Musk is still willing to buy Twitter under this condition

The richest man in the world, worth nearly $280 billion, is Tesla CEO Elon Musk. The executive announced in mid-April that he would be buying the social media app (and website) Twitter for $44 billion. But early last month, Musk withdrew the offer, prompting Twitter to sue Musk and the latter to file a counterclaim. What changed Musk’s mind was the fact that Twitter could not prove to the multi-billionaire that spam and fake accounts make up less than 5% of the total number of Twitter accounts.

Elon Musk believes that at least 10% of Twitter’s average daily users are not real accounts

Musk believes that at least 10% of Twitter’s daily active users (DAU) who see ads are not authentic. Furthermore, in his counter-indictment, Musk alleges that of the 229 million daily active users on Twitter, 65 million or 28% do not see ads. To get a more accurate indication of the number of fake accounts on Twitter, Musk used Botometer, a tool created by Indiana University that measures inauthentic accounts. Using this tool, Elon’s team found more fake accounts than Twitter disclosed, according to court records.

Twitter and Musk will fight in court in October

With a lawsuit commencing in October, Musk’s lawyers wrote in a document submitted to the court: “Twitter miscounted the number of fake and spam accounts on its platform as part of its plan to mislead investors. Twitter’s revelations have slowly unraveled, with Twitter frantically closing its gates to information in a desperate attempt to prevent the Musk parties from exposing its fraud.”

But having said all that, Reuters quoted today a tweet spread early today by Tesla CEO saying that if Twitter could reveal how it samples 100 members and confirm that they are genuine Twitter users, its $44 billion bid to buy Twitter will be back in effect. But Musk added in his tweet: “If their SEC filings are found to be materially inaccurate, then they shouldn’t be.”

In his lawsuit, Musk alleges that Twitter linked accounts are counting double. The multi-billionaire claims that Twitter had inflated the revenue of daily active users by as many as 1.9 million people in its SEC filings every quarter.

In response to another Twitter user who asked whether the U.S. Securities and Exchange Commission (SEC) was investigating Twitter’s “dubious claims,” Musk tweeted back, “Good question, why not?” The legal battle between the two sides takes on a harsh tone. Last Thursday, Twitter rejected Musk’s claim that he was tricked into bidding on Twitter.

Tinted with sarcasm, Twitter’s response was filed in court and it read: “According to Musk, he – the billionaire founder of multiple companies advised by Wall Street bankers and lawyers – was tricked by Twitter into entering into a $500 merger deal. 44 billion to sign.” Twitter added: “That story is as improbable and factual as it sounds.”

Twitter CEO Bret Taylor said of Musk: “His claims are factually false, legally inadequate and commercially irrelevant.” And as for the Botometer tool, Twitter called it unreliable, pointing out that it once called Mr Musk’s own Twitter account “very likely a bot.” In his lawsuit, Twitter said, “Musk is refusing to honor his obligations to Twitter and its shareholders because the deal he signed no longer serves his personal interests.”

A clause in the contract could allow Musk to pay $1 billion to end the deal if his financing falls through

A “specific performance” clause included in the contract allows Twitter to sue to close the deal as long as Musk’s funding remains in place. But if funding for the deal falls through, Musk could pay $1 billion to end his obligations to buy Twitter.

Tweet posted by Musk today gives some hope the deal can be finalized

Although Musk is a multi-billionaire, much of his wealth is tied up in Tesla stock. Musk planned to borrow against the value of some of his Tesla shares to raise as much as $12.5 billion. A dangerous financial maneuver, if Tesla shares had fallen sharply, Musk could have been forced to pay extra money with a margin call, or have sold the Tesla shares as collateral for the loan from under him.

In the end, the CEO decided not to borrow against his Tesla stock before scrapping the deal altogether. Still, Musk’s tweet today reveals that there is still a road to a completed acquisition.