Twitter deal: The impact of # bots/spam user accounts on a successful investment thesis

Andre Muscat
5 min readJul 9, 2022


Following the Twitter-Elon Musk acquisition saga, you surely identify Elon Musk’s continual push to get clarity around the number of bot/spam accounts within the Twitter monthly active user base. Follow this analysis to understand why this number is critical to this deal!.

SPOILER ALERT: It is a “How fast can I make my money back problem!……2 years, 10 years…..30 years????”


  • Elon Musk’s investment thesis to offer 44 Billion (nine zeros) for Twitter is built on data released on Quarterly results SEC filings from Twitter (extremely serious, official formal documents) where Twitter repeatedly report the #spam/bot accounts to stand around 3–5%.
  • Based on a deeper analysis of Twitter’s data, Musk identified a concern that suggests this critical data point is incorrect, making it and several other public disclosures such as its Monetisable Daily Active Users (mDAU) effectively false or materially misleading.
  • Since this started, Elon repeatedly asked for clarifications and better data to support the calculation of the reported 5% of spam/bot accounts on the platform.
  • Twitter maintains that less than 5% of its users served ads are spam accounts.
  • Twitter claims it removes over 1 million spam accounts daily from its platform. This is extremely important as if you are removing 1 million per day, how many others are being created that you are not aware of and including in your mDAU numbers?

Eliminating emotion and drama, this mDAU number is critical to evaluating the health of a SaaS business (Twitter is a Software as a Service — SaaS solution). It is a key metric that matters to investors and is extremely important if you are considering making a 44 billion investment case, where you undoubtedly will need to make your money up within a REASONABLE period to support the effort and also keep your partner investors happy. This is not a charity move.


If we analyse the Twitter SEC filings, we can track both the reported mDAU as hard numbers and its reported growth over time:

This looks great. If we want to adjust Twitter mDAU to cater for the 5% error in their calculations, we can see it as:

This is not too bad. Using 22-Q1 as an example, the mDAU number immaterially adjusts from 229 million to 218 million. This does not have a material effect, and life moves on.


Using a touch of spreadsheet smarts and maths, we can model the impact of spam/bots on mDAU reports if these are in the 30% or 50% range.

This means that the same 22-Q1 number of 229 million active users can actually drop to 160 million or, even worse, 115 million.

Otherwise visualised, you can see the scale of the problem source here:

Otherwise said, this issue is material, and if the Twitter company is struggling so much to provide clear unambiguous evidence to its investor base on why this number is firmly and surely at the 5% mark, this means that all numbers reported in their SEC filings can be indeed false or misleading.


However, I believe that Elon did not do all of this work and headache as either a publicity stunt or to make Twitter look bad. Let’s try to understand what this mDAU represents. This MONETISABLE DAILY ACTIVE USER count represents a simple indicator: “Out of all of the users of our platform, how many have the potential of purchasing something from us monthly….. “. And here is the key!

  • Living humans with an identity and credit card add value to the mDAU count.
  • Bots/automation do not. They are software programs built by other living humans to do their bidding (personal agendas, spam etc.).

As a software subscription service, Twitter has a direct correlation between:

  • Its number of daily active users (human) — Paying and non-paying
  • Its number of daily active users (human) — Paying
  • The average spend per Paying active user on that platform per month

Using a straightforward model, I try to calculate how many years it would take Elon to make up his investment spending under different variances of the size of the spam/bot problem.

This is a considerable outcome, as this tells me that with all being equal, the ROI to Elon can take anywhere from 7 to 30 years. That is a MASSIVE variance or window to deal with.


Now with this context, I still believe Elon wants to buy Twitter, but like any investment, there is a business case, and there is a business case. In this case, this number is the most important one to get right as it addresses and impacts everything you do post-acquisition.

I do not blame him for pushing back on it.

What we can expect next:

  • Twitter stock drops further
  • Tesla stock rises
  • Twitter investors will pressurise the board to find a way to make this work — AH YESSSS EARNINGS SEASON IS BACK on the 28th of July :)
  • No one is interested in the longer-term aspects of lawsuits
  • Elon has loads of room to get what he wants for cheaper. I still think he will get it in the end.



Andre Muscat

Exploring the world of business technology to work out what what’s really happening, what actually matters, and what it means. |