Britta Pedersen | Getty Images It is not often that a company receives a takeover bid of 18% premium shares just to see its shares fall in the news. This happened on Twitter on Thursday, after Tesla CEO Elon Musk bid for the company for $ 54.20 per share, or about $ 43 billion. The stock fell 1.7% to close at $ 45.08 for a market capitalization of $ 34 billion. In other words, investors do not expect the deal to happen. Stifel analysts went so far as to downgrade the stock to a sale on Thursday, saying the company was facing a “fully developed Elon circus”. Musk has his fans, for sure, and is a legend in the world of technology that simultaneously turns Tesla and SpaceX into thriving and truly innovative businesses. But years of turmoil, advertising campaigns and unfulfilled promises have left Wall Street skeptical of Musk’s intentions and ability or willingness to follow, especially when it comes to big financial deals. Think again about “secured funding”. This was the tweet in August 2018 sent by Musk, stating that he was ready to privatize Tesla at the price of the weed lover of $ 420 per share (in case this explains the $ 54.20 offer for Twitter). It is also the tweet that led to a lawsuit from the SEC and a possible settlement that required a “Twitter maintainer” to pre-approve any of Musk’s tweets containing information about the company that could affect its share price. Tesla never went private and instead became one of the great stock bets of the next three years. On a segregated basis, shares have risen more than 1,300% since the tweet. Zoom Icon Arrows pointing outwards Tesla share from the tweet “secured funding”. CNBC Twitter is Musk’s preferred form of mass communication for everything from shouting cryptocurrencies to hitting politicians. He also continues to make announcements about Tesla technology on the site. And recently, it has been his favorite place to criticize Twitter itself for what it considers to be ignorance of the principles of free speech and certain technological restrictions. But buying the company? Analysts do not see it. “While we agree with Mr. Musk’s assessment that Twitter is a low-profit platform, we expect the board and major shareholders to resist the offer because of philosophical differences,” wrote Mizuho Securities analysts who have an equivalent holding rating in stock. One major concern the board could have, analysts said, is “the limited time Mr. Musk has to focus on Twitter as he is the CEO of various technology companies, including Tesla, SpaceX and The Boring Company.” Then there is the money. Musk is worth about $ 265 billion, according to Forbes, but almost all of his wealth is linked to his ownership of Tesla and SpaceX. It sold more than $ 12 billion worth of Tesla shares at the end of 2021, which is still a fraction of the $ 43 billion bidding price for Twitter. Prior to the Twitter bid, Musk had bought a 9.1% stake in the company this year for more than $ 2.6 billion. The stock rose 27% on April 4, the day Musk first unveiled material ownership. “My offer is my best and final offer and if it is not accepted, I will have to reconsider my position as a shareholder,” Musk wrote in his proposal to Twitter’s board on Thursday. Musk said in a statement to the SEC that he had hired Morgan Stanley as his financial adviser, but made no mention of collaborating with other financiers or companies that could help cover the bill. Later Thursday, Musk admitted he was “not sure” if he could actually buy Twitter. At TED2022 in Vancouver, Musk was asked by TED Chris Anderson if there was a “Plan B” if the proposal was rejected. Musk replied, “There is,” but declined to give further details. Anderson asked if Musk had “secured funding”, citing the infamous Tesla privatization tweet. “I have enough assets,” Musk said. “I can do it if possible.” Whether or not Musk makes a really serious effort to buy the social media company has created a significant distraction on the board, as he now has to consider the offer. The board met to discuss the offer on Thursday, and CEO Parag Agrawal reportedly told employees that the company was not “hostage” to Musk’s proposal. Based on the stock price reaction, Agrawal may have investors on its side. David Trainer, CEO of equities research firm New Constructs, said the offer was a “desperate attempt by Musk to get attention” and not a sincere attempt to add value. “He only offers to buy Twitter because Twitter is the place Musk is most popular,” Trainer wrote in an email Thursday. “Elon Musk brings no functional value to Twitter shareholders, other than being a rock star, which is not enough to transform Twitter in the long run.” ATTENTION: Elon Musk can attract investors with Tesla shares and net worth
