Twitter Inc’s TWTR special meeting with shareholders on Wednesday is expected to kick off some more fireworks between Tesla Inc TSLA CEO Elon Musk and the microblogging platform’s board amid the billionaire investor’s $44 billion hostile take-private bid, according to Wedbush Securities.
The Tesla Analyst: Wedbush analyst and long-time Tesla bull Dan Ives has maintained an “outperform” rating and the recently lowered $1,000 price target on the Musk-led company’s shares at a time when investors are closely weighing the implications of the mega deal on the electric vehicle company’s shares.
The Twitter And Tesla Thesis: The $44 billion Twitter deal, which Musk has currently put on hold due to the much discussed representation of fake spam accounts, would be the elephant in the room at the shareholder meeting. It is also a “major overhang” on Tesla shares, which have plunged over 40% since April 4.
“We believe shareholders will clearly raise this hot button issue at the meeting this week as Twitter Board’s firm view is the deal is done and its subject to regulatory and shareholder approval,” Ives wrote in a note, adding the Street is expecting the deal to come down to the mid $40 level.
Musk had previously offered $54.20 to close the deal, but last week indicated that a “lower price” is not out of the question.
Twitter shares are currently trading well below Musk’s offer.
“We believe its [sic] currently a 60% chance that Musk tries to walk and use this spam account issue as the scapegoat to get out of the deal and a 40% chance Twitter’s Board and Musk come to a new deal price over the coming weeks,” Wedbush analysts indicated.
Musk is the largest individual shareholder of Twitter and owns a 9.2% stake in the microblogging site.
Running Out Of Patience: Ives said Musk’s “circus show” has been a major overhang on Tesla’s stock and a black eye for Musk for the way he has handled the “spiraling situation.”
Adding that, “..Musk is facing a fork in the road situation in which he has to decide his next step in this soap opera as Tesla investor patience is wearing thin.”
When Musk announced his plan to take Twitter private, he promised to make the platform a place for free speech and debate.
Price Action: Twitter closed 1.1% lower at $37.86 on Monday, and Tesla shares closed 1.6% higher at $674.90, according to Benzinga Pro.
Photo: Created with an image from Daniel Oberhaus on Flickr