Elon Musk says deal to buy Twitter is ‘temporarily on hold’

Shares in Twitter have crashed after Elon Musk said he was putting a temporary hold on his controversial plan to buy the social media firm.

Elon Musk said on Friday he was putting a temporary halt on his much-anticipated deal to buy Twitter, sending shares in the social media giant plunging.

“Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5 per cent of users,” he wrote on Twitter.

Mr Musk, the world’s richest man and founder of automaker Tesla, had made the eradication of spam accounts and bots one of the centrepieces of his proposed $US44 billion ($A64bn) takeover of Twitter.

Friday’s announcement saw shares drop by 25 per cent in early electronic trading before Wall Street opened. At 3pm in New York on Friday, Twitter shares were trading at $US40.37, down from $US45.09 at the close on Thursday and almost $52 in late April.

There is continued consternation that Mr Musk makes announcement of this magnitude, that can wipe billions of dollars off a company's value, on social media rather than official stock market channels.

Analysts have speculated the move could be a way for Mr Musk to renegotiate the price or scarp the deal altogether, reported the BBC.

If Mr Musk ends the deal he is on the nose for a $US1 billion ($A1.5bn) penalty to Twitter.

The social media giant has said it estimates fake accounts make up less the 5 per cent of its total users. But it has last said it’s estimate “may not accurately represent the actual number of such accounts” which could be higher.

Elon Musk said on Friday he was putting a temporary halt on his much-anticipated deal to buy Twitter.

Friday the 13th ‘horror show’

Technology analyst at investment firm Wedbush Securities Dan Ives told the BBC the current deal was now in doubt and if it did go ahead a “clear renegotiation is likely on the table”.

He added Mr Musk’s tweet would “send this Twitter circus show into a Friday the 13th horror show”.

“The nature of Musk creating so much uncertainty in a tweet (and not a filing) is very troubling to us … and now sends this whole deal into a circus show with many questions and no concrete answers as to the path of this deal going forward.”

Musk’s plans for Twitter

When the deal was announced in late April he said he wanted to make Twitter “better than ever” by “defeating the spam bots and authenticating all humans”.

Mr Musk, the world’s richest person, is reported to have presented a pitch deck to investors claiming he would increase the company’s annual revenue, which was $US5 billion ($7b) last year, to $US26.4 billion ($A37.3b) in 2028.

According to the deck, seen by The New York Times, Mr Musk also expects to grow Twitter’s userbase from 217 million at the end of last year to almost 600 million in 2025 and 931 million in 2028. He wants the average revenue per user to be $US30.22 ($A42.70) in 2028, up from $US24.83 ($A35.08) last year.

In order to get there many workers will be both hired and fired, according to the NYT.

The end goal is to have 11,072 employees by 2025.

There are currently about 7500 Twitter employees and 1725 are expected to be hired in 2022. But then 893 people would lose their jobs by 2023, before more people are recruited again.

According to NYT, Mr Musk is likely to “shed workers” as part of the takeover, and then will bring on new talent in engineering.

Elon Musk said he was putting a temporary halt on his much-anticipated deal to buy Twitter, sending shares in the social media giant plunging. (Photo by Olivier DOULIERY / AFP)

Controversial deal

But his potential stewardship of the social media platform has hit several bumps since then.

Earlier this month, Mr Musk said he would be open to lifting a ban on former president Donald Trump imposed after the attack on the US Capitol on January 6, 2021.

Activist groups had called on advertisers to boycott the platform if Mr Musk opened the gates to abusive and misinformative posts.

Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of usershttps://t.co/Y2t0QMuuyn

— Elon Musk (@elonmusk) May 13, 2022

“I think that was a mistake because it alienated a large part of the country, and did not ultimately result in Donald Trump not having a voice,” Mr Musk said.

“Permanent bans should be extremely rare and really reserved for accounts that are bots, or scam, spam accounts … I do think it was not correct to ban Donald Trump.

“I don’t own Twitter yet. So this is not like a thing that will definitely happen, because what if I don’t own Twitter?”

Jared Birchall, Mr Musk’s top assistant, who has been described as the “point man” for the Tesla CEO’s $US44 billion takeover bid of Twitter, told an associate that the idea of banning a sitting president from Twitter was “insane,” according to The Wall Street Journal.

Mr Musk reportedly “remains dismayed” that Mr Trump is still not permitted to tweet, according to the paper, which cited unnamed sources close to the situation.

Twitter’s decision to ban Mr Trump was a key point of disagreement between Mr Musk and then-CEO Jack Dorsey.

Friday’s announcement saw shares drop by 20 per cent in early electronic trading before Wall Street opened.

Mr Dorsey was initially opposed to removing Trump from Twitter, but came around to the idea after reaching the conclusion that the former president violated the service’s terms of usage, according to the Journal.

Nonetheless, Mr Dorsey and Mr Musk remained on friendly terms and maintained a dialogue, according to the paper.

Trump supporters have been energised by the prospect of Mr Musk taking control of Twitter and overhauling its content moderation policy.

Mr Dorsey, the Twitter co-founder who stepped down as CEO last year, has endorsed Mr Musk’s imminent purchase of the company, saying the world’s richest man is a “singular solution” for the San Francisco-based firm.