Elon Musk tweets that Twitter deal is temporarily on hold

The Tesla billionaire says the deal to purchase the social media company would be slowed pending details supporting calculations around the number of spam and fake accounts

The Tesla billionaire says he will delay his deal to buy Twitter. Picture: AFP

Elon Musk said his deal to buy Twitter was on hold pending details on the amount of fake accounts on the social-media platform, prompting a sharp slide in the company’s shares in premarket trade.

“Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users,” Mr Musk said in a tweet early Friday. He linked to a May 2 Reuters report about a recent Twitter securities filing with those statistics.

Twitter shares were down nearly 20 per cent in premarket trade. Mr. Musk disclosed a 9 per cent stake in the social-networking website last month and sought to buy the remainder of the company at a price of $US54.20 ($78.68) a share. He said he had lined up $US46.5bn of funding for the transaction.

Twitter didn’t immediately respond to a request for comment.

Mr Musk plans to bring a commitment to a more hands-off approach on speech moderation to a company that has struggled to reconcile freewheeling conversations with content that appeals to advertisers.

Some investors saw the pause in the acquisition as a potential sign that the deal may not go ahead.

“I think he’s potentially seeding the ground for pulling out of the deal. That’s certainly the market’s interpretation,” said Michael Hewson, chief markets analyst at CMC Markets. “But we’ll have to wait and see. It’s a bit strange to go through all that legwork and pull funding together and then suddenly put it on hold. It is a rather strange development.”

The move comes a day after Twitter said it was pausing hiring and looking to cut costs as it grapples with disruptions in the digital advertising market from global economic turmoil and the war in Ukraine. Across the tech industry, companies are cutting staff and spending or slowing hiring.

Mr Musk’s tweet comes as many big tech stocks have been falling on Wall Street. Twitter’s stock price had remained below Mr Musk’s offer price as investors wondered if the deal might get reworked or not get done.

Twitter said in its most recent quarterly report that by its estimates, false or spam accounts represented fewer than 5 per cent of its daily active users in the first three months of the year.

The social-media company warned that its estimate is based on a sampling of accounts and that “the actual number of false or spam accounts could be higher than we have estimated”.

The Tesla chief executive had vowed to eradicate fake Twitter users and spam accounts as part of his bid to buy Twitter.

The tweet Friday is the latest twist in the unorthodox attempt to take over the social-media giant by the world’s richest man. It began with Mr Musk buying a large chunk of Twitter shares on the open market earlier this year as a passive investor, which soon turned into a full-fledged buyout offer, outlined in a four-paragraph letter and several text messages to Twitter’s chairman.

In addition to financing from Wall Street, Mr Musk has had to sell at least $US8.5bn worth of Tesla shares to fund the deal. He has also assembled a cast of 19 investors, from a Saudi prince to Silicon Valley stalwarts, to put up another $US7bn.

Meanwhile, federal regulators are investigating Mr Musk’s late disclosure last month of his sizeable stake in Twitter, a lag that allowed him to buy more stock without alerting other shareholders to his ownership, The Wall Street Journal reported Thursday, citing people familiar with the matter.

Mr Musk made his filing on April 4, at least 10 days after his stake surpassed the trigger point for disclosure. He hasn’t publicly explained why he didn’t file in a timely manner. An attorney for Mr Musk didn’t respond to a message Wednesday seeking comment.

Additional reporting: Anna Hirtenstein

WALL STREET JOURNAL