Elon Musk said Friday that his planned $44 billion purchase of Twitter is “temporarily on hold” pending details on spam and fake accounts on the social media platform, another twist amid signs of internal turmoil over the proposed acquisition.
In a tweet, the Tesla billionaire linked to a Reuters story from May 2 citing a financial filing from Twitter that estimated false or spam accounts made up fewer than 5% of the company’s “monetizable daily active users” in the first quarter.
“Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users,” Musk said, indicating he’s skeptical that the number of inauthentic accounts is that low.
A short time later on Friday morning, Musk tweeted that he remains committed to the purchase.
It wasn’t clear whether the issue could scuttle the deal. Shares of both Twitter and Tesla swung sharply in opposite directions, with Twitter’s stock tumbling 17% to $37.20 before trading opened in the U.S, and Tesla, which Musk had proposed using to help fund the Twitter deal, jumping 5%. Twitter’s stock price is now well below the $54.20 per share that Musk agreed to pay for the company.
Calling Musk’s tweet “bizarre,” Wedbush Securities analyst Dan Ives said, “The implications of this tweet will send this Twitter circus show into a Friday the 13th horror show as now the Street will view this deal as 1) likely falling apart, 2) Musk negotiating for a lower deal price, or 3) Musk simply walking away from the deal with a $1 billion breakup fee.”
Twitter disclosed its findings on bot and spam accounts in a filing for its first-quarter results. The company said, “We have performed an internal review of a sample of accounts and estimate that the average of false or spam accounts during the first quarter of 2022 represented fewer than 5% of our [monetizable daily active users] during the quarter.”
Twitter added that it was possible that “the actual number of false or spam accounts could be higher than we have estimated.”
Investors have had to weigh legal troubles for Musk, as well as the possibility that acquiring Twitter could be a distraction from running the world’s most valuable automaker. Musk has also drawn scrutiny for his tendency to disclose so-called “material information” — information that can impact a publicly traded company’s stock price — via Twitter, rather than through a regulatory filing.
“The nature of Musk creating so much uncertainty in a tweet (and not a filing) is very troubling to us,” Ives said in his note to investors.
Musk’s tweet comes a day after the social media company. Twitter said the company is pausing most hiring, except for critical roles, and is “pulling back on non-labor costs to ensure we are being responsible and efficient.”
In a memo sent to employees and confirmed by Twitter, CEO Parag Agrawal said the company has not hit growth and revenue milestones after the company began to invest “aggressively” to expand its user base and revenue.