Elon Musk’s Twitter show faces huge skepticism on Wall Street

It’s not often that a takeover offer company receives up to an 18% stock premium just to see its stock fall in the news.

This is what happened to Twitter Thursday after Tesla Executive Director Elon Musk feet Bid To buy the company for $54.20 per share, or about $43 billion. The stock fell 1.7% to close at $45.08 for a market capitalization of $34 billion.

In other words, investors don’t expect the deal to happen. Analysts at Stifel went so far as to downgrade the stock to sell on Thursday, saying the company faces a “full Elon circus.”

Musk has legions of followers, sure, and he’s a tech legend for simultaneously turning Tesla and SpaceX into a truly thriving and innovative business. But years of hype, hype and unfulfilled promises have left Wall Street skeptical about Musk’s intentions and ability or willingness to pursue, especially when it comes to big financial deals.

Think back to Funding is guaranteed. That was an August 2018 tweet that Musk sent out, indicating that he was willing to take Tesla private at $420 a share from the weed fanatic (in case that helps explain Twitter’s $54.20 offer). It’s also the tweet that led to a lawsuit from the Securities and Exchange Commission (SEC) and eventually settlement Asking Twitter incubator to pre-approval of any of Musk’s tweets containing information about the company could affect its share price.

Tesla was never taken privately and instead turned into one of the big stock bets of the following three years. On a divided rate basis, shares are up over 1,300% since the tweet.

Musk became admirably rich in the process, transcending Amazon Jeff Bezos As the richest person in the world. While managing his two main companies and running a few others side by side, he found plenty of time to be a regular mob on Twitter, where he now has 81.7 million followers.

Twitter is Musk’s favorite form of mass communication for everything from promoting crypto tokens to criticizing politicians. He also continues to make announcements about Tesla technology on the site. More recently, it has been his favorite place to criticize Twitter itself, for what he sees as ignoring the principles of free speech and some technological limitations.

But buying the company? Analysts don’t see it.

Analysts at Mizuho Securities with an equivalent rating wrote on the stock. Analysts said one big concern the board of directors could face is “the limited time Mr. Musk must focus on Twitter as he is the CEO of several technology companies, including Tesla, SpaceX and The Boring Company.”

Then there is the money. Musk is worth about $265 billion, according to Forbes, but nearly all of his fortune is tied to ownership of shares in Tesla and SpaceX. he is Sold more than 12 billion dollars The value of Tesla’s stock in late 2021, which is still a fraction of Twitter’s $43 billion offer price.

Before trying to buy Twitter, Musk 9.1% bought Of the company’s outstanding shares this year, more than $2.6 billion. Inventory increased by 27% On April 4, the day of Musk’s initial disclosure of ownership of the materials.

“My offer is my best final offer, and if it is not accepted, I will need to reconsider my position as a contributor,” Musk wrote in his proposal Thursday before the Twitter board.

Musk said in deposit With the SEC that he hired Morgan Stanley As his financial advisor, but he made no mention of partnering with other financiers or companies that could help foot the bill. Later on Thursday, mask He confessed He is “not sure” if he will actually be able to buy Twitter.

At TED2022 in Vancouver, TED’s Chris Anderson asked Musk if there was a “Plan B” if the proposal was rejected. “There is,” Musk replied, but declined to go into details.

Anderson asked if Musk “got the funding,” referring to an infamous tweet about making Tesla private.

“I have enough assets,” Musk said. “I can do that if possible.”

Whether or not Musk is making a really serious effort to buy the social media company, it has created a huge distraction for the board of directors because he must now consider the offer. The Board of Directors met to discuss the tender on Thursday, CEO Parag Agrawal He reportedly told the staff The company was not “hostage” to Musk’s suggestion.

Depending on the stock price reaction, Agrawal may have investors on his side. David Trainer, CEO of equity research firm New Constructs, said the offer was Musk’s “desperate attempt to get attention,” not an honest attempt to add value.

“He’s only offering to buy Twitter because Twitter is the most popular niche among Musk,” Trainer wrote in an email Thursday. “Elon Musk brings no operating value to Twitter shareholders, other than his rock star status, which is not enough to change Twitter in the long run.”

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