logologologologo
  • Home
  • Business
  • Markets
  • Exchange
  • Investment
  • Personal Finance

Bank of America details 3 ways Elon Musk’s Twitter takeover bid may end, and one is terrible for shareholders

Just 10 days ago, Elon Musk took what he called at the time a “passive” 9.2% stake in Twitter.

Shares of the social media giant soared in response, but that was just the start of the drama as that passive part didn’t last long.

On Thursday, Musk launched a hostile takeover bid for Twitter, revealing in an SEC filing his “best and final” offer of $43 billion, or $54.20 per share. The Tesla CEO says he wants to take Twitter private in order to ensure the platform stands for “free speech around the globe.”

“I believe free speech is a societal imperative for a functioning democracy,” Musk wrote in a letter to Twitter chairman Bret Taylor, according to an SEC filing on Thursday. “However, since making my investment I now realize the company will neither thrive nor serve this societal imperative in its current form. Twitter needs to be transformed as a private company.”

At the TED 2022 conference in Vancouver, shortly after announcing his Twitter bid, Musk added that the move is definitely “not a way to sort of make money.” But whether the world’s richest person is launching his takeover bid as a publicity stunt, to troll the Securities and Exchange Commission, or because he believes he can be an anti-censorship white knight isn’t important to Twitter investors.

For them, it’s a wild ride no matter the reasoning. And the move has left Wall Street analysts scrambling to predict what’s coming next.

In a note to clients on Thursday, Bank of America analysts, led by Justin Post, laid out three possible scenarios for how Musk’s takeover bid could move Twitter’s stock in the coming weeks—and one of them is unappealing for shareholders.

Scenario one
The first potential scenario Bank of America sees for Twitter: the board accepts the offer in its current form.

Analysts said they see this as a “lower-probability scenario” as Twitter’s board likely sees more potential in their company based on internal growth targets and historical valuations. After all, Twitter stock traded as high as $73.34 over the past 12 months.

The current offer is also “non-binding” which means it will likely require financing, leaving “significant uncertainties,” the analysts said.

Other top Wall Street analysts argue Twitter is likely to accept the offer, however. Wedbush’s Dan Ives said he sees this “soap opera” ending with Musk owning Twitter.

“It would be hard for any other bidders/consortium to emerge and the Twitter board will be forced to accept this bid and/or run an active process to sell Twitter,” Ives wrote in a Thursday note.

But some analysts aren’t so sure. Jefferies’ Brent Thill said that he suspects Musk will have to reconsider his offer if he wants Twitter’s board to bite.

“No board in America is going to take that number,” Thill told. “Bring the bid to $60 and then put together a constructive structure around how they would run it. Then maybe, but that’s what it’s going to take.”

Scenario two
The second scenario, according to Bank of America, involves Twitter’s board rejecting the current offer and agreeing to a sweetened price with Musk or another firm.

In this scenario, stockholders could expect a roughly 10% jump in the final bid price to $60 per share, the analysts said.

“Mr. Musk has indicated that the $54.20 bid is final, but the board has a duty to explore all options for getting a higher price,” the analysts wrote. “Other social media or tech companies could be interested in Twitter.”

Thill said a deal with another tech firm is unlikely, however, due to antitrust regulation.

“The government is going to say no to any large transaction even if the rest of tech wanted to do this,” Thill explained. “It’s hard to see who the next logical player will be.”

Scenario three
The final scenario Bank of America analysts flagged was the board rejecting the current and any revised offers, forcing Musk to abandon his takeover attempt.

The move wouldn’t be surprising given reports by tech news site The Information that suggest Twitter’s board views the current offer as “unwelcome,” and is willing to fight either for a better deal or to stay public.

If this happens, BofA analysts said investors should expect Twitter’s stock to fall to between $34 and $37. Given the stock’s current price of around $45 per share, BofA said investors believe there is a serious possibility Musk walks away from his bid altogether.

“We think that the board likely believes that Twitter has more than $54/share in value,” the analysts wrote, but it must also evaluate the company’s potential to reach its 2023 financial targets.

That would be 315 million daily active users and $7.5 billion in revenue versus the 217 million daily active users and roughly $5 billion in revenue it had in 2021. “There will likely be extra scrutiny on hitting these targets if the board rejects Mr. Musk’s offer,” they added.

Related posts

February 3, 2023

Here’s how — and where — Netflix has started cracking down on password sharing


Read more

Categories

  • Business
  • Content
  • Exchange
  • Inflation
  • Investment
  • Markets
  • Personal Finance
  • Technology
  • Uncategorized

Archives

  • February 2023
  • January 2023
  • December 2022
  • November 2022
  • October 2022
  • September 2022
  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021

Recent Posts

  • Where Will AMD Stock Be In 1 Year?
  • Here’s how — and where — Netflix has started cracking down on password sharing
  • 2 reasons Meta stock is exploding 20% after a whopper earnings miss
  • Apple earnings: What to expect from the iPhone maker
  • Bitcoin closes out best January since 2013

About Us

The Alpha Cut a Vida Street LLC Company
1404 N. Ronald Reagan Blvd.
Suite 1120
Longwood, FL 32750

Link

(843) 256-4375
https://thealphacut.com

Why Us

Terms & Privacy
Policy & Procedure
Disclaimer

This material is not an offering, recommendation, or a solicitation of an offer to buy or sell the securities mentioned or discussed, and is to be used for informational purposes only.
Any performance results discussed herein represent past performance, not a guarantee of future performance, and are not indicative of any specific investment. Due to the timing of information presented, investment performance may be adjusted after the publication of this report. There can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this communication will be profitable, equal any corresponding indicated historical performance levels or be suitable for your portfolio.
All data in this communication is provided for informational purposes only and is not intended for trading or investing purposes. We expressly disclaim the accuracy, adequacy, or completeness of any data and content provided by financial exchanges, individual issuers, their respective affiliates and business partners and shall not be liable for any errors, omissions or other defects in, delays or interruptions in such data, or for any actions taken in reliance thereon. You agree not to copy, modify, reformat, download, store, reproduce, reprocess, transmit or redistribute any data or information found herein or use any such data or information in a commercial enterprise without obtaining our prior written consent.
We make no express or implied warranties or representations and shall have no liability whatsoever with respect to any data contained herein. The data may not be further redistributed or used to create indices or other financial products. This report and the views expressed herein are subject to change at any time based upon market or other conditions (such as domestic and global economic trends) and are current as of the date of publication hereof. The information, analysis, and opinions expressed herein are for general information only and are not intended to provide specific advice or recommendations for any individual or entity.
We emphasize that Investment in the securities of smaller companies can involve greater risk than is generally associated with investment in larger, more established companies, and can result in significant capital losses that may have a detrimental effect on the value of your investments.
Forecasting represents predictions of market prices and/or volume patterns utilizing varying analytical data. It is not representative of a projection of the stock market, or of any specific investment.
Nothing contained in this material is intended to constitute legal, tax, securities or investment advice, nor an opinion regarding the appropriateness of any investment. The general information contained in this publication should not be acted upon without obtaining specific legal, tax and investment advice from a licensed professional.
Please remember that all investments carry some level of risk, including the potential loss of principal invested. They do not typically grow at an even rate of return and may experience negative growth.As with any structuring of a portfolio of investments, attempting to reduce risk and increase return could, at certain times, unintentionally reduce returns.
The information, analysis and opinions expressed herein are for general, impersonal information only and are not intended to provide specific advice or recommendations for any individual entity.

copyright © Alpha Cut 2021. All Right Reserved
The Alpha Cut a Vida Street LLC Company