Twitter shares tumbled and Tesla stock soared as Elon Musk sparked speculation he will walk away from his £35billion deal to buy the social media platform.
In a tweet that shocked Wall Street and Silicon Valley, Musk said the acquisition was ‘temporarily on hold’.
The announcement raised the prospect that the tycoon would abandon plans to buy Twitter – a move that could cost him $1billion (£820m) in break fees.
Twitter shares fell as much as 25 per cent on Wall Street before it clawed back some of the losses. By contrast, shares in Tesla, which have been weighed down by fears Musk’s interest in Twitter will distract him from the electric car maker he runs, rose 7 per cent.
The 50-year-old billionaire said he was putting the deal on hold over concerns about the number of spam and fake accounts on the site. Twitter estimates 5 per cent of its users are spam, but admitted last week the figure could be higher.
Musk wants to know what the exact percentage is before pushing ahead as he looks to combat fake users and monetise the site.
Having lost a quarter of its value in minutes, Twitter shares rebounded after Musk later tweeted he was ‘still committed to the acquisition’. But they were still down 9 per cent at $41 – well below the offer price of $54.20 per share – in a sign investors increasingly doubt the deal will go ahead.
Neil Wilson, an analyst at Markets, said: ‘I just always felt like [the] deal was suspect and now get the sense it won’t happen and maybe was never going to.’
Neil Campling, analyst at Mirabaud, added: ‘Laughable! We’d always said he may cut or run or change his tune at the 11th hour and 59 minutes and 59 seconds on the clock. It is farcical.’
Tesla shares fell 33 per cent in the weeks after Musk first took a stake in Twitter and then launched a full-scale takeover bid. Investors were unhappy Musk used large chunks of his shares in the electric car maker to help finance the deal.
He has sold £7billion worth of Tesla shares and plans to borrow further against his stock. Question marks over funding have hung over the deal from the start.
As a result, some believe Musk’s latest move was a ploy. Susannah Streeter, an analyst at Hargreaves Lansdown, said: ‘There are questions over whether fake accounts are the real reason behind this delaying tactic. The £35billion 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.’
Musk’s tweet could also land him in hot water with US regulators again for taking to Twitter to announce the delay rather than through a regulatory filing.
He is already in trouble with the US Securities and Exchange Commission, which is probing his delayed disclosure in Twitter, when he built up a stake.
Musk disclosed his 9.2 per cent stake in Twitter on April 4, a delay of at least ten days since passing the 5 per cent threshold for revealing a shareholding.
And a court this week found that Musk’s 2018 tweets about taking Tesla private, when he declared funding was secured, were inaccurate and reckless.