Elon Musk Has The Upper Hand To Strike A Lower Twitter Stock Price Deal

Twitter stock continues to decline. (photo: doc. pixabay)

JAKARTA - Hindenburg Research warned Monday, May 9 that Elon Musk's $44 billion bid to make Twitter Inc a private company could be undervalued if the world's richest man leaves the deal.

"Musk holds all the cards here," Hindenburg, who has a short position on Twitter, said in a report. "If Elon Musk's bid for Twitter were to disappear tomorrow, Twitter equity would be down 50% from current levels. As a result, we see a significant risk that the deal will be priced lower."

Shares of the social media platform have fallen as much as 4% amid the broader market decline and touched a price of 47.76 dollars per share. This is the lowest level since Musk made an offer of 54.20 per share in April. Elon at the time called it "the best and final". While Twitter declined to comment.

"Interesting. Don't forget to look on the bright side of life sometime!" Musk wrote in a tweet in response. Hindenburg Research said they hoped Tesla's shareholders would thank him if the deal was done at a "more reasonable price".

Hindenburg said the deal had seen a number of developments, from financing to board approval, that could weaken Twitter's position.

"We support Musk's efforts to make Twitter a private company and see a significant opportunity the deal will close at a lower price," Hindenburg said.

Hindenburg Research said Tesla Inc's chief executive could cancel the deal and pay a $1 billion breakup fee and then have extraordinary leverage to renegotiate it if he wanted.

Last month, Twitter secured a $44 billion cash deal to sell the company to Musk, who received more than $7 billion in funding from high-profile investors, including Oracle co-founders Larry Ellison and Sequoia Capital.

Angelo Zino, analyst at CFRA Research, said there is a high probability that the deal will close at the stated offering price, unless Musk changes his mind.