The prospect of the Twitter acquisition by the global social media giant is beginning to become chaotic. According to the previous article on Wall Street, Tesla, Inc. CEO Musk said that unless Twitter proved that the false account was less than 5%, the transaction could not be advanced.

Musk didn't know anything about Twitter's fake accounts before announcing his acquisition of Twitter. Why did he make such a fuss about it in the middle of the acquisition?

In addition, against the backdrop of recent sharp falls in technology stocks, the sharp falls in the share prices of Twitter and Tesla, Inc. have made the deal look more and more "expensive"; coupled with the fact that the financing will leave Twitter in debt, Mr Musk will still be under great pressure even if the acquisition succeeds. The suspension of trading at this point in time raises doubts about his true motives.

Musk doesn't mean "fake account"?

According to a joint press release by Twitter and Musk previously disclosed by SEC, he promised to "make Twitter better" by "cracking down on spam robots".

Musk once tweeted: "if we succeed in acquiring Twitter, we can either defeat the spam robot or die in our efforts!"

However, less than a month after the joint press release, Musk attacked Twitter with a flood of fake accounts, saying that unless Twitter proved that the fake accounts were less than 5%, the transaction could not proceed. Musk thinksThe number of fake Twitter users could be 20 per cent, four times what Twitter had previously claimed to be "only 5 per cent".

Fake accounts do bring some risks to Twitter.

As Bloomberg pointed out, fake accounts have cyber security risks, and as a social media, Twitter is not as secure as more mature technology companies such as Alphabet Inc-CL C and Microsoft Corp. Fake accounts frequently post unpleasant spam messages, which will reduce the user experience of real-life users. For Twitter, a tough crackdown on fake accounts could hurt the total number of Twitter users.

Twitter has said in its quarterly results that the average number of fake or spam accounts is "less than 5% of the monthly active users and daily active users in the current quarter."It is basically consistent with its assessment results over the past eight years.

Twitter's CEO Parag Agrawal outlined its method of estimating the number 5 per cent on Twitter, arguing that a third party could not accurately determine the number without access to data such as IP address, geographic location and phone number.

Musk then replied with a poop emoji.

If Musk is so concerned about the number of fake users, why didn't he investigate before buying Twitter? And question almost everything before the dust settles?

As Goldman Sachs Group's investment banker and Bloomberg financial commentary columnist Matt Levine bluntly pointed outThe fake account is not the reason why he withdrew from the transaction. If he doesn't want to buy Twitter because he has a fake account, he shouldn't have signed a contract to buy Twitter.

Musk was aware of these assessments before he announced his acquisition of Twitter, but did not conduct any private due diligence.

He did not produce any evidence to prove that Twitter's estimates were wrong, and of course there was no evidence that these estimates were materially wrong or malicious.

Obviously, Agrawal's well-thought-out answer is basically correct.

A deal that is getting worse and worse.

So what made Musk change his mind in the weeks after announcing his $54.20 acquisition of Twitter?

The first is the subject matter of the transaction-Twitter. Twitter shares have fallen 25.9 per cent from a high of $51.70 since Mr Musk made his offer on April 13th. As of the overnight close, Twitter shares were trading at $38.32.It is 29% lower than the $54.20 a share that Musk agreed to pay.

Second, the recent fall in Tesla, Inc. 's stock has also shrunk Musk's wealth. Since April, Tesla, Inc. 's stock has fallen nearly 30%, and Tesla, Inc. 's market capitalization has lost more than $300 billion.

Technology stocks, which rely heavily on future cash flow, are under tremendous pressure against the backdrop of the Fed's aggressive "water collection".

Now it seems thatThe price of $54.20 a share looks very uneconomical.Therefore, it would be better for Musk to reprice, but according to the acquisition agreement he signed, he could not quit just because the stock fell.

So Musk needs an excuse. As Levine said:

So he pretended to want to reprice for other reasons. He didn't try very hard to pretend that the expression of poop was untenable in court!

But he did enough to confuse the public and give his fans an excuse to believe that he was really a victim.

Trapped in the debt quagmire, the pressure of Twitter transformation is huge.

Moreover, compared with fake accounts, what really bothers Musk is the huge debt generated by the acquisition.

According to Bloomberg, the financing package was hastily drawn up and signed for him by the bank before April 20. The acquisition is partly funded by leveraged loans and high-yield bonds, which will also lead Twitter into a deeper debt quagmire.。

American Bond Research Corporation (CreditSights) estimatesTwitter's annual interest payments have soared to about $900m, while Bloomberg expects that figure to reach $750 million to $1 billion.

Musk may repay the equity pledge loans out of his own pocket, and Twitter may pay interest in the company's cash.

Such a huge data means that Twitter will spend money at an astonishing speed in the future, and it will undoubtedly put pressure on Musk, who has previously made a "grand blueprint" for Twitter. Even if Mr Musk is not burdened with debt, there will be little room for him to make mistakes.

As Bloomberg said,It is to be expected for clear-headed credit analysts to think twice about such a deal.

The inexplicable relationship between false accounts and stock prices

Finally, does Musk really hate "fake accounts"?

A preliminary study by David A. Kirsch, a professor at the University of Maryland Robert Smith School of Business, showed that fake accounts played an important role in Tesla, Inc. 's share price fluctuations, the Los Angeles Times reported last month.

Kirsch and his assistant Moshen Chowdhury collected tweets about Tesla, Inc. from 2021 to the end of 2020. The two found that 1/5 of Tesla, Inc.-related tweets were generated by robots.

Kirsch and Chowdhury tracked 186 robot accounts related to Tesla, Inc.Tesla, Inc. 's share price rose more than 2 per cent after it was found that each account was online.

According to the Los Angeles Times, when Tesla, Inc. was caught up in negative news about the fire of his Model S car in November 2013, fake Twitter accounts quickly became active and began to post positive comments about Tesla, Inc.. And over the next seven years, more than 30,000 such tweets were posted.

Kirsch said any direct link between the robot's tweets and the share price had not been determined, "but it does raise questions."