![]() ![]() On the other hand, Elon Musk conducted a poll on Twitter, where 83.5% of approximately 2.8 million votes were in favor of his view that "shareholders, not the board" should decide on the TWTR buyout offer. If Elon Musk does cross the 15% mark with respect to his shareholdings in TWTR, Twitter's other shareholders excluding Musk have the option of buying shares in the company at a huge discount thereby potentially diluting Elon Musk's stake.įlip-In Trigger Clause Of Twitter's Shareholder Rights Plan On April 15, 2022, Seeking Alpha News reported that Twitter's board of directors "adopted a shareholder rights plan" that is "exercisable if any one entity acquires beneficial ownership of 15% or more of Twitter common stock in a transaction unapproved by the board." The key clause of the shareholder rights plan is the "flip-in trigger" as highlighted below. Separately, Elon Musk's buyout offer hasn't been well received by Twitter's board of directors. This suggests that the success of recent discussions on financing as reported in the media will make or break the Elon Musk deal. Based on a Wall Street Journal report cited by Seeking Alpha News, Apollo Global (NYSE: APO) on Ap"could provide Elon Musk or another PE bidder with equity or debt for a bid." But another ApSeeking Alpha News article quoting a report from The Financial Times suggested that "several large PE firms don't want to participate in Elon Musk's $43 billion takeover."Įlon Musk is speculated to have "less than $2 billion of cash on hand" according to an ApForbes article, and he is unlikely to sell his Tesla ( TSLA) shares to finance the buyout of Twitter. Musk on the potential deal, has been calling banks and other potential investors to shore up financing for the ($43 billion) offer" according to its sources.Īt the same time, there has been mixed news about whether private equity players will be keen to finance the acquisition of Twitter by Elon Musk or other potential bidders. With respect to deal financing, The New York Times highlighted in a recent Aparticle that "Morgan Stanley ( MS), the investment bank working with Mr. The key questions to ask are whether Elon Musk has the financing required to fulfill his buyout offer and if the company's board of directors and shareholders are in favor of this proposed deal. In other words, the success or failure of Elon Musk's bid to take over the company will be the key factor that impacts Twitter's stock price outlook this year. Twitter's shares last traded at $46.72 as of April 20, 2022, which implies that TWTR is trading at a 14% discount to Elon Musk's offer price. On April 14, 2022, Elon Musk disclosed with a 13D/A filing that he is proposing to acquire all of the shares in TWTR at a offer price of $54.20. In my February update, I had noted that "Twitter's Q4 2021 earnings failed to meet market expectations" which "didn't give the market sufficient confidence that the company will succeed in achieving its 2023 revenue and user growth targets (which I will touch on in greater detail later in the article)."īut TWTR's shares pulled back to close at $47.01 as of April 11, 2022, after it was reported that Elon Musk won't become a board member of Twitter. TWTR's Stock Price Performance For The Past One MonthĮlon Musk revealed that he had a 9.2% equity interest in Twitter with a 13G filing on Monday April 4, 2022, and this led TWTR's shares to rise +27% from $39.31 as of Apto $49.97 at the end of the day itself.Īt that point in time, there were huge expectations that Elon Musk could possibly take a board seat and play a key role in driving positive change at Twitter in areas like user monetization, content moderation policies and new product innovation. This is largely attributable to the actions of Elon Musk, who is also likely determine whether TWTR's stock price will continue to rise going forward. Twitter's share price has outperformed the S&P 500 by a significant margin in the last one month as per the chart below. As such, a Hold rating or a Neutral view for TWTR is appropriate. Twitter is unlikely to deliver a substantial revenue beat for Q1 2022 and Elon Musk's buyout offer needs to cross significant hurdles to have a decent chance of being successful. I am rating Twitter's shares as a Hold, as I see TWTR's shares heading nowhere (i.e. The first is Elon Musk's proposed takeover of TWTR announced on April 14 the second is a preview of the company's upcoming Q1 2022 earnings release on April 28. With my latest update, I evaluate Twitter's 2022 share price outlook in view of two key developments. I last wrote about TWTR in an article published on February 18, 2022, where I reviewed its Q4 2021 earnings. I retain a Hold investment rating for Twitter, Inc. Sundry Photography/iStock Editorial via Getty Images Elevator Pitch ![]()
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