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Musk Could Try To ‘Get Out’ Of Twitter Acquisition After ‘Troubling’ Decision To Put Deal On Hold: Analysts

Musk May Strive To ‘Get Out’ Of Twitter Acquisition After ‘Troubling’ Determination To Put Deal On Maintain: Analysts

The topline

Shares of Twitter plunged on Friday after Elon Musk stated he would put his acquisition of the social media firm “quickly on maintain,” including extra confusion as to if a deal will nonetheless occur as analysts predict that the Tesla billionaire may very well be on the lookout for an excuse to again out or renegotiate a decrease shopping for value.

The Key Info

Twitter’s inventory fell roughly 10% on Friday after Musk stated he would put his deliberate $44 billion takeover “on maintain” till he finds out extra concerning the variety of pretend and spam accounts on the platform.

Musk’s “weird” tweet will ship the “Twitter circus present right into a Friday the thirteenth horror present,” wrote Wedbush analyst Dan Ives, with “many questions and no concrete solutions as to the trail of this deal going ahead.”

The markets are reacting as if he’s going to again out of the deal, which may properly be a chance, in accordance with Michael Hewson, chief markets analyst at CMC Markets, who added, “that is straight out of the Musk playbook, preserving shareholders on their toes.”

Musk’s determination was “very troubling” for traders—Twitter’s inventory fell over 10% on Friday, and amid the broader market selloff this yr, Musk may properly be utilizing the pretend accounts as an excuse to “get out of the deal,” Ives provides.

Whereas Musk may be getting nervous about following by, “individually, this transfer is more likely to drive larger uncertainty and chaos inside [Twitter], which may have damaging implications by itself enterprise prospects,” notes CFRA analyst Angelo Zino.

Amid the thrill generated by Musk’s provide to purchase the corporate in April, Twitter shares are down simply 4% up to now in 2022—having surged over 20% final month alone, and are outperforming the remainder of the market (the benchmark S&P 500 index has fallen over 15%).

Right here’s What to Watch:

Tesla’s billionaire may very well be ready for a greater deal and presumably making an attempt to get a decrease share value than his unique provide of $54.20 per unit. Twitter’s board of administrators final month accepted his bid, nevertheless, which valued the social media firm at roughly $44 billion. “If Musk decides to go down the deal path, a transparent renegotiation is more likely to be on the desk,” Ives predicts.

Stunning Truth

Twitter short-sellers, who’re betting that the inventory will fall, are loving the confusion round Musk’s deal to purchase the corporate. “I’m trying on the intense facet of life this morning,” Nathan Anderson, founding father of short-selling agency Hindenburg Analysis, which has a place in opposition to Twitter, wrote on Friday shortly after Musk’s tweet. On paper, Twitter short-sellers acquired a $136 million enhance—bringing potential month-to-month returns to round $262 million, in accordance with S3 Companions.

Huge Quantity: $232 Billion

That’s how a lot Musk is price, in accordance with SME’ calculations, making him the richest particular person on the planet.

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