Twitter, which has just been affirmed by Guo Mingyu, a securities analyst at Tianfeng international and the best apple analyst, and can realize Musk's grand blueprint, was blasted by bears in the afternoon. In late April, twitter announced its acceptance of Musk's $44 billion acquisition proposal. On Monday, May 9, US Eastern time, Hindenburg research, a US short seller, believed that the transaction of "Iron Man" Musk's acquisition of twitter faced a "significant risk of being repriced", and twitter, which was under pressure with the market in the morning, once fell by more than 4.0%.
Hindenburg research pointed out in a report that the deal has made a series of progress from financing to board approval, but it is also weakening Twitter's position.
Despite strong public attention to the deal between musk and twitter, the market seems to have overlooked a key and developing risk.
Musk has all the initiative. I believe that if Musk's bid for twitter disappears tomorrow, the market value of twitter will fall by 50% from the current level. Therefore, we believe that this is a major risk that Musk's acquisition of twitter will be repriced at a lower price.
We support Musk's efforts to privatize twitter, but believe that the deal is likely to be completed at a lower price.
The report points out that musk may withdraw from the transaction with a breakup fee of $1 billion. If he really chooses to do so, he has the chips to renegotiate and will gain a greater advantage. In addition, Hindenburg research also talked about Twitter's poor financial results.
In addition to broader market dynamics, Twitter's recent earnings performance represents a further downward trend, which has not been included in the stock price, but will be included if Musk's quotation is not completed.
Twitter's first quarter results showed that its revenue in the first quarter was $1.2 billion lower than market expectations, and admitted that it had exaggerated user data for "wrong reasons" for three years. In addition, when it announced its results at the end of April, twitter also cancelled this regular earnings conference call. At the same time, twitter said it would not provide forward-looking guidance and would withdraw its previously provided goals and prospects.
In this regard, musk himself directly replied on Twitter:
Interesting. Sometimes don't forget to look at the bright side of life!
Last December, the US Department of justice was planning a large-scale crackdown on radical short sellers who violated various securities market rules. In February this year, the scope of the survey has been expanded to more than 30 companies, including Hindenburg research.