This was reported by an American firm known for betting against the share prices of companies Elon Musk may drop a lower rate for Twitter due to falling technology stocks and weak financial performance on the social networking platform.
Hindenburg Research said there was a “significant chance” that Tesla’s CEO would seek to pay less than the agreed-upon bid price of $ 54.20 (£ 43.90) per share, which valued Twitter at $ 44 billion. and was adopted by the company board.
“We support Mask’s efforts to take Twitter private and see a significant chance that the deal will be concluded at a lower price, ”Hindenburg said in a note released Monday.
It says the Nasdaq-dominated stock market has fallen sharply since the discovery of the world’s richest man. he made his initial share on Twitter on April 4th, given the lower share price for the social networking platform, the value of which was delayed by the takeover situation. Hindenburg said that if Musk leaves, Twitter shares could catch up with the negative sentiment around the Nasdaq and fall by 50%.
Hindenburg added that Twitter’s recent quarterly results were poor and were not taken into account in the stock, while Musk could pay $ 1 billion to drop the deal. The investment research firm has also dismissed speculation that Twitter could enforce the point in takeover agreement which required the multibillionaire to complete the deal.
“Mask has incredible leverage to influence the negotiations if he wants to,” said Hindenburg, who said he had taken a short position on Twitter. A short position is when an organization holds shares of a company in anticipation that the price will fall. The entity sells these shares and then expects to repurchase them at a lower price before returning them to the lender – to earn a profit.
Shares on Twitter fell 2.6% to $ 48.50 in trading in New York this afternoon.
Hindenburg said the deal as structured would leave Twitter in high debt and make it harder for Mask to achieve his goal of reducing the company’s reliance on advertising. Advertising accounts for 90% of Twitter’s annual revenue of $ 5 billion.
The deal goes partially funded through $ 27.25 billion in cash, of which $ 7.1 billion comes from Fr. a group of investors and the rest from Mask. Another $ 6.25 billion is in loans secured by Mask shares in Tesla, $ 13 billion in loan financing. Bank debt will cost Twitter about $ 800-900 million a year in interest payments.
Hindenburg became famous last year by taking an aggressive stance against special purpose companies, or Spacs, which are vehicles with letterheads that first attract money from investors and look for businesses to buy later.
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