Goldman advisers say “No Deal” to Musk’s Twitter bid

Elon Musk, Dogecoin enthusiast

Shares traded lower this morning as large banks’ earnings rolled in. Goldman Sachs (NYSE: GS), Morgan Stanley (NYSE: MS) and Citigroup (NYSE: C) all reported “beats” before the market opened. GS decreased slightly while MS and C increased higher.

But all three stocks remain well below their recent highs after being sold out over the past few weeks.

Overall, bank shareholders have had little to look forward to due to an always dysfunctional yield curve. Last quarter’s earnings did not change much.

This morning’s biggest story, however, was undoubtedly Elon Musk’s offer to buy 100% of Twitter (NASDAQ: TWTR) at $ 54.20 per share.

“I invested in Twitter as I believe in its potential to be the platform for freedom of expression across the globe, and I believe that freedom of expression is a societal necessity for a functioning democracy,” Musk wrote in a letter to Twitter’s chairman.

“But since I made my investment, I now realize that the company will neither thrive nor serve this societal imperative in its current form. Twitter must be transformed as a private company,” he continued.

As a result, I’m offering to buy 100% of Twitter for $ 54.20 per share in cash, a 54% premium over the day before I started investing in Twitter and a 38% premium over the day before my “investment is announced. My offer is my best and final offer and if it is not accepted, I have to reconsider my position as a shareholder.”

Musk concluded, adding that “Twitter has extraordinary potential,” and he “will unlock it.”

Twitter announced that its board would meet at. 10 EST to discuss the offer. Shortly before noon EST said company management would hold an “hands-on meeting” with employees to discuss Musk’s bid at 17 EST.

The offer was met with skepticism by many analysts.

“It seems hard to imagine that TWTR’s board would accept a $ 54.20 / shr. Bid given the stock was at $ 70 less than a year ago,” said Vital Knowledge founder Adam Crisafulli.

Others felt that Musk’s bid was merely a side show to serve as a diversion for Tesla’s (NASDAQ: TSLA) shareholders.

“The Musk bump in Twitter shares is likely to fade as investors realize that Musk is not responding to Twitter’s challenges with revenue generation and user experience,” said David Trainer, investment firm New Constructs CEO.

“Musk’s offer to buy Twitter is the latest development in a week-long saga that is simply a distraction from the many challenges that Tesla itself faces.”

But it was not all doom on Wall Street. Piper Sandler analysts called the bid “reasonable,” while Bloomberg observed that a competing bid would hardly exceed $ 50 billion. At $ 54.20 per share, Musk is seeking to take the company privately for a total of about $ 43 billion.

The most confusing answer came from Goldman Sachs, whose strategists were hired to advise Twitter’s board in relation to Musk’s offerings. They said $ 54.20 was too low to be taken seriously, but Goldman currently has a SELL rating of TWTR with a price target of only $ 30 per share. shares.

And ironically, the stock may well fall to $ 30 a share if Musk’s bid is rejected. He said that in the event that the board rejects his offer, he could sell his entire 9.2% stake in the company.

TWTR turned sharply after opening significantly higher this morning as investors began to price this in.

However, given the stock’s large slide over the past year, it is likely that many TWTR shareholders would welcome Musk’s offer. TWTR hit a new low in 2022 at $ 31.30 per share in late February. Most of its rally since then was driven solely by Musk’s announcement that he was buying 9.2% of the company.

It could even be argued that Musk is paying way too much to $ 54.20 per share since TWTR closed trading at $ 39.31 on April 1ststthe last trading session before Musk’s big revelation launched shares 27.12% higher than after Monday.

Still, many analysts believe that is not enough. We’ll probably find out if this is true after the board’s “hands-on meeting” with employees tonight. Until then, you can expect TWTR shares to remain rolled up while investors await the completion of Musk’s recent conquest.

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