Elon Musk's Twitter deal has been on hold for four days and the stalemate seems to be here to stay. Musk claims that Twitter's underestimating of the number of fake accounts – so-called "spambots" – on the platform has put the deal temporarily on hold.
Speaking at the All In Summit in Miami, Musk said that a Twitter deal at a lower price “was not out of the question. While Twitter's bot problem is well known, many are speculating Musk putting the deal on hold has more to do with it being unlikely that the world’s richest man can afford the $44 billion dollars originally agreed upon.
According to the Bloomberg Billionaire Index, Musk has a net worth of $213 billion at the time of writing. Converted into hard cash, even if he were to spend $1 million every hour, it would take him 24 years and 4 months to run out. But the conversion to cash is the issue, and not just for this hypothetical scenario.
The same index suggests that Musk has only got $9.25 billion in “cash” with the rest of his fortune coming from shares. So, to raise the money for the deal, Musk has been looking for alternatives. Last month, NYU Professor Scott Galloway suggested in his Pivot podcast Musk would have to borrow the cash against his shares in Tesla.
Musk had secured $13 billion in bank loans and then moved to secure $12.5 billion more by pledging about $62.5 billion worth of Tesla stock as collateral. This still leaves about half of the money to be found, with private investors such as Binance chief founder Changpeng Zhao and Saudi Arabian investor Prince Alwaleed bin Talalapparently pledging money to help Musk. However, speculation is rampant that all of that is simply not enough and that Musk can’t afford the offer he made.
The criticism of Twitter’s spambots might have some merit – research from 2017 suggested that automated bots made up between 9 and 15 percent of active profiles – but that doesn’t mean the site's userbase is overwhelmingly spambots. While the issue might be bigger than the social media company admits, some argue that Musk is using this to step away from a deal he can’t afford.
Many have turned their attention to the clauses in the deal where if any party backs out, they would have to pay $1 billion to the other. But there is also another clause that seems extremely relevant: Musk is not supposed to say anything negative about the company and its employees.
This is something that Musk has constantly ignored – not only disparaging Twitter, its past decisions, and its current ones, but also targeting its employees such as Twitter’s top lawyer, Vijaya Gadde, who received a barrage of abusive and racist tweets after Musk criticized Gadde.