It appears that Elon Musk does perform due diligence.

Today the market freaked out when Elon Musk essentially said his Twitter (TWTR), acquisition is on hold pending due diligence. Specifically, as common sense would suggest, Musk does not take Twitter at face value when the company says that fake accounts are less than 5% of user accounts. Our contention has always been that Facebook (FB), and Twitter under-report the number of fake accounts on their respective platforms. User numbers for each company are self-reported and are not audited by an independent party. Should Musk find that the number of actual active users is materially lower than reported (Twitter insiders would have to own up to this fact, Musk does not have some special tool that would allow him to calculate the true number of users), one remedy would be for Musk to adjust the purchase consideration downward. I don’t know that Musk’s findings around actual user numbers will ever come public. He could leak that metric in an effort to win the battle in a court of public opinion.

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