The news initially sent Twitter shares down more than 20% in premarket trading before the stock rebounded somewhat. Two hours after his first tweet, Musk posted that he is “still committed to acquisition.”
But it acknowledged that the measurements were not independently verified and the actual number of fake or spam accounts could be higher.
Twitter has had a spam problem for years, and the company has previously acknowledged that reducing fake and malicious accounts would play a key factor in its ability to keep growing. It’s unclear why Musk would back away from the deal because of the latest disclosure.
Musk turned “this Twitter circus show into a Friday the 13th horror show,” wrote tech analyst Dan Ives of Wedbush Securities in a note to clients early Friday.
Musk would owe Twitter a $1 billion breakup fee if he were to cancel the deal.
“The Street will view this deal as 1) likely falling apart, 2) Musk negotiating for a lower deal price, or 3) Musk simply walking away from the deal with a $1 billion breakup fee,” Ives wrote. “Many will view this as Musk using this Twitter filing/spam accounts as a way to get out of this deal in a vastly changing market.”
Stocks — tech in particular — have been sharply lower since Musk and Twitter reached a deal on a purchase of the the company nearly three weeks ago.
Skepticism from the start
Even as Musk has worked to secure financing for the takeover, skepticism about whether the deal would go through has been swirling since Twitter’s board agreed to the offer on April 26.
Wall Street analysts weren’t convinced of Musk’s ability to buy Twitter, either — at least not at $54.20 a share. The consensus target price was below $52, and the vast majority put a “hold” rating on the company’s stock.
Musk’s sale of a significant number of Tesla shares to help finance his Twitter deal had also put pressure on the carmaker’s stock. Having already committed a big chunk of his Tesla shares elsewhere, he wasn’t left with much of a cushion should he need to pony up more funds to complete the Twitter takeover.
Musk’s plans for Twitter
Musk had offered few details about his plans for the social media company, though he has often spoken out about bot accounts that promoted spam content. He also says the company has been too quick to remove accounts that violate its content-moderation rules.
—— CNN Business’ Clare Duffy and Allison Morrow contributed to this article.