Elon Musk has put his $44 billion (£35 billion) proposal to acquire Twitter on hold, citing concerns over the amount of bogus or spam accounts on the network.
He stated that he was awaiting facts "to corroborate [the] calculation that spam/fake accounts do indeed comprise fewer than 5% of users."
Later, Mr. Musk said he was "still committed to [the] transaction."
Analysts believed that he may be attempting to renegotiate the price or perhaps walk away from the acquisition.
Mr. Musk's remarks sent Twitter's stock price down 10% in the New York morning session.
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
Visit Twitter to see the original tweet
Even before Mr. Musk's statements, the company's shares were trading for less than Mr. Musk's offer of $54.20 per share, indicating that the markets were not persuaded he would complete the takeover.
Mr. Musk's statements, according to Dan Ives, a tech analyst at investment company Wedbush Securities, will "turn this Twitter circus act into a Friday the 13th horror show."
"Many will see this as Musk utilizing these Twitter filing/spam accounts to get out of this purchase in a rapidly shifting market," he said in a note.
"Musk's habit of generating so much ambiguity via a tweet (rather than a file) is highly disturbing to us... and now turns this whole agreement into a circus show with numerous questions and no firm answers as to the deal's future ahead."
Mr. Musk has made it clear that "fighting the spam bots" is a top priority for him following his planned acquisition of the firm.
- Executives at Twitter have been fired ahead of Musk's acquisition.
- Elon Musk's potential impact on Twitter
Twitter has long been accused of failing to do enough to combat automated and false accounts that post material.
Twitter estimated that bogus accounts accounted for less than 5% of its daily active users during the first three months of this year in a document filed more than two weeks ago. It warned that the statistics were estimates and that they may be higher.
Those statements were similar to those made by the business in earlier filings.
According to Susannah Streeter, an analyst at Hargreaves Lansdown, the amount of spambots on the site is a crucial metric since a greater than projected figure might hinder the company's potential to develop advertising income or paid-for memberships.
She did say, though, that it was unclear how serious Mr. Musk's fears were.
"There will also be concerns raised about whether false accounts are the true reason for this delaying strategy, considering that his major objective for the takeover appeared to be encouraging free expression rather than focused on money development," she added.
"The $44 billion price tag is enormous, and it might be a plan to reduce the amount he is willing to pay for the platform."
Many companies' values have been wiped out by weeks of market volatility in the United States, including once-favored tech giants.
Mr. Musk's interest in Tesla, the electric vehicle firm where he serves as CEO, has also plummeted, a blow to Mr. Musk, whose standing as the world's richest person is tied to his investment in the company and who had expected to use his shares to help finance the purchase of the Twitter.
He raised $8.5 billion by selling shares last month. He intended to use the stock to get $6.5 billion in loans.
Tesla's stock rose more than 5% after Mr. Musk tweeted that the deal was temporarily put on hold.
Another twist in Elon Musk's quest to take over Twitter.
He stated that one of his top goals was to "clean up" the site, removing bots and spam accounts that he feels slow it down.
Spend any amount of time on it, and you'll see signs of both.
Twitter, on the other hand, claims that less than 5% of its active users are fraudulent.
So does this imply that there is no diamond in the rough to be polished here and that what you see on Twitter is exactly what you get? Is it less valuable as a proposal if such is the case?
It's also conceivable that his current hesitancy arises from how he plans to fund the transaction - he's already had to sell some of his precious Tesla shares to acquire cash, which has had a negative impact on the company.
Mr. Musk needs to think about anything.