressive bargain than his initial offer of $54.20 per share for the social media giant. However, given Musk’s maximalist position at this stage, there is a material probability that the entire deal unravels, allowing Musk to walk away after paying a $1 billion breakup fee. Whatever the outcome, Twitter stands to lose the most in this saga. For one, Musk has honed in on Twitter’s Achilles heel with a laser-like focus by publicly drawing attention to the company’s fake account problem. To make matters worse, Agrawal’s response was imbecilic, frankly speaking. Are we to believe that Twitter’s criterion for identifying fake accounts is so fuzzy and subjective that a third-party audit would not be able to identify “which accounts are counted as mDAUs on any given day”? All this means that Twitter is unlikely to receive a counter offer at this stage, leaving the company completely at the fickle mercy of the CEO of Tesla. In the meantime, the spread between Twitter’s share price and Musk’s offer price continues to grow as investors remain uncertain regarding the fate of the “global town square”. Veni, Vidi, Vici is a Latin phrase that is commonly attributed to Julius Caesar and can be translated to: “I came; I saw; I conquered”. With Musk making mincemeat out of Twitter’s board with veritable gusto, this phrase can now also be attributed to him.
