Update: Elon Musk says, he’s still committed to acquisition.
The stock of Twitter, Inc. (NYSE: TWTR) fell after Tesla CEO Elon Musk stated that the Twitter deal was “temporarily on hold.”
Twitter fell 17% in pre-market trading after Musk tweeted that the deal was suspended pending more information on the company’s claims that fake accounts accounted for less than 5% of its users.
In a previous filing, Twitter stated that “the average of false or spam accounts during the first quarter of 2022 represented less than 5% of our monthly daily active users during the quarter.”
The announcement came just days after Elon Musk, who has agreed to buy Twitter for $44 billion, tweeted that one of his top priorities would be to remove “spam bots” from the platform.
Twitter stated in the same filing that it had 229 million users who were shown advertising, a key internal metric. It also said that Mr. Musk’s takeover offer posed additional risks to the company, such as whether advertisers would continue to spend on the platform and “potential uncertainty regarding our future plans and strategy.”
Musk has made reducing the number of “spam and scam bots” and “bot armies” on Twitter an important part of his pitch for improving the service and prioritizing free speech and open-sourcing the platform’s ranking algorithms.
The billionaire has also repeatedly stated that he wants Twitter to become a free speech platform and reduce its reliance on advertising.
Though Twitter’s board of directors has accepted the buyout offer, the transaction could take months to complete.
He recently disclosed $7.1 billion in equity commitments from investors such as Larry Ellison, Sequoia Capital, Qatar Holding, and Saudi Prince Alwaleed bin Talal, the latter of whom rolled his Twitter stock into the deal.
The move ostensibly reduces the cost Musk would provide from his fortune, much of which is linked to the value of Tesla shares, while increasing the overall equity portion of the proposed takeover to $27.45 billion.
Mr. Musk also can back out of the deal, though he would have to pay a $1 billion penalty.