lon Musk has said his $44 billion acquisition of Twitter is “on hold” as he probes the number of spam and fake accounts on the social media platform.
The billionaire Tesla owner tweeted: “Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users.”
Twitter shares plummeted 20% in pre-market trading in New York after the tweet.
It followed an update from Twitter on the estimated number of fake users on the platform in its most recent quarterly report.
Twitter said: “We have performed an internal review of a sample of accounts and estimate that the average of false or spam accounts during the first quarter of 2022 represented fewer than 5% of our mDAU [monetisable daily active users] during the quarter.
“After we determine an account is spam, malicious automation, or fake, we stop counting it in our mDAU, or other related metrics.”
MDAU is a key metric in determining the value of social media companies, as it is used to help calculate the amount of advertising revenue the platform is able to make.
The billionaire may believe his offer for the social media giant is too high if it turns out the company underestimated the proportion of users that are spam accounts. He said this week that twitter “should authenticate all real users.”
Musk struck a deal to buy Twitter for $54.20 per share last month, securing a combined $25.5 billion in debt from a number of major banks including Barclays and Bank of America to help finance the deal. He has also sold Tesla shares to raise cash to fund the takeover.
Musk has already hinted at a number of changes he might make at Twitter including lifting the ban on Donald Trump and loosening content moderation practices. He has also hinted at layoffs.
On Thursday, Twitter CEO Parag Agrawal fired two executives and cut spending at the company after it “did not hit intermediate milestones.”
One of the executives who was sacked, former general manager Kayvon Beykpour, tweeted: “The truth is this isn’t how and when I imagined leaving Twitter, and this wasn’t my decision.” Beykpour was on paternity leave when he was fired.
Reuters reported on Friday that Musk is seeking to renegotiate some of his financing deals to replace loans backed by Tesla shares. The electric car maker’s stock price has fallen 40% so far this year amid a wider tech sell-off. It raises the possibility of a possible margin call on the loans, forcing Musk to put up more cash or shares.