Elon Musk spooked the market with his early Friday tweet that the Twitter, Inc. (NASDAQ:TWTR) deal is on hold. Wedbush analyst Dan Ives says there are three scenarios at play now:
- The Street will view the announcement as signaling that the deal could be falling apart.
- Alternatively, the development could suggest Musk is looking around to negotiate a lower bid price.
- It could also mean the Tesla (NASDAQ:TSLA) CEO is "simply walking away from the deal" with a $1 billion breakup fee.
He could be using Twitter's filing of spam accounts as a way to get out of the deal in a "vastly changing" market.
"The initial reaction will be positive for Tesla shares as now the Street will view the chances of a deal as less than 50%," Ives wrote in a note.
Related Link: Does Elon Musk's About-Face On Twitter Portend 'Game Of Thrones' Battle Ahead?
If Musk persists with his pursuit of Twitter, there could be a clear "renegotiation" on topics such as financing path, leverage of Tesla stock, prior financing partners, employee reaction, etc.
"The nature of Musk creating so much uncertainty in a tweet (and not a filing) is very troubling to us and the Street and now sends this whole deal into a circus show with many questions and no concrete answers as to the path of this deal going forward," the analyst said.
TWTR Price Action: Twitter shares were down 13.82% to $38.85 in premarket trading on Friday, according to Benzinga Pro data. Meanwhile, Tesla was advancing 6.11% to $772.45.
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