Shares of Twitter fell more than 8 per cent on Monday after Elon Musk said he wants to buy the social media company for less than $44 billion and the “deal cannot move forward” unless the microblogging company provides proof that less than 5 per cent of its users are fake.
Twitter shares slumped to $37.39 at close of trading in New York, extending losses after Mr Musk was reported as saying a lower price for the company is appropriate.
The company's share price has slumped 31 per cent below Mr Musk's initial $54.20 a share offer as part of his proposed acquisition. Twitter had a $28.57bn market value as of the end of trading on Monday.
If Mr Musk decides to abandon the agreement he would have to pay the social media company a $1bn break-up fee.
Mr Musk and Twitter chief executive Parag Agrawal have argued over the company's estimates of spam accounts, Reuters reported, citing an attendee at a private conference, where Mr Musk spoke.
The quarrel extended to the social media microblogging site, with Mr Musk openly calling in a post for Twitter to welcome an independent audit to determine what percentage of its accounts are genuine or fake on Tuesday signalling it would take some time for the deal to go through.
The billionaire businessman tweeted on Friday that his acquisition of Twitter is temporarily on hold pending details on the amount of fake accounts on the social media platform. Mr Musk later said he is still "committed" to the acquisition of the social media company.
On Sunday, Mr Musk said he has not yet seen "any analysis" that suggests less than 5 per cent of Twitter accounts are fake.
"There is some chance it might be over 90 per cent of daily active users, which is the metric that matters to advertisers," he said on Twitter.
Twitter shares have declined below the level before Mr Musk revealed his Twitter stake in early April. His comment at the conference, which was closed to the media, is casting doubts about his commitment to proceed with the acquisition at the agreed price.
In a filing last week, Twitter said false or spam accounts represented fewer than 5 per cent of its monetisable daily active users during the first quarter. The San Francisco-based social media company said it had 229 million users who were served advertising in the first quarter.
The disclosure came after Mr Musk, who is the founder and chief executive of electric vehicle maker Tesla and rocket company SpaceX, tweeted that one of his priorities would be to remove spam bots from the platform.
Responding to days of criticism, Mr Agarwal took to Twitter on Monday and reiterated that fake accounts are less than 5 per cent of the total on the company's platform.
“We suspend over half a million spam accounts every day, usually before any of you even see them on Twitter,” he said in a tweet.
Twitter locks millions of accounts each week that it suspects could be spam, he said.