Elon Musk said on Friday that he would temporarily halt his long-awaited deal to buy Twitter, sending shares of the social media giant plummeting.
Musk, the world’s richest man and founder of automaker Tesla, had made rooting out spam accounts and bots one of the centerpieces of his proposed $44 billion takeover of Twitter.
When the deal was announced in late April, he said he wanted Twitter to be “better than ever” by “defeating spam bots and authenticating all humans.”
Reliable figures for the number of users are considered vital in judging future sources of revenue.
“The Twitter deal is temporarily on hold pending details supporting the estimate that spam/fake accounts represent less than 5% of users,” he wrote on Twitter.
The filing says that an internal review concluded that Twitter had 229 million “monetizable daily active users” in the first quarter of this year, and only five percent were considered fake or spam accounts.
Wedbush analyst Dan Ives said Twitter’s “circus sideshow” would likely translate into a “Friday the 13th horror show”.
Wall Street investors are likely to interpret the tweet as an attempt by Musk to back out of the deal or force a lower price, Ives said.
“Musk’s takeover of Twitter was always meant to be a bumpy ride, and now it’s at risk of a skid,” said market analyst Susannah Streeter of Hargreaves Landsdown.
He said the number of spam and fake accounts, and conversely the number of real accounts, was a key metric because future revenue streams would depend on advertising or paid subscriptions.
Friday’s announcement sent shares of Twitter down 20 percent in the first electronic trading before Wall Street opened, but shares of Tesla were on the rise.
‘False and misleading’
Musk is the head of Tesla and SpaceX and is estimated to be worth $240 billion, according to Forbes.
But his ownership style has frequently landed him in trouble with the authorities.
He has been mired in legal trouble since he tweeted in 2018 that he had enough funds to take Tesla private, a claim a judge decided last month was “false and misleading.”
His would-be stewardship of the social media platform has run into several hurdles since the takeover attempt was made public, most notably over the future status of Donald Trump.
The former US president was banned from Twitter and other social networks after the attack on the US Capitol on January 6, 2021.
On Wednesday, Musk said he would be willing to lift the ban on Trump’s account.
Activist groups responded by urging advertisers to boycott the platform if Musk opened the doors to abusive and misinformation posts.
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