There’s been a lot of talk about whether Elon Musk is truly serious about buying out Twitter (NYSE: TWTR), especially whether the company’s board will allow it or not. Recently we’ve seen how management has been preparing a “poison bill” strategy to dilute shares and prevent a Musk buyout.
However, the anti-Musk sentiments might not be as strong as first suspected. Twitter is supposedly in the midst of deal talks with Musk right now, although the outcome is still far from certain.
The two parties met on Sunday in order to discuss Musk’s $43 billion buyout offer. According to the Wall Street Journal, both parties were supposedly making progress, although they still had issues to hash out.
Experts had previously expected Twitter to reject the offer outright. However, after Musk revealed that he had indeed prepared over $46.5 billion in financing and stock, effectively proving he was serious, it seems Twitter has changed its stance once again.
The eccentric billionaire had also privately met with several top shareholders of Twitter, primarily through video calls, in an attempt to persuade them to change their tone. His main promise continues to be a revision of Twitter’s free speech policy, an issue that he sees as plaguing the platform.
Sources at the meeting didn’t mention any other specific details Musk might have in mind for the social media giant. However, he has mentioned wanting to reduce Twitter’s reliance on advertising in the past. There’s a lot of questions surrounding exactly how Musk can go about overhauling Twitter’s top and bottom lines.
Musk also said that he sees no way for Twitter to get its stock price anywhere near what he’s offering for it. Shareholders that have rallied behind Musk include Lauri Brunner, manager of a growth fund called Thrivent Asset Management, which owns a modest 0.4% stake in the $37 billion company.
“He has an established track record at Tesla. He is the catalyst to deliver strong operating performance at Twitter,” she said about the situation.
Elon has already said he’s considering taking his bid directly to shareholders via a tender offer. However, this still wouldn’t get around the company’s poison pill. If his offer doesn’t go through and the deal falls apart, Musk has also threatened to sell his entire stake, effectively triggering a massive selloff in Twitter stock.
Shares of Twitter were up 3.9% on Friday and are gaining another 1.2% in pre-market trading. While investors are keeping an eye out for how this whole situation settles, they’re also keen to see Twitter’s Q1 results later this week.
Analysts are largely mixed on Twitter’s prospects, given some issues it had in terms of user growth and monetization. Currently, only two analysts have a “buy” rating, while 24 are neutral and three are bearish.
Twitter Company Profile
Twitter is an open distribution platform for and a conversational platform around short-form text (a maximum of 140 characters), image, and video content. Its users can create different social networks based on their interests, thereby creating an interest graph. Many prominent celebrities and public figures have Twitter accounts. Twitter generates revenue from advertising (90%) and licensing the user data that it compiles (10%). – Warrior Trading News
