Elon Musk has an excuse to potentially back out of Twitter Deal, 50% chance the deal goes through, say analysts

Twitter’s current CEO Parag Agrawal and Elon Musk have engaged in a massive debate around spam bots. Agrawal says that of all the users on the social media platform, about 5 per cent of the platform’s daily users are spambots. Industry insiders believe that Twitter is gravely underreporting this number. 

Elon Musk is looking for excuse to back out of Twitter deal

Now though, some analysts at Wedbush Securities, an American investment firm, have reasons to believe that this dispute will be used by Musk to back out of the Twitter deal.

Dan Ives, an analyst at Wedbush Securities wrote in an internal note on Monday, that there is a 50 per cent chance of any deal going through where Twitter is valued at $44 Billion. There is also a very good chance that the deal may fall through altogether.

Elon Musk is looking for excuse to back out of Twitter deal

Musk plans to use a good chunk of his stake in Tesla to finance his deal with Twitter’s shareholders, wherein he will be paying $54.20 per share. Given the recent market crash, and the fact that Tesla’s stock has plunged ever since Musk announced that he would be taking over Twitter, Musk is having second doubts.

What pushes things over the edge is the fact that Twitter hasn’t had a proper audit over the number of fake profiles and spam bots, something that Musk has been a stickler for.

So where does all of this put Musk and his deal Twitter deal? Dan Ives stated in the memo, that although Wedbush Securities believe that Musk is committed to the deal, the massive pressure on Tesla's stock since the deal, a changing stock market/risk environment the last month, and a number of other financing factors has caused Musk to get 'cold feet' on the Twitter deal.

Elon Musk is looking for excuse to back out of Twitter deal

He added that in all probability, Musk will be looking for a way to renege on his side of the deal with Twitter, or purchase Twitter for a much lower price, something around $30-35 per share.

When Musk announced that the Twitter deal was put on hold for the time being, Tesla’s stock jumped up by 5 per cent, which gives him all the more reason to back out. But because he has to pay a breakup fee of $1 Billion, Musk is looking to use the spambot issue as an excuse, according to Ives.



from Firstpost Tech Latest News https://ift.tt/M3uVqnQ

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