By Geoffrey Smith
Investing.com — Twitter (NYSE:) stock plunged in premarket trading on Monday after Tesla (NASDAQ:) CEO Elon Musk threatened to end his bid to buy the company in because of his refusal to give him the information he wants about the fake accounts on his social media site.
Musk argued in a filing with the Securities and Exchanges Commission that Twitter’s board of directors’ refusal to provide him with more detailed information about fake accounts and spam accounts was a violation of their agreement, under which Musk and other investors were to take the company private at a price of $54.20 per share.
“Twitter has refused to provide information Musk has repeatedly requested since May 9, 2022 to facilitate his assessment of spam and fake accounts on the company’s platform,” the document said. His offer to “simply provide additional details regarding the company’s own testing methodologies, whether through written materials or verbal explanations, is tantamount to refusing Musk’s requests for data.”
Twitter CEO Parag Agrawal said the company’s research shows “far less than 5%” of its users over the past four quarters were spam or fake accounts. Musk argues that the actual number is a multiple of this figure. Musk had said in late May that the deal was “temporarily on hold” due to the dispute.
“Musk has made it clear that he does not believe the company’s lax testing methodologies are adequate and therefore needs to conduct his own analysis. The data he requested is necessary for this purpose,” the report said. document.
Twitter argued that to provide the data requested by Musk, the company would have to violate the confidentiality agreements it has with its users. This privilege of anonymity is, ironically, preferred by many accounts that side with Musk in his various online spats on the platform.
In response, Twitter stock fell 5.5% to $39.95 at 3:10 p.m. In contrast, Tesla stock rose 3.6%. Tesla stock has tended to have an inverse relationship with Twitter stock since the deal, given that Musk may need to sell or borrow on his stake in the electric vehicle company to raise the cash needed to the operation. As such, anything that reduces the likelihood of the Twitter takeover happening reduces the likelihood of Tesla being overcharged.