May 13, 2022 - Technology

Elon Musk says Twitter deal "temporarily on hold"

Elon Musk
Photo: Dimitrios Kambouris/Getty Images for The Met Museum/Vogue

Elon Musk tweeted Friday morning that his $44 billion deal to buy Twitter is "temporarily on hold" as he seeks more details on the platform's new estimate that spam and fake accounts make up less than 5% of users.

Why it matters: Musk provided few details, but the tweet from his official account will ignite havoc in the tech and financial worlds. Twitter shares extended their fall in pre-market trading.

  • "Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users," he said.
  • Musk later added in a separate tweet that he is "still committed to acquisition."
  • The company's shares plunged more than 17% in pre-market trading in response to the news. Tesla's shares rose about 5%.

The big picture: Musk's takeover bid has been wrought with so many twists and turns that Wall Street is beginning to feel skeptical that it will even happen.

  • For Musk to liquidate a significant amount of his Tesla stake and to wrangle bankers into giving him billions of dollars in financing, only to backtrack due to a single article, shows how manic the entire takeover process has been.
  • Most acquirers go through a thorough due diligence process to address these types of concerns before submitting a formal bid.

Be smart: The tweet comes a day after Twitter's CEO Parag Agrawal ousted two of the company’s top execs and paused hiring in an effort to be more fiscally responsible.

  • While sources say the changes were made outside of Musk's purview, there's no question that a looming takeover bid is adding pressure on the company to become more innovative and profitable.
  • On Friday, Agarwal acknowledged the move tweeting, “While I expect the deal to close, we need to be prepared for all scenarios and always do what’s right for Twitter. I’m accountable for leading and operating Twitter, and our job is to build a stronger Twitter every day.”
  • ”Our industry is in a very challenging macro environment – right now. I won’t use the deal as an excuse to avoid making important decisions for the health of the company, nor will any leader at Twitter,” he added.

Sources tell Axios that internally, employees are exasperated by the whole process.

  • The potential sale already caused a lot of concern about job security, and morale has been low. A pivot away from a sale would’ve been a relief, but the bait and switch is just as exhausting.

Our thought bubble: There's been speculation for weeks that Musk would walk away, and he just took a giant first step.

Editor's note: This article has been updated with additional comments from Musk.

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