Elon Musk’s Twitter bid on Wall Street faces huge doubt

Tesla was never taken private and instead turned into one of the great stock bets of the next three years. On a split-adjusted basis, the shares have risen more than 1,300% since the tweet.

Musk has become spectacularly rich in the process, surpassing Amazon’s Jeff Bezos as the world’s richest man. And while running his two main companies and a few other companies, he’s found plenty of time to become a regular rowdy on Twitter, where he now has 81.7 million followers.
It’s not often that a company receives a takeover bid that equates to an 18% stock premium only to see its shares decline.

That’s what happened on Twitter on Thursday after Tesla CEO Elon Musk submitted a bid to buy the company for $54.20 a share, or about $43 billion. The stock fell 1.7% to close at $45.08 for a market cap of $34 billion.

In other words, investors don’t expect the deal to happen. The company is facing a “full-blown Elon circus,” analysts at Stifel told Thursday to downgrade the stock to sell.

Musk has number of followers, to be sure, and he’s famous in the tech world for simultaneously turning Tesla and SpaceX into flourishing and truly innovative businesses. But years of gusts, hype and unfulfilled promises have made Wall Street doubt Musk’s intentions and his ability or willingness to follow through, especially when it comes to big financial deals.

Think back to “money safe”. That was an August 2018 tweet that Musk sent in, indicating he was ready to price Tesla the ****-savvy at $420 a share (if it were to explain the $54.20 offer for Twitter). helps). It’s also the tweet that led to lawsuits from the SEC and a final settlement requiring a “Twitter sitter” to pre-approve any of Musk’s tweets containing information about the company that could affect his stock price. can.

Tesla was never taken private and instead turned into one of the great stock bets of the next three years. On a split-adjusted basis, the shares have risen more than 1,300% since the tweet.

Musk has become spectacularly rich in the process, surpassing Amazon’s Jeff Bezos as the world’s richest man. And while running his two main companies and a few other companies, he’s found plenty of time to become a regular rowdy on Twitter, where he now has 81.7 million followers.
At the TED2022 conference in Vancouver, Musk was asked by TED’s Chris Anderson if he had a “plan B” for rejecting the offer. Musk replied, “There is,” but he declined to elaborate.

Anderson asked if Musk had “funding secured,” alluding to the infamous tweet about taking Tesla private.

“I have enough assets,” Musk said. “If possible, I can do it.”

Whether or not Musk is actually making a serious effort to buy the social media company has created a huge distraction for the board as it must now consider the offer. The board met on Thursday to discuss the bid, and CEO Parag Agarwal reportedly told employees that the company was “not being held hostage” by Musk’s proposal.

Depending on the stock price reaction, Agarwal may have investors. David Trainor, CEO of stock research firm New Constructs, said the bid was “a desperate attempt to get attention for Musk,” not a sincere attempt to add value.

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“He is only offering to buy Twitter because Twitter is where Musk is most popular,” Trainor wrote in an email on Thursday. “Elon Musk doesn’t bring any operating value to Twitter shareholders other than his rock star status, which isn’t enough to replace Twitter in the long run.”