The acquisition of Twitter (TWTR) by Tesla (TSLA) CEO, Elon Musk, has taken another turn that ensures investors remain glued to their seats as the saga unfolds.
Twitter has now sued the ‘Technoking’ of Tesla to make him go through with the $44 billion acquisition. The social media giant has accused Musk of outlandish and bad faith maneuvers that have significantly impacted Twitter’s share price.
Twitter shares rocketed from $32 levels in March to upwards of $51 in April after Musk agreed to acquire the company at $54.20 per share. Recently, though, Musk said Twitter had not provided enough details about the fake accounts on its platform, and Twitter’s share price is now back to $34 levels.
Twitter shares have now tanked 51.2% over the past year, and Wall Street is holding its breath too, with only one Buy and 24 Holds for the stock. The average price target for Twitter stands at $45.38, implying 33.24% potential upside.
Twitter’s Lawsuit
Twitter has filed its suit in Delaware Chancery Court to force the Dogefather to consummate the merger. The social media company has also accused Musk of repeatedly breaching the agreement terms.
Twitter minced no words, saying, “Having mounted a public spectacle to put Twitter in play, and having proposed and then signed a seller-friendly merger agreement, Musk apparently believes that he—unlike every other party subject to Delaware contract law—is free to change his mind, trash the company, disrupt its operations, destroy stockholder value, and walk away.”
The Wall Street Journal reported that Twitter is ready to hold a shareholder vote as soon as the middle of August, and Musk must consummate the transaction in the next two days.
What happens next is anybody’s guess.
Analyst Reiterates Hold for TWTR
Yesterday, Wedbush’s Daniel Ives reiterated a Hold rating on the stock while decreasing the price target to $30 from $43, which implies a nearly 12% further downside.
The analyst believes Twitter has a long-drawn fight ahead, which could stretch into 2023, and the situation could be a nightmare for the company.
Closing Note
The situation is challenging for Twitter, which will face the scrutiny of the bot issue in full public glare in court. How Mr. Musk navigates the legal challenge remains to be seen.
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