Musk, Twitter “fireworks” could come at the annual shareholder meeting: Analyst

One Wall Street analyst predicts “fireworks” between Tesla CEO Elon Musk And Twitter The board of directors at the social media giant’s upcoming annual shareholder meeting on Wednesday.

“Twitter will have its annual shareholder meeting this Wednesday and it will definitely start some fireworks between the Musk and the Twitter Board,” Dan Ives, a securities analyst at Wedbush Securities, wrote in a note to clients Monday night. “Obviously the elephant in the room at the Twitter shareholder meeting will be Musk’s $44 billion deal price for the company with shareholders the board of directors has encouraged to vote for this signed deal.”

Although the Twitter board of directors accepted your touch $54.20 per share offer To make the company private, the deal is now temporarily on hold The billionaire asked the company to show how it calculates an internal estimate that spam and fake accounts make up less than 5% of the platform’s users.

Musk who said that the deal “Can’t go forward” Until transparency is provided, fake and spam accounts may form At least 20% of platform users.

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Twitter CEO Parag Agrawal said on May 16 that it will be It is difficult to conduct an external review To determine the percentage of fake accounts and spam on the platform “due to the urgent need to use public and private information.”

“Our estimate is based on multiple human reviews (in replication) of thousands of accounts, which are sampled randomly, consistently over time, from *accounts we consider mDAUs*. We do this every quarter, and we do it for many years.” “Each human review is based on Twitter’s rules that identify spam and platform manipulation, and use public and private data (eg IP address, phone number, geolocation, client/browser signatures, what the account does when it’s active…) to identify each account.”

In the First quarter of 2022Twitter’s daily active user base (mDAU) grew 15.9% year-on-year to 229 million users, including 39.6 million daily active users in the United States and 189.4 million international daily active users.

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Although Musk’s acquisition of Twitter is currently It is expected to close In 2022, the stock is currently trading well below its bid.

He said during the All In Tech conference in Miami earlier this month that a viable deal for Twitter at a lower price would not be “out of the question.” However, Twitter He said “Committed to completing the transaction at the agreed price and terms as quickly as practicable.”

Tesla CEO Elon Musk speaks at the grand opening ceremony of the Tesla Giga Texas manufacturing “Cyber ​​Rodeo” in Austin, Texas, on April 7, 2022. (Photo by Susan Cordero/AFP via Getty Images) (Susan Cordero/AFP via Getty Images/Getty Images)

“If the deal is renegotiated behind closed doors, the actual transaction price of $54.20 will likely be much lower in the mid-$40s in the eyes of the street,” Ives predicts. “However, we believe that shareholders will clearly raise this hot issue at the meeting this week as it is the firm’s view of the Twitter Board of Directors that the transaction has been completed and is subject to regulatory and shareholder approval.”

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If Musk withdraws from the deal, he will have to pay a $1 billion dismantling fee and could be subject to additional lawsuits for damages.

“We believe there is currently a 60% chance that Musk will attempt to bot and use this spam account issue as a scapegoat to get out of the deal and a 40% chance that Twitter and Musk will reach a new deal price over the coming weeks,” Ives added.

He stressed that accepting a lower bid from Musk would be a better alternative than a standalone situation, citing major market pressures for tech stocks along with Snap’s recent “disaster” quarter. In addition, he noted that the Twitter deal was a “significant burden” on Tesla stock and that Musk needed to make a quick decision on whether to abandon the existing deal, renegotiate or pursue it with investor impatience.

Wedbush Securities currently has a “Neutral” rating on Twitter stock, with a 12-month price target of $54 per share, and a “Outstanding” rating on Tesla stock, with a 12-month price target of $1,000 per share.