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Elon Musk Has Another Reason To Walk Away From Twitter Takeover

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Elon Musk Has Another Reason To Walk Away From Twitter Takeover



Updated at 9:23AM ET

Twitter (TWTR) – Get Twitter, Inc. reports Shares tumbled on Tuesday, offering Tesla (TSLA) – Get Tesla Inc report As social media stocks gain traction in Snap Inc. (SNAP) – Get Snap, Inc. Class A Reports Surprise profit warning.

Snap, which makes the Snapchat messaging app, warned in a filing with the U.S. Securities and Exchange Commission late Monday that the group’s reported sales and profits could be “below the low end of our second-quarter 2022 guidance range,” in part The reason is that the global “deteriorating” economy will hit ad spending.

Social media groups also warned that Apple’s (AAPL) – Get Apple Inc. Report Identifier for Advertisers (IDFA) privacy changes have made it more difficult to track and target users with specific ads, impacting both user growth and revenue growth.

Shares of Snap tumbled nearly 30% in premarket trading, pulling various social media stocks, including Twitter, whose revenue model consists almost entirely of ad sales, sharply lower.

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Wedbush analyst Dan Ives said Snap’s “disaster” not only reminded investors of “the do’s and don’ts of the tech world,” but it could also prompt a mass capitulation by Musk, who has said he Is “on hold” his Twitter acquisition desire. The battle over the size and scope of fake accounts on Weibo.

“In Wall Street’s view, a sudden catastrophe could bring Musk one step closer, or lower the price of the deal,” Ives aided Tuesday. “Tomorrow’s Twitter shareholder meeting will be interesting as the soap opera continues.”

Meanwhile, KeyBanc Capital Markets analyst Justin Patterson said the current takeover saga “would or won’t” “could be a distraction and exacerbate headwinds for brand ad spending.”

Shares of Twitter fell 2.4% in early trade Tuesday, changing hands at $36.89 a share, a move that would give it a market value of about $28 billion and about 36% below Musk’s “best and final” offer. Tesla shares fell 4.3% to $646.03 per share, giving it a market value of about $670 billion.

Twitter reiterated its commitment to the proposed acquisition in last week’s SEC filing — at $54.20 a share — while Musk said at a conference in Miami that he may still be interested in a lower deal , despite his concerns about the number of so-called bot accounts on the platform.

Earlier this month, analysts at prominent short-seller Hindenburg Research warned that the deal could be “repriced” if Musk threatened to leave.

Hindenburg said Musk could pay the $1 billion breakup fee associated with the acquisition and that he could still strike a better deal if he renegotiated, noting his “significant influence” over the microblogging site and lack of competitors supply.

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