Tuesday (September 13) is set to be an action-packed day for Twitter (TWTR) followers.
For one, the company’s shareholders will vote on whether to accept or rebuff Elon Musk’s $44 billion – or $54.20 per share – takeover bid.
Wedbush’s Daniel Ives has no doubts regarding the vote’s outcome. “Shareholders are expected to overwhelmingly approve the deal ahead of the October 17th trial that kicks off between Twitter and Musk in Delaware Chancery Court,” said the 5-star analyst.
Musk has repeatedly tried to call off the acquisition and his latest attempt to cancel the deal took place on Friday when the billionaire’s legal team sent a letter to Twitter asserting it had violated the terms of the deal with the multimillion-dollar severance payment made to whistleblower Peiter “Mudge” Zatko. Twitter denies breaching any of its obligations.
Musk’s initial attempts to call the whole thing off centered on the claimthere are far more fake accounts on the platform than Twitter has disclosed. The next attempt leaned on Zatko’s allegations that Twitter does not really know how many spam and fake bot accounts are on its platform while the whistleblower also claimed the platform has major privacy and security issues.
Prior to Zatko’s claims, the odds seem stacked in Twitter’s favor, but the allegations have the potential to create a “Pandora’s Box scenario” for the micro-blogging platform.
More could potentially be gleaned on this issue tomorrow, too, as Zatko will testify in front of the Senate Judiciary Committee. The hearing will center on the alleged widespread security failures and Ives expects the Street to closely follow the proceedings.
Of all the current possible scenarios for how this affair will end, Ives thinks there’s a “high possibility” some form of negotiation takes place ahead of the court date. “Once both parties step into court its a high risk/high reward scenario for both parties with the major X variable now being the Zatko whistleblower claims,” the analyst summed up.
For now, Ives remains on the sidelines with a Neutral rating and $50 price target, based on the assumption of a deal “likely being done at this lowered price point.” That figure is ~21% above the current share price. (To watch Ives’ track record, click here)
It’s mostly Holds amongst Ives’ colleagues too; barring 2 Buys, all 16 other reviews recommend staying on the fence, all leading to a Hold consensus rating. However, most aren’t quite as optimistic where the share price is concerned; going by the $40.49 average target, the stock will stay rangebound for the foreseeable future. (See Twitter stock forecast on TipRanks)
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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.
