Elon Musk put his $44 billion acquisition of Twitter Inc “temporarily on hold” on Friday while awaiting statistics on the number of bogus accounts on the social media site, prompting the company’s stock to fall.
Twitter shares fell 17.7% to $37.10 in premarket trading, their lowest level since Musk announced his ownership in the company in early April and made a “best and last” proposal to take it private for $54.20 per share.
Tesla shares, which Musk leveraged to secure $6.25 billion in financing for the acquisition, rose about 5% in the meanwhile.
“Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users,” Musk said to his 92 million Twitter followers on Friday.
Musk’s most recent tweet cited a Reuters report from May 2 that indicated fraudulent or spam accounts accounted for fewer than 5% of Twitter’s monetizable daily active users during the first quarter, when the company reported 229 million users who were shown ads.
“This 5% measure has been accessible for quite some time. Obviously, he would have seen it before… As a result, it might be more of a price-cutting strategy.” Hargreaves Lansdown analyst Susannah Streeter
Given that many senior executives have already been fired, she believes it will be very painful for many employees.
On Tuesday, when Twitter shares fell below $46.75, the estimated likelihood of the deal closing at the agreed-upon price fell below 50% for the first time.
Musk, the world’s richest man and self-proclaimed absolutist of free speech, said that one of his main priorities will be to remove “spam bots” off the site.
Twitter did not immediately respond to a request for comment. At the time of writing, Musk’s spokesmen and Tesla Inc. were unavailable for comment.
Musk has chastised Twitter’s moderation practices. He has said that he wants Twitter’s algorithm to prioritize public tweets and that he dislikes businesses having too much influence over the service.
He said this week that if he were to purchase Twitter, he would lift the ban on former US President Donald Trump, implying that his objective is to lessen site regulation.
The social media company said it faces a variety of risks until the deal with Musk is concluded, including whether advertisers would continue to spend money on Twitter in the face of “potential uncertainty around future objectives and strategy.”
If Musk breaks the deal, he would have to pay a $1 billion termination fee.