Officials at the US Securities and Exchange Commission must be raising their eyebrows over the latest antics by Elon Musk on his soon-to-be-bought favourite mouthpiece today.
A tweet this morning, saying his $44bn deal to buy the social media company was being put “temporarily on hold”, sent Twitter’s shares around 20 per cent lower. Musk said this was “pending details supporting calculation that spam/fake accounts do indeed represent less than 5 per cent of users”.
The implication was that Twitter might be understating the number of fake accounts, making it worth less than he had offered and giving him material cause to renegotiate or pull out of the deal.
However, another tweet, two hours later, said he was “still committed to acquisition”. The shares pared their losses to be down 11 per cent.
Our reporters say the estimation of fake accounts was included in the company’s quarterly filing last week, but the same calculation has also been reported in each quarterly filing going back to 2014.
Twitter now trades at a 26 per cent discount to the $54.20 per share price Musk agreed to pay in mid-April, signalling that investors do not believe a deal will happen anywhere near that price and possibly not at all.
Alphaville says that as well as potentially triggering the deal’s Material Adverse Effect clause and voiding the $1bn break fee Musk has to pay, raising a fresh issue puts Twitter in a very bad place.
It had already been a tumultuous 24 hours for the company. Earlier, it announced an immediate hiring freeze, cost-cutting measures and the departure of two of its senior leaders.
The Internet of (Five) Things
1. Tech stocks rally at the end of awful week
Tech stocks are roaring back today, with the Nasdaq Composite closing nearly 4 per cent higher, but Richard Waters argues there are plenty of reasons to believe the recent car crash isn’t over. John Thornhill says the rules of the game may have fundamentally changed, with Uber’s chief saying shareholders now need to be “shown the money” in terms of cash flow and profits.
2. Bitcoin is back as well
Bitcoin was back above $30,000 on Friday after a horrid time this week.
The $1.3tn cryptocurrency industry had also been hit on Thursday by one of its toughest challenges when stablecoin tether — a critical cog in the market — failed to maintain its link with the US dollar. Alphaville looks at how stablecoins are destabilising crypto and we also have an explainer on their significance. Lex says the size of the stablecoin industry — $180bn as of March, according to the Federal Reserve — makes it a source of potential systemic risks. Our Lunch with the FT this week is with Sam Bankman-Fried. the founder of the FTX crypto exchange.
3. VCs seek big NFT returns
Venture capitalists are ploughing millions into digital art, virtual land and online collectibles, the new frontier for investors seeking big returns in crypto. Andreessen Horowitz and Paradigm, two of the largest cryptocurrency venture fund managers, have begun investing directly in non-fungible tokens (NFTs), reports Miles Kruppa. FT Weekend looks at
Los Angeles-based Jason Li’s art collection of 1,000 NFTs.
4. Son raises SoftBank’s umbrella
“We put up an umbrella when it rains,” said Masayoshi Son this week. “It is the time to strengthen our defence now.” Here’s our analysis of the more subdued and humbler SoftBank founder, after he revealed a $27bn loss for its Vision Fund investments.
5. Money, it’s a gas
Grab that cash with both hands and make a stash. Pink Floyd, known for hits such as “Money”, could soon be $500mn richer, with Warner Music and KKR-backed BMG competing to buy the band’s entire back catalogue. Lex says such assets, which are effectively annuities, are the antithesis of the flashy artists behind them.
Tech tools — Google’s gaggle of gadgets
Google’s gaggle of hardware announcements at its I/O developer conference this week included new phones, a watch, earbuds and a tablet. There was a first look at the Pixel 7 and 7 Pro smartphones, but the Pixel 6a will be available sooner with pre-orders from July 21 for $449. Pixel Buds Pro earphones will be available at the same time. Coming in the autumn is the Google Pixel Watch, the first all-Google-built smartwatch, with Wear OS, Fitbit integration and Assistant access. A Pixel tablet was shown, but won’t be available till next year. The Guardian has a round-up of all the gadgets, as well as looking at improvements in the Android 13 operating system due this summer.