Elon Musk tweeted that his $44 billion takeover of Twitter Inc. is “temporarily on hold” as he awaits data on its proportion of fake accounts, sending the social media giant into a tailspin.
Twitter slumped 20% in pre-market trading after Musk tweeted the deal was suspended pending details on the company’s assertions that fake accounts contributed less than 5% of its users.
Twitter said in a previous filing “that the average of false or spam accounts during the first quarter of 2022 represented fewer than 5% of our monthly daily active users during the quarter.”
Musk said in a statement announcing his deal to buy Twitter last month that he wants to defeat spam bots, authenticate all humans and make its algorithms open source. Musk has also said he’d like to make the platform a bastion of free speech, taking the guardrails off of content moderation.
Bots are currently allowed on Twitter, though under the company’s policy, such accounts are supposed to indicate that they’re automated. The platform has even launched a label for “good” bots, such as @tinycarebot, an account that tweets self-care reminders. Spam bots, however, are not permitted, and the company has policies meant to combat them.
Doubts have grown in recent days that Musk would be able to pull off his acquisition of Twitter.
The spread on the deal, which offers an indication of how much Wall Street believes the takeover will be completed, swelled further on Thursday to $9.11 from $8.11 in the previous session. That was the widest level since the billionaire launched his bid last month to purchase the Twitter for $54.20—and double where it was last week when he announced a roughly $7.1 billion financing commitment.
Musk has also been in talks with investors to raise enough equity and preferred financing for his proposed buyout of Twitter to eliminate the need for any margin loan linked to his Tesla shares, according to people with knowledge of the matter.
He recently disclosed $7.1 billion in equity commitments from investors including Larry Ellison, Sequoia Capital, Qatar Holding and Saudi Prince Alwaleed bin Talal, with the latter rolling his Twitter stock into the deal.