Musk has finally canceled the twitter deal after courting the american microblogging platform for more than two months in this video im going to explain to you why the tesla ceo has walked out of the twitter deal. You will also get to know the consequences of canceling. The twitter purchase agreement join me today in this video, as we explore the reasons that made elon musk cancel the twitter deal and the consequences thereof. From the beginning, most financial experts and analysts were skeptical about musks plan to take twitter private. They had many reasons to believe that the twitter purchase would not be a success. To begin with, it was casually revealed to the public through a tweet. In most cases, such big deals are mostly brokered in secret and released to the public in an official manner. You could have also doubted the twitter purchase agreement as it was done hastily. The world was informed of elon musks interest in twitter on the 4th of april. This year, when the tesla founder bought a 9.2 stake in the company for 2.9 billion dollars, the following day, twitter, ceo parag agrawal, invited elon to join the twitter board via a tweet im excited to share that were appointing elon musk to our board. Through conversations with elon in recent weeks, it became clear to us that he would bring great value to our board. Musk welcomed the invitation and pledged that he was going to closely work with perak and the board in general, with an aim of improving twitter.
But a few days later, the tesla owner appeared to have changed his tune when he said that he would not be joining the twitter board. But then the drama was far from being over. The tech icon shocked many on the 14th of april when he said that he wants to buy a 100 stake in twitter. It is at this point that it became clear that elon was up to something the following day. The twitter board called for an emergency board meeting where they adopted a poison pill plan against the tech genius. This is simply a shareholders protection mechanism that allows the board to add more shares to the company, should a particular shareholder want to acquire more than a 15 stake in the company. The newly added shares will be sold at a discount to all other shareholders, except the one that has the aim of taking the company private. In the end, the poison pill plans aim to dilute the stake of the shareholder that wants to buy a 100 stake in the company. The shareholder protection plan complicates things for buyers, as it makes the value of the company to be increased, in other words, with a poison pill strategy musk would be forced to spend more than the initial 43 billion dollars in buying twitter. After a week of attacking the twitter board on twitter, the tesla ceo said that he had secured more funding for the twitter purchase. He came up with a better offer of 46.
5 billion dollars. The new offer price triggered serious negotiations from the 22nd to the 24th of april this year. By monday, the 25th of april 2022 elon musks team and the twitter board had agreed on the terms and conditions of buying the site. Twitter board. Chair brett taylor informed us of the twitter deal via a tweet that reads: the twitter board has reached an agreement with elon musk. It is unfortunate that the twitter purchase deal has now been cancelled by the tesla ceo for a number of reasons. The main reason that made musk walk out of the deal is the issue of spam and fake accounts before canceling the twitter deal. The tesla ceo had put it on hold for the same reasons as seen in a tweet that reads: twitter deal temporarily on hold pending details supporting calculation that spam fake accounts do indeed represent less than five percent of users. After putting the twitter deal on hold the tesla billionaire requested that the microblogging site hand over its data, so that musks team could help establish the number of users on the platform. The tech genius wants to do his own independent audit of the number of users on the platform, since he does not trust the audit that was done by twitter. His lawyer said that, in a statement that reads, mr musk has made it clear that he does not believe the companys lax testing methodologies are adequate, so he must conduct his own analysis to determine how many accounts are fake.
According to a letter that has now been leaked must cancel the deal after the twitter team refused to submit their user data for verification purposes. Part of that letter reads: mr musk believes the company is actively resisting and thwarting his information rights and the companys corresponding obligations under the merger agreement. The letter says: musk reserves the right not to consummate the transaction and his right to terminate the merger agreement on his part. Musk believes that the twitter spam accounts are actually more than 20 percent. Such a high number of spam accounts will give the tesla billionaire a perfect opportunity for him to renegotiate the twitter purchase price of 44 billion dollars. According to the documents that were filed with the united states securities and exchange commission, the number of spam accounts on the microblogging site should not be more than 5. But then why is the number of spam accounts? An issue to a large extent, the success of a social media platform is greatly influenced by the number of users on the site. The number of actual users on a social media platform is realized by subtracting the fake and spam accounts from the total accounts. This simply means the higher the number of spam and fake accounts, the lower the number of real users on the social media site. The number of real users means everything to the social media site, as it dictates the number of advertisers that it attracts social media sites.
Make an income by advertising products and services for various marketers. It is obvious that business owners will choose to advertise their products and services on sites with a large user base on such platforms, they have a higher chance of reaching out to a larger marketplace. So in the case of twitter, business owners will not want to advertise their products and services on the american microblogging site because it has a lot of spam and fake accounts which do not have the potential of buying their products. Unlike real people with such a high number of spam accounts, twitter is likely to lose some of its clients to other major social media sites such as facebook, whatsapp, instagram and tick. Tock twitter has approximately 400 million users while metas facebook is the largest social media site. With more than 3.5 billion users, whatsapp is also a force to reckon with in the social media space, as it has a user base of 2 billion people. In fact, it is the most popular messaging app just like facebook. It is also a subsidiary of meta. The photo sharing platform instagram and the short video sharing platform tiktok are the other sites that have more than 1 billion users before canceling the twitter deal, the tesla billionaire had intended to grow it to a level that it was going to compete with the other major Social media sites that i just mentioned, elon also cancelled the twitter deal because he fears that the high number of spam and fake accounts would increase crypto scams and frauds on social media sites.
Musk wanted to verify the number of fake accounts on twitter so that he does not get in a situation where he is running a company that is full of scammers before canceling the deal the tech guru had promised that he was going to do all it takes To fight the spam accounts on the social media platform, the tech billionaire was a victim of online scamming when his twitter account was attacked. The attack happened in 2020, with more than 100 000 celebrities, also being hacked. Some of the notable people whose accounts were hacked include president barack obama, microsoft, founder bill gates, kim kardashian and warren buffett. The attack was a bitcoin scam that aimed to swindle crypto from the followers of these popular personalities. There is no doubt that the cyber criminal who orchestrated the attack was using a fake account. This is precisely the reason why the tesla founder canceled the twitter purchase after cancelling the twitter deal. Elon musk has invited the u.s securities and exchange commission to also do an audit regarding the number of fake accounts on the social media platform, you can be sure that the sec will not hesitate to sue twitter if they establish that the number of fake and spam Accounts on the site is more than five percent. The government agency will sue the american microblogging site for fraud. If found guilty, twitter will have no option but to pay a very hefty fine. The twitter share price has fallen sharply after the tesla billionaire canceled.
The deal of taking the social media platform private. This is the exact opposite of what happened when the tech billionaire bought his first stake in the company. The fluctuation of twitter prices after elon bought a 9.2 percent stake in the company and after he canceled the deal is a sure demonstration of the tech billionaires influence in the finance and the crypto realm. Musks exit from twitter has also seen a mass exodus of people from the platform to other social media sites. Many people have been frustrated after the tech icon canceled the deal as they had high hopes in his leadership and revolutionary approach in the microblogging site. On the flip side, the tesla shares have also dropped by 30 after the tesla owner cancelled the deal. It is not an issue that will deny the tech billionaire some sleep, considering that the shares of the leading tech companies have not been performing well. In the last few weeks with the twitter deal canceled, there is a high possibility that elon musk may come up with his own social media platform that will promote democracy and free speech. We are keenly monitoring to see if elon is going to sue twitter once more. For fraud after cancelling the twitter deal, you can be sure that we will update you on the next move as it pertains to the twitter deal. That was just cancelled. Thank you for watching dont forget to subscribe with all notifications enabled so that you dont miss out on the latest elon musk news, anyways guys.