Musk's Twitter Buyout Offer Means the Endgame Is Near
- by Kiplinger
- Apr 14, 2022
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14 April 2022
If it wasn't obvious before, Elon Musk was never going to be a "passive" shareholder in Twitter (TWTR, $45.85).
The Tesla (TSLA) CEO and world's richest person offered to buy the social media platform for $54.20 per share in cash, according to filings with the Securities and Exchange Commission late Wednesday. Musk's Twitter buyout offer translates into about $43 billion. Will a Second Tesla Stock Split Spark Another Rally?
That's putting it diplomatically. If some market participants disliked TWTR stock before Musk got involved, they really can't stand it at current levels.
Then there's Wedbush analyst Daniel Ives, who believes Musk will prevail.
"Ultimately we believe this soap opera will end with Musk owning Twitter after this aggressive hostile takeover of the company," says Ives, who rates TWTR at Outperform (equivalent of Buy). "It would be hard for any other bidders/consortium to emerge and the Twitter board will likely be forced to accept this bid and/or run an active process to sell Twitter."
The market, for its part, is taking a more skeptical view. Twitter's price action suggests this is far from a done deal. Note that TWTR shares were trading around $46.50 early in Thursday's session – well below Musk's buyout offer of $54.20.
Bottom Line
Musk already has Tesla, SpaceX and the Boring Company in his considerable portfolio of responsibilities. As such, a successful Twitter coup d'etat has all the makings of a "be careful what you wish for" outcome.
As Bloomberg's Matt Levine once wrote, Musk owning 9% of Twitter makes him Twitter's problem. "If Elon Musk buys Twitter, Twitter is his problem."
And Musk certainly has plenty of problems as it is. Indeed, we shouldn't forget yet another constituency that's less-than-enamored of Musk's latest jape: Tesla shareholders.
The electric vehicle manufacturer's stock slumped after Musk disclosed his Twitter bid, and it's not hard to guess why.
"As the CEO of a trillion-dollar company, Elon Musk should focus on Tesla and not waste time attempting to acquire and manage a $43 billion company," says David Trainer, CEO of New Constructs, a Nashville-based investment research firm.
Twitter stock is up more than 50% from its 52-week low, but every investor's cost basis is different. Just remember: There's no shame in plotting an exit from what has been a very frustrating stock for a very long time.
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