Billionaire Tesla CEO Elon Musk on Friday said he was putting the deal to acquire Twitter at $44 billion on hold until it was verified that fake accounts constituted less than 5% of the total users.
“Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users,” Musk said, adding that he was “still committed to the acquisition.”
Twitter Inc estimated in an SEC filing earlier that false or spam accounts represented fewer than 5% of its monetizable daily active users during the first quarter.
The social media giant had 229 million users who were served advertising in the first quarter.
Musk’s announcement sent twitter’s share price spiraling down over 17% at $37.2 in pre-market trading, while Tesla shares were up over 5% at $769.27 in pre-market trading.
The merger agreement, on page 30 of the filing, states that Musk will have to pay $1 billion in the form of a termination fee if the takeover falls through.
Musk had started his takeover campaign of the social media site last month by announcing to buy a prominent stake in Twitter and then offered to buy the firm for $54.2 per share, which would value the company at around $41.4 billion.
The offer was initially reportedly rebuffed by Twitter’s board but was later accepted. Musk said he wants Twitter to be a platform dedicated to free speech.
Musk is also a prominent supporter of cryptocurrencies over the past few years, often discussing popular memecoin Dogecoin (DOGE) and bitcoin (BTC) on social media.
Dogecoin slumped by more than 7% following Musk’s statement on the Twitter deal. It has since recovered back to $0.0904 after trading at a low of $0.0869.