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Elon Musk Officially Seeks to Terminate Twitter Takeover Deal

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Elon Musk Launches Hostile Takeover Bid for Twitter

It seemed inevitable, and now, Elon Musk has officially filed a motion with the SEC to terminate his $44 billion takeover of Twitter, based on Twitter’s failure to provide accurate information on the number of fake accounts on its platform.

In a letter filed on behalf of Musk and his investment partners at Morgan Stanley, Musk is seeking to cancel the acquisition due to a ‘material breach of multiple provisions’ of the original merger agreement.

As per the filing:

‘[Twitter] appears to have made false and misleading representations upon which Mr. Musk relied when entering into the Merger Agreement, and is likely to suffer a Company Material Adverse Effect (as that term is defined in the Merger Agreement).”

Musk’s team says that, despite repeated requests for qualifying information, Twitter had failed to provide them with the data required to make an accurate and true assessment of the number of fake accounts on its platform.

“While Section 6.4 of the Merger Agreement requires Twitter to provide Mr. Musk and his advisors all data and information that Mr. Musk requests “for any reasonable business purpose related to the consummation of the transaction,” Twitter has not complied with its contractual obligations.”

Musk’s team says that it has been seeking more information from Twitter for nearly two months, with Twitter only providing limited access to the required data, in violation of the terms.

“Sometimes Twitter has ignored Mr. Musk’s requests, sometimes it has rejected them for reasons that appear to be unjustified, and sometimes it has claimed to comply while giving Mr. Musk incomplete or unusable information.”

In total, Musk’s team says that Twitter has failed to provide them with information on:

  • Information related to Twitter’s process for auditing the inclusion of spam and fake accounts in mDAU
  • Information related to Twitter’s process for identifying and suspending spam and fake accounts
  • Daily measures of mDAU for the past eight (8) quarters
  • Board materials related to Twitter’s mDAU calculations
  • Materials related to Twitter’s financial condition

Because Twitter has failed to comply with these requests within a reasonable time period, that, Musk’s team says, is a violation of the deal’s terms, and is therefore reason enough to cancel the agreement.

The letter also notes that Musk’s team is still unconvinced of Twitter’s metrics, with its own analysis of Twitter’s expanded usage data, which it provided last month, showing that fake accounts are more prevalent in the app than Twitter claims:

Preliminary analysis by Mr. Musk’s advisors of the information provided by Twitter to date causes Mr. Musk to strongly believe that the proportion of false and spam accounts included in the reported mDAU count is wildly higher than 5%.”

Musk’s team also says that, based on its discussions with company execs, its understanding is that Twitter includes accounts that have been suspended within its active user metrics, which it says would see Twitter still including known fake and spam accounts within its publicly reported figures. Musk’s team also says Twitter’s process for determining the percentage of fake accounts ‘appears to be arbitrary and ad hoc’, further clouding their metrics.

Based on these ongoing questions, and Twitter’s failure to provide adequate justifications for such, Musk and Co. want to pull out, which will now put the onus on the SEC and/or the courts to decide whether the reasoning here is justified, and how it moves forward, or not, with the merger.

Which could be a disaster for Twitter, which has already cut executive jobs and shifted its entire business approach, in preparation for a pending Musk takeover.

Indeed, this week, reports suggested that Twitter CEO Parag Agrawal is ‘willing to go to war’ in order to make Elon Musk follow through with his takeover bid, even if Musk looks to back out of the process. Agrawal would personally be in for a big payday if the Musk deal were to go through – but more than that, the deal falling apart now would raise significant questions over Twitter’s future, and its capacity, as a business, to become a more viable, valuable proposition.

The overriding consensus thus far has been that Musk will eventually have to go through with his Twitter takeover push either way, because Musk waived various due diligence measures in his initial offer, in order to expedite the transaction,

But in today’s letter, Musk’s team has also provided a note of clarity on this point:

Despite public speculation on this point, Mr. Musk did not waive his right to review Twitter’s data and information simply because he chose not to seek this data and information before entering into the Merger Agreement. In fact, he negotiated access and information rights within the Merger Agreement precisely so that he could review data and information that is important to Twitter’s business before financing and completing the transaction.”

