Someone could say that the shocking news of yesterday (October 26) was a comment posted on Twitter (Twitter), by billionaire Elon Musk, CEO of one of the largest electric car manufacturers Tesla (Tesla).
Elon Musk's soap opera and Twitter's board of directors
Musk posted a comment on his profile: "Entering Twitter HQ - let that sink in!" along with a video of him entering the company's headquarters with a sink in his hands (the phrase "sink in" means to think about something well and take more time to process the information). Perhaps Musk needed this time before finalizing the deal. With his "action" he was able to inform readers about the conversation he had with the company's current management about the acquisition. We also learned that Twitter's listing will be suspended on October 28 in connection with the company's acquisition of more than $44 billion.
We learned about the renewed attempt to take over Twitter on October 4 from Elon Musk's lawyers, given the billionaire and Twitter's board of directors' previous struggles. As the Bloomberg website describes it, “Musk had been trying for months to end his contract to acquire Twitter, signed in April. The billionaire began showing signs of buyer’s remorse shortly after the deal was announced, alleging that Twitter had misled him about the size of its user base and the prevalence of automated accounts known as bots. "
At the time, Musk also appears to have commented on what changes he would like to make after taking over the company, where, among other things, he spoke of cutting staff by about 75%. However, at Tuesday's meeting with the company's employees, he seems to have renounced that decision.
Twitter situation and announcement of results
Reuters reported on Tuesday: “equity investors, including Sequoia Capital, Binance, Qatar Investment Authority and others, had received the requisite paperwork for the financing commitment from Musk's lawyers. The deal's completion would mark an end to a lawsuit by Twitter, which, along with investors, now expects the deal to be completed on its original terms of $54.20 per share."
However, we have yet to receive the company's financial statements, for which the projected earnings per share is $0.01 (previously -$0.08). The company, despite stable revenue growth,seems to be experiencing fluctuations in operating profit, which last quarter amounted to a $170 million loss. As we could learn from Social App Report data, in September the number of active accounts on the platform was about 206 million users. Which is an increase of more than 10 percent year-on-year. (previously 186 million). However, given the reports from the billionaire about the unknown percentage of bots operating on the platform, it seems that the data may contain a large margin of error.
Emerging negative performance data from competitors including SNAP (Snap), and Meta platforms (Facebook), may give signals of an unfavorable market environment. Additionally, note that it seems to be harder for Twitter to monetize its business model relative to rivals.
What does Wall Street think of Twitter's stock?Source: Mt5, Twitter, Weekly
According to the Market Screener portal, the company has 33 recommendations, most of which are "Hold" recommendations. The average target price is set at $44.89, which is 17% lower than the offered takeover price. The lowest target price is at $22, and the highest is $54.2.
Grzegorz Dróżdż, Junior Financial Markets Analyst Conotoxia Ltd. (Cinkciarz.pl investment service)
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