Elon Musk spooked the market with his early Friday tweet that the Twitter, Inc. deal is on hold. Wedbush analyst Dan Ives says there are three scenarios at play now:
The Street will view the announcement as signaling that the deal could be falling apart.
Alternatively, the development could suggest Musk is looking around to negotiate a lower bid price.
It could also mean the Tesla CEO is “simply walking away from the deal” with a $1 billion breakup fee.
He could be using Twitter’s filing of spam accounts as a way to get out of the deal in a “vastly changing” market.
“The initial reaction will be positive for Tesla shares as now the Street will view the chances of a deal as less than 50 percent,” Ives wrote in a note.
If Musk persists with his pursuit of Twitter, there could be a clear “renegotiation” on topics such as financing path, leverage of Tesla stock, prior financing partners, employee reaction, etc.
“The nature of Musk creating so much uncertainty in a tweet (and not a filing) is very troubling to us and the Street and now sends this whole deal into a circus show with many questions and no concrete answers as to the path of this deal going forward,” the analyst said.
By Shanthi Rexaline
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