It seems, then, that a stand-off is coming, with Musk now making the move that many had expected, which will force Twitter to respond and provide a detailed explanation of such to the SEC.

Twitter board Chairman Bret Taylor was quick to respond to the news:

Will Musk be able to get out of the deal, or will Twitter indeed be able to force Musk to pay up, based on the terms of the agreement?

It looks like things are about to get really ugly, which can only be bad for Twitter as a business.



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Twitter Blue Subscribers Can Now Post Tweets Up to 4,000 Characters Long

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Twitter Blue Subscribers Can Now Post Tweets Up to 4,000 Characters Long

So, this is a thing…

Twitter has rolled out longer tweets to Twitter Blue subscribers in the US, with paying users now able to post tweets up to 4,000 characters in length.

If anyone needed or wanted that.

Longer tweets will be displayed in the main feed at standard length, with a ‘Show more…’ indicator pointing users to the remainder of the content.

Honestly, it’s sadly ironic that not even Twitter could come up with a good use of the extra characters in its example, but yes, Twitter Blue users – all 300,000 of them – will now be able to post super long rants about whatever they choose in the app.

As explained by Twitter:

“[Twitter Blue users] can also compose longer Tweets in a Quote Tweet or reply. Standard functionality like posting media, creating polls, and using hashtags still apply. Everyone will be able to read longer Tweets, but only Blue subscribers can create them.

I don’t know if anyone requested this, but Twitter 2.0 chief Elon Musk seems convinced that by enabling users to post long-form content, that will eventually open up new avenues to monetization, and will see more top voices posting more stuff to the app.

I mean, the recent Twitter Files are probably the best example – Elon’s hand-picked team of journalists have been trawling through Twitter’s archives to uncover accusations of corruption and Government meddling, all ended up posting their findings in ridiculously long tweet threads in the app.

It would make more sense to post them on a more long-form focused format, but Musk obviously wants all the attention on Twitter – and in instances like this, maybe having longer tweets could be valuable.

But I don’t know.

It also seems short-sighted to only provide this functionality to Twitter Blue users. As noted, only a small fraction of Twitter’s 250 milllion total user base is paying for a blue tick, and while Twitter is now expanding the offering into new markets, it’s hard to see it catching on in any real way.

That means that a lot of the most popular creators won’t even be able to use the option, which seems counterintuitive. But then again, Elon will probably look to add in a new monetization element, which you have to pay up to qualify for, which is probably his broader view for limiting access at this stage.

Who knows – maybe it ends up being amazing, and maybe it makes it way easier to post what would have been multi-tweet threads in a more engaging, interesting way in the app.

It’s different, for sure, very different from Twitter’s usual offering.



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Growth Stock Surges On Ad Fraud Discovery, Analyst Upgrade

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Growth Stock Surges On Ad Fraud Discovery, Analyst Upgrade

Ad data and analytics provider DoubleVerify (DV) is building the right side of a cup base with a buy point of 32.53. The growth stock is today’s selection for IBD 50 Stocks to Watch.




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DoubleVerify has a strong Composite Rating of 94 and a Relative Strength Rating of 89. Its stellar EPS Rating of 96 is even better.

Company sales grew 35% to $112.3 million in the third quarter while earnings per share of 6 cents grew 20% from the previous year.

On Jan. 10, analysts at Barclays upgraded the stock to overweight from equal weight with a price target of 29. Shares gapped up over 6% on the news, and the move helped the stock start its recovery from the January low.

Growth Stock Surges After Finding Fraud Scheme

DoubleVerify helps advertising companies that target users on video, mobile, and social media platforms. The company also has an analytics side that provides data on consumer engagement.

