Musk said Twitter is “transparently refusing to comply with its obligations under the merger agreement … due to concern for what his own analysis of that data will uncover”.
Updated at 9:41 am EST
Twitter (TWTR) – Get Twitter, Inc. Report shares slumped lower Monday after Tesla (TSLA) – Get Tesla Inc Report CEO Elon Musk doubled-down on his challenge to the company to prove its data on fake accounts and spam on the micro-blogging website.
In a Securities and Exchange Commission filing made public on Monday, Musk indicated he had sent a letter to Twitter executives seeking more information regarding the methods it used to calculate the company’s estimate that fake accounts comprise less than 5% of total users.
Musk, who waived his right to due diligence on the deal when it was unveiled earlier this spring, said Twitter is “transparently refusing to comply with its obligations under the merger agreement”, adding that he is not persuaded by its “lax testing methodologies”.
“Twitter has, in fact, refused to provide the information that Mr. Musk has repeatedly requested since May 9, 2022 to facilitate his evaluation of spam and fake accounts on the company’s platform,” the letter stated. “Twitter’s latest offer to simply provide additional details regarding the company’s own testing methodologies, whether through written materials or verbal explanations, is tantamount to refusing Mr. Musk’s data requests.”
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“Twitter’s effort to characterize it otherwise is merely an attempt to obfuscate and confuse the issue. Mr. Musk has made it clear that he does not believe the company’s lax testing methodologies are adequate so he must conduct his own analysis,” the letter added. “The data he has requested is necessary to do so.”
Twitter shares were marked 3.6% lower in early Monday trading immediately following publication of Musk’s letter to indicate an opening bell price of $38.68 each, some 30% south of Musk’s ‘best and final’ offer of $54.20 each.
The Wall Street Journal reported Sunday that as many as 70% of Musk’s nearly 100 million followers are spam, fake or inactive, citing data from audience-research software group SparkToro LLC.
The Tesla CEO has previously said there is “some chance” the number of fake and bot accounts “might be over 90% of daily active users”, but provided no proof for his assertion.
Last month, he said his Twitter pursuit was “on hold” pending an investigation into that number, alleging that “Twitter’s CEO publicly refused to show proof of <5% (spam accounts)” adding the deal “cannot move forward until he does.”