Fox News Headlines 24/7 sports reporter Mike “Gunz” Gunzelman argues that Elon Musk is “unpredictable” after the Tesla CEO announced he has a backup plan to buy Twitter.
Tesla CEO Elon Musk’s surprise $43 billion unsolicited bid for Twitter ushered in a tumultuous week for the social media giant and its investors, capped with Friday’s “poison pill” via the Twitter board was used to stop Musk.
Now it’s anyone’s guess what happens next. FOX Business dives deep into the latest developments and what investors and analysts are predicting.
Poison Pill Backfire?: Wedbush’s Ives
Wedbush securities analyst Dan Ives told FOX Business on Friday that Twitter’s move to prevent a Musk takeover is a “predictable defensive measure” that “is not viewed positively by shareholders given the potential for dilution and takeover.” “.
Elon Musk gestures as he speaks during a press conference at SpaceX’s Starbase near the village of Boca Chica in South Texas on February 10, 2022. (Photo by JIM WATSON/AFP via Getty Images/Getty Images)
Under the plan, also known as the “poison pill,” shareholder rights become exercisable when a company, person, or group acquires beneficial ownership of 15% or more of Twitter’s outstanding common stock in a transaction not authorized by the board of directors. In the event the rights become exercisable, existing Twitter shareholders — other than the person, entity or group initiating the plan — would be entitled to purchase additional common shares at a discount. Musk currently owns a 9.2% stake in Twitter.
“The board has their backs to the wall and Musk and shareholders are likely to challenge the merits of the poison pill in court,” Ives said. “We think Musk and his team were expecting this poker move that the street would see as a sign of weakness, not strength.”
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Musk and Twitter are wrestling with the next step
Ives says Musk needs to provide details on his funding for the $43 billion bid going forward and come back to Twitter’s board of directors with a formal response. In the meantime, he expects Twitter to initiate a strategic process to seek other buyers.
| ticker | security | Last | To change | To change % |
|---|---|---|---|---|
| TWTR | Twitter Inc. | 45.08 | -0.77 | -1.68% |
Musk, who has offered to take Twitter private for $54.20 per share, has said the $43 billion offer is his “best and last” offer. However, he revealed to TED2022 on Thursday that he has a “plan B” in place if the offer is formally rejected. He did not give details of this plan.
Twitter shares YTD
GOVERNMENT STOPPING MUSK’S TWITTER OFFER IS ‘VERY REAL THREAT’: FORMER SEC CHAIR
Stay Long Twitter: T3 Trading
T3 Trading chief strategist Scott Redler believes investors should go long on Twitter, arguing that the company is currently an “undervalued” and “ill-managed” asset that has the potential to be a platform for improvement to become of society.
JMP Securities equity analyst Andrew Boone and T3 Trading CSO Scott Redler analyze the billionaire entrepreneur’s bid for the social media giant in The Claman Countdown.
“I don’t think Twitter should be a private company. I think Elon should be on the board. It would have been better if he bought 14% so he could shake the tree,” Redler told The Claman. Countdown” on Thursday. “I think the company could be run better. I think the features could be more updated. I think they could get more users. They could make more money.
“But now with that $54 bid, it just wasn’t enough, and now it’s turning into a little mishmash where the market doesn’t believe it, the board doesn’t know what to do, and it could come in higher, though.” he said best and final, which is never really best and final,” Redler adds. “So he created a precarious situation where it will be interesting to see how it all plays out.”
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Twitter can and should improve its product: JPMorgan
JPMorgan analyst Doug Anmuth told clients that Musk’s offer was “credible” and “represented a 54% premium to trading TWTR before he began acquiring shares.” However, he acknowledges that it’s also well below the company’s March 2021 highs. The company keeps an “Overweight” rating on the stock.
“We believe the stocks have significantly greater upside potential if management is able to execute on its plan to innovate the product, grow the user base by ~20% and expand direct-response advertising,” said Anmuth am Thursday in a note. “Accordingly, we do not expect the offer to be accepted by the board.”
Downside Risk for Equities: Stifel
Meanwhile, Stifel analyst Mark Kelley believes the bid “places a short-term cap on shares, decouples the company from fundamentals and poses significant downside risk if Mr. Musk decides to abandon his bid or sell his stake.” Stifel has downgraded the stock to “sell” from “hold” and warns that a rejected offer could lead to a “dramatic sell-off” in Twitter shares.
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Twitter could be looking for a consortium of investors?: Jefferies
Jeffries, who maintains a “hold” rating on Twitter stocks, notes that a sell-off of more than 20% on a rejected Twitter offer “would definitely represent value for a strategic investor.”
“In our view, this could be a positive outcome as TWTR would likely prefer a consortium of investors rather than being controlled by a single major owner,” Jeffries analyst Brent Thill told clients on Thursday.
Thill believes Twitter is likely looking for an offer of at least $60 per share.