Tesla boss Elon Musk announced that his much-anticipated $44 billion Twitter deal has been temporarily put on hold pending details about the number of bot and spam accounts on the social media platform. Shares of Twitter plummeted as much as 25% in the pre-market trade following the announcement by Musk.
Twitter's shares nosedived on April 25, after it was made official that Musk would be taking the company private. Since then, shares of the microblogging site have only moved southward, with the stock closing at $45.08 on Thursday, to record a 13 percent decline since the buyout announcement by Musk last month.
Roadblock for Twitter
Musk said on Friday that the $44 billion Twitter buyout deal has been halted. "Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users," Musk said in a tweet.
Twitter had earlier said that fraudulent or spam accounts accounted for less than 5 percent of its 229 million users in the first quarter of 2022. However, Musk isn't ready to buy Twitter's version and has put his massive takeover on hold in order to get more information on the figures.
The transaction was approved by Twitter's board of directors, but it has not yet been completed.
Musk also added a link to a Reuters report from May 2 that quoted Twitter's Monday filing. "Twitter Inc estimated in a filing on Monday that false or spam accounts represented fewer than 5% of its monetizable daily active users during the first quarter," the Reuters article said.
It's unclear what legal consequences his notice had. Shares of Twitter fell 25% in the pre-market trade on Friday, following Musk's sudden decision to temporarily put the deal on hold.
Musk Making Surprise Moves
Twitter's shares have been taking a hit ever since the day it was announced that the Tesla CEO would buy out the company and make it private. Since then a lot has happened and speculation is rife that Musk would make sea changes in the company both ahead of the takeover and after that.
Musk told a Financial Times conference Tuesday that Twitter's decision to ban former President Donald Trump was "morally bad."
On Thursday, he reiterated on Twitter saying that he does not support Trump for president.
It is difficult to understand what's going on in Musk's mind and what his next move would be.
A US firm that bets against corporate share prices warned this week that Musk may submit a reduced bid for Twitter due to the plummeting price of Twitter's shares and poor financial performance.
According to a Daily Mail report, Hindenberg Research, a short-selling firm, believes there's a "significant chance" the entrepreneur will try to pay less than the $54.20 per share agreed upon by the Twitter board.
In a document published Monday, the company said: "We are supportive of Musk's efforts to take Twitter private and see a significant chance the deal will close at a lower price."
The steep dip in the Nasdaq stock market after the deal was completed suggests that Twitter's valuation, which is being propped up by the acquisition proposal, is much lower.
They added that if Musk decides not to buy Twitter, its shares could plummet by as much as 50 percent.