Elon Musk said on Friday that his $44 billion cash purchase for Twitter Inc is “temporarily on hold” while he waits for evidence on the number of fraudulent accounts on the social media platform, Reuters reports.
In premarket trade, Twitter shares dropped more than 20% but recovered after Tesla CEO Elon Musk made a second tweet claiming he was still committed to the acquisition. The stock fell 12% in strong volume before the market opened, as investors worried about the takeover.
Musk, the world’s richest man, agreed to purchase Twitter on April 25 without doing due diligence in order to persuade the San Francisco-based firm to accept his “best and last offer” of $54.20 per share.
Investor fears about inflation and a probable economic downturn have caused technology stocks to plummet since then.
As investors worried that the slump might drive Musk to walk or seek a lower price, the difference between the listing price and the value of Twitter shares had increased in recent days, signifying less than a 50% likelihood of completion.
“Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users,” Elon Musk tweeted, Reuters quoted him as saying.
Spam or fraudulent accounts are created with the intent of manipulating or artificially increasing activity on social media platforms such as Twitter. Some are intended to boost sales, while others are intended to give the idea that something or someone is more popular.
An inquiry to Twitter for comment was not returned back. Musk’s investors, who he approached last week to raise $7.1 billion in cash, had no immediate comment.
Meanwhile, Tesla’s shares jumped 7% in premarket trade. Since Musk declared a stake in Twitter on April 4, the stock has lost almost a quarter of its value, raising fears that he may become distracted as Tesla’s CEO and that he may have to sell additional Tesla shares to fund the acquisition.