Twitter stock tumbles 11% after Elon Musk says $44bn buyout deal is on hold
Musk tweeted the deal was paused pending more details about fake accounts on the social media website. He later tweeted that he was still committed to the acquisition, helping Twitter pare its losses somewhat.
“Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users,” Musk tweeted Friday.
The Tesla CEO attached a Reuters article reporting on a Twitter filing that estimated spam or fake accounts made up less than 5% of its monetizable daily users in the first three months of the year.
About two hours later, he tweeted that he was “still committed to acquisition.”
Twitter stock was down 8.49% to $41.26 as of 10.43 a.m. ET.
Tesla stock, meanwhile, rose 5.57% to $768.65.
Shares in the car company have fallen around 25% since Musk announced his plans to buy Twitter. Investors have worried that Musk would put large amounts of Tesla stock on the line, and be distracted from running the electric-vehicle company.
Musk did not clarify why Twitter’s filing on fake accounts would influence the deal.
The entrepreneur, who is the world’s richest person, has made the eradication of fake spam or bot accounts central to his plans for the company. “If our twitter bid succeeds, we will defeat the spam bots or die trying!” he tweeted in April.
Shares in the social media company jumped in early April after Musk first revealed he was a major shareholder and then announced plans to buy the company. The two parties later agreed a deal worth $44 billion.
However, the stock has consistently traded at a discount to the agreed price of $54.20 a share, reflecting concerns that something may go wrong.
Musk has shifted positions on how he would finance the takeover. He initially planned to take out a $12.5 billion loan against his Tesla shares. But he later secured an extra $7.1 billion in funding from a group of investors including Sequoia Capital and Larry Ellison.
Bloomberg reported Friday that Musk was in talks to raise enough capital to eliminate the need for a margin loan altogether. Twitter and Tesla did not immediately respond to requests for comment.