The Twitter market cap has fallen below the purchase price of the mask to 9 9 billion

On May 3, 2022, a Twitter logo and trading information were displayed on the floor of the New York Stock Exchange (NYSE) in New York City, USA.

Brendon McDermide | Reuters

As Elon Musk follows ownership of Twitter, shares of the social media company are declining, suggesting some concerns among investors that the deal will not reach the finish line.

Twitter fell nearly 13% after reaching its highest level of the year in late April. As the market closed on Thursday, the stock traded at $ 45.08, well below the 27 54.20 it agreed to mask on April 27th. The difference represents more than $ 9 billion in market value.

Although Twitter’s board has approved the purchase, the deal could take months to close and there is no guarantee it will happen. Musk will have to pay a বিল 1 billion breakup fee if he wants to leave. Tesla’s CEO is worth more than 220 billion.

Mark Mahani, an analyst at Everco’s ISI, said in an email that “there is little market confidence that the deal will go through because of the regulatory challenge, which is its” very quick explanation “of the stock movement.

Before Musk made his bid to buy Twitter directly, he failed to disclose more than 9% stake in the company within the mandatory 10-day window of the SEC.

The report states that the Federal Trade Commission is investigating the timing of Musk’s release. Bloomberg later said the FTC was separately reviewing the acquisition itself, although many experts did not expect the deal to raise concerns about mistrust.

The FTC did not disclose the ongoing investigation, and an FTC spokesman declined to comment.

Dan Ives, an analyst at Wadebush Securities, estimates that there is a 90% or greater chance of closing the deal with Musk, but he sees three things that put pressure on the stock.

For one, Twitter shares would only be worth less than $ 20 if it remained a public company. Second, he said regulatory issues cast a shadow over the agreement. Finally, Ives said that financing the acquisition of Musk, in part through its Tesla share advantage, presents greater risk and uncertainty.

Musk may try to address financing concerns. Bloomberg reported Thursday that it is in talks to raise equity and has opted for financing to meet its $ 6.25 billion margin loan requirement tied to its Tesla shares. CNBC did not confirm the report.

Ives said such a move would “give Street more confidence that the mask will not just go to the left if the pressure on Tesla shares is high.”

Ives expects more twists and turns.

“It’s a soap opera,” he said. “It will have many different chapters.”

Internally, Twitter could take steps to increase its balance sheet if Musk punishes inflationary pressures in the larger technology market. The company confirmed on Thursday that it was cutting most hiring, and said two top executives – Bruce Falk, head of consumer Kayvan Bekpur and head of revenue products – were leaving the company.

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