Elon Musk said his $44 billion bid to purchase Twitter was “temporarily on hold” until he could get more details to confirm that spam and fake accounts represent less than 5 percent of the social network’s total users.
Mr. Musk made the announcement in a pre-dawn tweet on Friday, the latest chapter in an unfolding corporate drama that has raised questions about free speech online and the ramifications of putting the world’s richest person in charge of one of the most influential social media platforms.
Mr. Musk, the chief executive of Tesla, has said that ridding the platform of fake accounts, bots and spam would be one of his top priorities after taking over. In his tweet on Friday, Mr. Musk linked to a Reuters article published on May 2 about a regulatory filing by Twitter that included an estimate of the number of spam and fake accounts.
Shares in Twitter fell about 20 percent in premarket trading on Friday.
Known for his freewheeling and sometimes impulsive business style, Mr. Musk’s comments raised questions about the future of the deal. In a May 2 regulatory filing, Twitter said that it had estimated that less than 5 percent of its users were fake or spam, a figure it had disclosed previously. In the filing, Twitter cautioned that it had applied “significant judgment” in making the calculation and that “our estimation of false or spam accounts may not accurately represent the actual number.”
“Many will view this as Musk using this Twitter filing/spam accounts as a way to get out of this deal in a vastly changing market,” Daniel Ives, an analyst with Wedbush, said in a note to investors.
Mr. Musk’s surprise bid for Twitter has sparked considerable debate about the role of a social media platform to police what is said by its users. Twitter has spent years trying to combat hate speech, harassment and other online abuse, but Mr. Musk, who has a history of using the platform to attack and belittle critics, has pledged to loosen the company’s content moderation policies. On Tuesday, he said he would lift a ban on former President Donald J. Trump.
How Elon Musk Bought Twitter
A blockbuster deal. Elon Musk, the world’s wealthiest man, capped what seemed an improbable attempt by the famously mercurial billionaire to buy Twitter for roughly $44 billion. Here’s how the deal unfolded:
Backing out of the deal could get messy. The purchase agreement includes a $1 billion fee that Mr. Musk would have to pay if he terminated the deal, though it was unclear how such a clause would apply if Mr. Musk could prove Twitter’s user figures were incorrect. If Mr. Musk’s debt financing is intact, Twitter could also take the billionaire to court to force him to pay for the deal.
Mr. Musk has pledged to use a considerable amount of his personal fortune to finance the deal for Twitter, a plan that has been impacted by a recent plunge in stock prices, including Tesla’s. Tesla’s stock has fallen nearly 30 percent in the past month. Mr. Musk is both selling Tesla shares and putting them up as collateral for personal loans to raise cash.
If a deal were to be completed, any trouble at Twitter could force Mr. Musk to draw further on his stock in the electric carmaker to plug potential financial holes. And any problem at Tesla that caused its stock to fall far enough could trigger clauses in Mr. Musk’s personal loans that would require him to add more collateral, limiting his ability to invest in Twitter.
Mr. Musk’s bid has created uncertainty within Twitter, a company already struggling to add users and generate more revenue. On Thursday, Twitter’s chief executive, Parag Agrawal, fired two top executives, halted new hiring and pledged to slash spending.