The will-they-won’t-they saga between Twitter (TWTR) and Elon Musk looks close to finally being resolved.
After a judge decreed earlier this month that the deal must close by October 28 or a trial will be held, Musk appears to have opted out of a day in court after it was widely thought he would likely lose the case.
Musk has now signaled he is ready to come good on the deal which will see him fork out $44 billion to buy Twitter as agreed upon previously between the two parties.
With Cinderella “finally getting the glass slipper that fits,” Wedbush analyst Daniel Ives thinks the new footwear is rather on the expensive side.
“The $44 billion price tag for Twitter will go down as one of the most overpaid tech acquisitions in the history of M&A deals on the Street in our opinion,” the analyst said. “With fair value that we would peg at roughly $25 billion, Musk buying Twitter remains a major head scratcher that ultimately he could not get out of once the Delaware Courts got involved.”
Musk still needs to come up with the money for the deal, which Ives thinks he has procured by selling some of his Tesla stock this week, a move which should finally remove the “overhang” on Tesla for its frustrated investors.
Buying the microblogging platform is the easy part, says Ives. More of an issue is the “Everest-like uphill battle looking ahead” needed to mend the “troubled asset.”
What needs to be done? Reports surfaced recently that Musk has said he intends to cut the workforce by as much as 75%. On a less brutal note, Ives thinks that big questions will remain around “changes to the platform, monetization efforts, and the long-term strategy around the “X” App,” once Musk takes over Twitter on Friday.
All told, Ives maintains a Neutral rating on the shares, while his price target is the deal price of $54.20, which suggests shares will remain rangebound for the foreseeable future. (To watch Ives’ track record, click here)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
