On Friday, Elon Musk tweeted that his $44 billion purchase for Twitter Inc was “temporarily on pause” while he awaited data on the number of false accounts, sending the social media platform’s stock plummeting.
Tesla CEO Musk, who added that he was still committed to the acquisition, opted to forego due diligence when he agreed to buy Twitter on April 25 in an attempt to persuade the San Francisco-based company to accept his “best and last offer.”
Since then, technology stocks have plummeted due to market concerns about inflation and a possible economic downturn.
As investors worried that the slump would drive Musk to walk or seek a lower price, the difference between the offer price and the value of Twitter shares expanded in recent days, signifying less than a 50% likelihood of completion.
“Twitter deal on hold temporarily seeking details supporting calculation that spam/fake accounts do indeed represent fewer than 5% of users,” Musk said to his 92 million Twitter followers.
Twitter did not reply immediately to a request for comment. The investors Musk recruited last week to raise $7.1 billion in fundraising had no immediate reaction.
Musk mentioned the bogus account data in a Reuters piece from 10 days earlier. Twitter has stated that the figures are estimates and that the true number could be higher.
According to Twitter’s regulatory filings, the estimated number of spam accounts on the microblogging site has remained below 5% since 2013, prompting some analysts to wonder why Musk was upping it now.
“This 5% metric has been out for some time. He clearly would have already seen it… So it may well be more part of the strategy to lower the price,” Hargreaves Lansdown analyst Susannah Streeter remarked.
Twitter shares were down 16 percent in pre-market trading in New York, trading at $38.06, well below the $54.20 per share purchase price.