Elon Musk’s latest tweet is not going over well with Wall Street.
Wedbush Securities analysts Dan Ives and John Katsingris say Elon Musk’s “bizarre” tweet putting his $44 billion Twitter acquisition on hold has turned the entire deal into a “circus show.”
Shares dropped on the news.
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On Friday, Musk said his deal to take Twitter private at $54.20 per share would be paused pending details supporting calculations that spam and fake accounts represent less than 5% of the social media platform’s users.
The Tesla chief executive has previously vowed to crack down on spam bots to improve the user experience on Twitter. The self-described “free speech absolutist” has also expressed interest in open sourcing Twitter’s algorithm to increase transparency and said he would overturn former President Donald Trump’s ban.
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Ives and Katsingris said in a note to clients on Monday that Wall Street will view the implications of the tweet as either the deal falling apart, Musk negotiating for a lower deal price, or Musk walking away entirely with a $1 billion break up fee.
“If Musk does decide to still go down the deal path a clear renegotiation is likely on the table, which calls into question a number of topics (financing path, leverage of Tesla stock, prior financing partners, employee reaction),” they said.
“Many will view this as Musk using these Twitter filing/spam accounts as a way to get out of this deal in a vastly changing market,” the note continues. “The nature of Musk creating so much uncertainty in a tweet (and not a filing) is very troubling to us and the Street and now sends this whole deal into a circus show with many questions and no concrete answers as to the path of this deal going forward.”
The analysts expect the initial reaction to the tweet to be positive for Tesla shares, as now Wall Street will “view the chances of a deal as less than 50%.”
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Prior to Musk’s tweet on Friday, Twitter said the deal was expected to close in 2022, subject to shareholder and regulatory approval and the satisfaction of customary closing conditions.
A spokesperson for Twitter did not immediately return FOX Business’ request for comment. Musk said in a follow-up tweet that he is “still committed” to completing the acquisition.