Elon Musk’s bombshell takeover of Twitter was put on hold early Friday after the billionaire raised new questions about how many of the social media platform’s accounts are fake, although he later tweeted he is “still committed” to seeing the deal through.
Musk’s $44 billion offer for the San Francisco-based company has already been unanimously approved by the board of directors, which initially resisted. But Friday morning’s development, which Musk characterized as “temporary,” threw the controversial takeover into a new round of uncertainty. Twitter shares fell 25% in pre-market trading.
“Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users,” Musk tweeted early Friday morning.
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
Later in the morning, just before 8 a.m. ET, Musk tweeted that he is “still committed to acquisition.”
Musk has vowed to clean up spam accounts on Twitter by “defeating the spam bots.” The company has long been plagued by fake accounts set up to post automated content, some of which has been deemed misinformation. The company earlier this month that fake accounts made up fewer than 5% of its daily active users during the first quarter of this year.
A higher number of fake accounts could hurt Twitter’s market value and affect its advertising rates. Some critics have estimated as much as 30 percent of Twitter’s accounts could be fake.
Under the terms of the deal, if either Twitter or Musk back out for any reason, they owe the other side a $1 billion termination fee.
On Thursday, word came out of the company that two of its top leaders have been ousted as the social media platform begins to make changes ahead of Musk’s expected arrival.
“Kayvon Beykpour, Twitter’s general manager, is leaving and will be replaced by Jay Sullivan,” The New York Times reported, citing a company memo. “Mr. Sullivan is currently the interim general manager of the consumer product. Bruce Falck, Twitter’s general manager for revenue, is also departing the company.”
The memo also reportedly said Twitter was freezing most new hiring and cutting back on spending in-part due to the company not achieving key growth metrics.
The New York Times previously reported that Musk plans to hire approximately 3,600 employees over a period of time but not before dismissing up to 1,000 current employees.
And the U.S. government is reportedly investigating Musk’s business dealings surrounding the deal to buy Twitter.
“The Securities and Exchange Commission is probing Mr. Musk’s tardy submission of a public form that investors must file when they buy more than 5% of a company’s shares,” The Wall Street Journal reported. “The disclosure functions as an early sign to shareholders and companies that a significant investor could seek to control or influence a company.”
The report said that Musk’s April 4 disclosure filing was at least 10 days late, a move that is believed to have saved him more than $140 million because share prices could have been higher if the public knew about his ownership of 5% of the company.