The digital media analytics platform ensures that ads reach their target customers in a safe way. This means that ads reach actual people with the right context. The software also has tools to adapt ads to different devices.

Its technology also seeks to address ad fraud. On Thursday, the company discovered “BeatSting,” the first large-scale ad-impression fraud scheme that targeted audio ads.

DV Fraud Lab first identified the fraud scheme in 2019, which is largely responsible for advertisers losing $20 million in several scams, according to reports. DoubleVerify was credited for unveiling the fraud. Shares last Thursday surged nearly 4% in strong volume.

Deals With Twitter, LinkedIn, Meta, Facebook

The company has partnered with leading social media and mobile platforms like LinkedIn and TikTok to improve ad impact and experience. DoubleVerify has a long-standing relationship with Facebook parent Meta Platforms (META). The social media platform faced a massive boycott in 2020 when several companies removed their ads due to concerns over their brand safety.

In June of last year, DoubleVerify brought features that will allow marketers to see where their ads appear in a user’s timeline. The feature uses artificial-intelligence tools to understand the context in which ads appear. The feature also enhanced brand safety  and attracted Twitter and other social media platforms to try it out. Nonetheless, marketers did not buy in entirely, according to reports, as Twitter’s ad revenue continued to struggle.

The growth stock ranks second in the specialty enterprise software group. The stock went public in April 2021. The New York-based company has locations in the U.S., U.K., Europe, Asia, Australia and South America.

Mutual funds own 39% of shares outstanding. That may not seem like much, but more funds have been picking up the growth stock over the past eight quarters, according to MarketSmith. The stock has an Accumulation/Distribution Rating of B-.

Exchange traded funds hold shares of DoubleVerify as well. The Invesco S&P Small Cap Information Technology ETF (PSCT) and the SPDR FactSet Innovative Technology ETF (XITK) own DV.

Please follow VRamakrishnan on Twitter @IBD_VRamakrishnan for more news on growth stocks.

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YouTube Will Now Enable Brands to Buy Specific Time Slots Around Major Events for Masthead Ads

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YouTube Will Now Enable Brands to Buy Specific Time Slots Around Major Events for Masthead Ads

YouTube has added a new time targeting element to its Masthead Ads, which will enable brands to display their promotions in key times leading up to key events.

As explained by YouTube:

In a time of multiple screens and countless ways to stay entertained, it can be challenging to get your audience’s attention. But even with so much content available at any time, people are drawn to moments they can experience together: a new movie release, a big game, a product launch, a holiday. And these are key opportunities to connect with a brand. Marketers, you know this well: you center advertising campaigns around the tentpole moments most likely to inspire your audience, shift perceptions or influence a purchase decision.”

YouTube’s Cost-Per-Hour Masthead enables brands to own the most prominent placement in the app during the hour(s) leading up to, during or after priority moments.

For example:

“[During the recent World Cup], McDonald’s Brazil turned to the YouTube Cost-Per-Hour Masthead. Their strategy was savvy: reach anyone in Brazil who was watching YouTube an hour before the Brazil vs. Cameroon match and remind them to pick up McDonald’s before the game started. This perfectly timed execution delivered tens of millions of impressions at the very moment fans were preparing for the match.

It could be a good way to hook into key moments, and build momentum for your campaigns, while also establishing association with key events and subjects.

“Just a few weeks ago, Xiaomi, the leading smartphone manufacturer in India, prepared to launch their highly anticipated Redmi Note 12 series via YouTube livestream. To drive viewership, Xiaomi ran the Cost-Per-Hour Masthead during the event. Not only did this activation drive scaled awareness, it led to over 90,000 concurrent livestream views. The Redmi Note 12 went on to generate a record number of first-week sales, making it one of their most successful launches to date.

It’s an expansive, but potentially significant targeting option, which could hold appeal for big brands looking to make a big splash around major events and releases.

You can learn more about YouTube’s Cost-Per-Hour Masthead process here.

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