Elon Musk has put his $44 billion (£35 billion) proposal to buy Twitter on hold, citing concerns over the amount of bogus or spam accounts on the platform.
He stated that he was awaiting facts “to support [the] calculation that spam/fake accounts do indeed comprise less than 5% of users.”
Mr. Musk has been outspoken about the need to eliminate spam accounts.
Analysts believed that he may be attempting to renegotiate the price or perhaps walk away from the acquisition.
Twitter shares plunged as much as 25% in pre-market trade after Mr Musk’s remark.
If either Twitter or Mr Musk decides to leave, they must pay the other side a $1 billion termination fee.
Fake accounts accounted for less than 5% of Twitter’s daily active users in the first three months of this year, according to a report released more than two weeks ago.
However, the business stated that when calculating the number of spam accounts, “it applied significant judgment, so our estimation of false or spam accounts may not accurately represent the actual number of such accounts”.
“The actual number of false or spam accounts could be higher than we have estimated. We are continually seeking to improve our ability to estimate the total number of spam accounts,” it said.
Mr Musk, who according to Forbes magazine is the richest person on the planet, is now looking into that statistic.
Twitter has long had a problem with automated, phoney accounts posting content incessantly.
Mr Musk has called for “fighting the spam bots” on Twitter, as well as a slew of other improvements, including the reinstatement of certain banned accounts, including former US President Donald Trump’s.
Mr Musk’s remark, 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.”
He said Wall Street would now “view this deal as 1) likely falling apart, 2) Musk negotiating for a lower deal price, or 3) Musk simply walking away from the deal with a $1bn break-up fee”.
Mr Ives said if Mr Musk did still decide to go ahead with the deal, a “clear renegotiation is likely on the table”.
He added many would view him highlighting the number of spam accounts “as a way to get out of this deal in a vastly changing market”.
“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.”
The Tesla CEO’s latest move comes after two Twitter executives announced their departure from the firm.
Kayvon Beykpour, who led Twitter’s consumer division, and Bruce Falck, who oversaw revenue, both tweeted on Thursday that the departures were not their decisions.
From this week, the firm also said it had paused most hiring, except for “business critical roles”.
Another twist in Elon Musk’s quest to take over Twitter.
He stated that one of his top priorities was to “clean up” the site, removing bots and spam accounts that he believes slow it down.
If you spend any time on it, you’ll notice evidence 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 proposition if such is the case?
Mr. Musk needs to think about a lot.