Andre Porter on October 6, 2022
The controversy of Elon Musk officially backing the purchase of Twitter has brought out raw feelings. Now his ideas for the social media platform are causing a backlash on the financial level.
The Wrap reports that Twitter shares tumbled on Thursday, reflecting what one analyst called “a wild 24 hours” for the social media company. Twitter shares slipped 18 cents to $51.12 in late morning trading after dropping as much as 84 cents after the opening bell on Thursday.
Hours after Musk agreed to terms with the company to purchase it at the original price of $44 billion, following months of attempting to back down from the deal, the Tesla and SpaceX CEO shared his vision for a super-app called “X”, which appears to be a Western version of the all-in-one Chinese app WeChat.
The vision accompanied the formation of three holding companies with variations of the name “X Holdings,” Bloomberg reported.
“It’s been a wild 24 hours for the Twitter/Musk saga with the deal now green lighted from the Musk camp at the original $44 billion/$54.20 price tag,” wrote Wedbush analyst Daniel Ives in a note to clients.
Ives, who has a “neutral” rating and a $54.20 price target on the stock, saw “one slight problem” in the news. According to Bloomberg, Musk’s scheduled deposition in the suit was postponed after the volatile executive reversed course. Ives said the Delaware Court of Chancery said the parties did not file paperwork to end the lawsuit Twitter brought when Musk tried to scrap the buyout.
“Front and center here could be the condition out of the Musk agreement that the deal closing was pending the receipt of the necessary $12.5 billion debt financing,” Ives wrote. “On this point, we have been getting many investor questions on this topic, and it’s important to note that the banks are essentially cemented to this Twitter debt deal and we see no way out despite the very tough debt markets today.”
Ives said he does “not see this debt situation falling apart” which would give Musk “a way out” of the Twitter deal without having to pay a $1 billion breakup fee.
“We continue to believe the deal gets done smoothly despite some late night poker moves from the Twitter camp with the Delaware Court case around the corner (set to begin October 17th) and ongoing depositions,” Ives wrote.
Thirsty will continue to monitor the whole Twitter drama. This could be blockbuster news when the court hearings start.
What do you think of all this? Sound off in the comments!
October 6, 2022 12:58 pm
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