Elon Musk Says His Deal to Buy Twitter Is on Hold

Elon Musk Says His Deal to Buy Twitter Is on Hold

“Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users,” Mr. Musk said early Friday morning from his verified Twitter account. Tea

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chief executive linked to a May 2 Reuters report about a recent Twitter securities filing with those statistics.

About two hours later, he posted: “Still committed to acquisition.”

Twitter shares fell more than 20% after Mr. Musk’s first tweet but recovered somewhat after his update. Shares were recently trading at $40 in premarket trading, down 11% and well below the $54.20 a share, or $44 billion, that Mr. Musk agreed to pay for the company last month.

Twitter didn’t immediately respond to a request for comment.

The tweets come as many big tech stocks have been falling on Wall Street, including shares of Tesla, which are down 29% over the past month. Mr. Musk is using his Tesla holdings to help fund the Twitter deal. Meanwhile, Twitter’s stock price had traded below Mr. Musk’s offer price as investors wondered if the deal might get reworked or not get done.

Mr. Musk might be using Twitter’s recent disclosure as a means to get out of or renegotiate the deal, said Daniel Ives, a technology analyst at Wedbush Securities. One reason is the impact on Tesla shares since the deal was announced.

“Leveraging his stock and potential sales of Tesla is a huge overhang on the stock,” Mr. Ives said.

Twitter said in its most recent quarterly report that by its estimates, false or spam accounts represented fewer than 5% of its daily active users in the first three months of the year. The company reported the same figure in its February quarterly update.

Twitter will become a private company if Elon Musk’s $44 billion takeover bid is approved. The move would allow Musk to make changes to the site. WSJ’s Dan Gallagher explains Musk’s proposed changes and the challenges he might face enacting them. Artwork: Jordan Kranse

The social-media company warned that its estimate is based on a sampling of accounts and that “the actual number of false or spam accounts could be higher than we have estimated.”

Mr. Musk had vowed to eradicate fake Twitter users and spam accounts as part of his bid to buy Twitter.

Susannah Streeter, an investment analyst at Hargreaves Lansdown, said there will be skepticism whether the fake accounts are the real reason for the delaying tactic. “The $44 billion price tag is huge, and it may be a strategy to row back on the amount he is prepared to pay to acquire the platform,” she said.

The tweet Friday is the latest twist in the unorthodox attempt to take over the social-media giant by the world’s richest man. It began with Mr. Musk buying a large chunk of Twitter shares on the open market earlier this year as a passive investor, which soon turned into a full-fledged buyout offer, outlined in a four-paragraph letter and several text messages to Twitter’s chairman.

The per-share offer price of $54.20 contained a veiled reference to marijuana. The latest bombshell comes on a superstitious date: Friday the 13th.

In addition to financing from Wall Street, Mr. Musk has had to sell at least $8.5 billion worth of Tesla shares to fund the deal. He has also assembled a cast of 19 investorsfrom a Saudi prince to Silicon Valley stalwarts, to put up another $7 billion.

Meanwhile, federal regulators are investigating Mr. Musk’s late disclosure last month of his sizable stake in Twitter, a lag that allowed him to buy more stock without alerting other shareholders to his ownership, The Wall Street Journal reported Thursday, citing people familiar with the matter,

Mr. Musk made his filing on April 4, at least 10 days after his stake surpassed the trigger point for disclosure. He hasn’t publicly explained why he didn’t file in a timely manner. An attorney for Mr. Musk didn’t respond to a message seeking comment.

Amid Mr. Musk’s takeover attempt, Twitter has been dealing with the disruptions in the digital advertising market from global economic turmoil and the war in Ukraine. The company said Thursday that it was pausing hiring and looking to cut costs. It also announced the surprise departure of two senior executives.

“Effective this week, we are pausing most hiring and backfills, except for business critical roles,” Twitter Chief Executive Parag Agrawal wrote in a memo, which was viewed by The Wall Street Journal. Twitter’s move adds to broader upheaval in the tech industry in recent weeks in which several companies have been cutting staff and spending or slowing hiring.

Write to Anna Hirtenstein at anna.hirtenstein@wsj.com

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