On Monday, May 9, EASTERN TIME, THE US short-selling agencyHindenburg Research believed that "Iron Man" Musk's acquisition of Twitter company faced a "significant risk of being re-priced", and Twitter, which was under pressure with the broader market in the morning session, fell more than 4.0% at one point.
Hindenburg Research noted in a note that the deal has seen a series of developments in terms of financing to board approval, but it is also weakening Twitter's position.
Despite the public's strong focus on the deal between Musk and Twitter, the market seems to be ignoring a key, evolving risk.
Musk has all the initiative. It is believed that if Musk's bid for Twitter disappears tomorrow, Twitter's market value will fall 50% below its current level. As such, we see this as a significant risk that Musk's acquisition of Twitter will be repriced at a lower price.
We support Musk's efforts to take Twitter private, but believe the deal is likely to close at a lower price.
The report notes that Musk could exit the deal for a $1 billion breakup fee, and if he does choose to do so, he has the bargaining chips to renegotiate and will also gain a greater advantage. In addition, Hindenburg Research also talked about Twitter's dismal earnings report.
In addition to broader market dynamics, Twitter's recent earnings performance represents a further downtrend that has not yet been counted in the stock price but will be counted in the event that Musk's offer is not completed.
In this regard, Musk himself directly on Twitter to shake back:
Interesting. Sometimes don't forget to look at the bright side of life!
Last December, the U.S. Department of Justice was plotting a massive crackdown on aggressive short sellers who violated various securities market rules. In February, the survey was expanded to more than 30 companies, including Hindenburg Research.