A few days ago, the short-selling agency Hindenburg Research said that Musk's acquisition of Twitter may face a major risk of being re-priced, and said that this is mainly because Musk holds the initiative to acquire Twitter. At the same time, it also believes that "if Musk announces his withdrawal from the acquisition of Twitter tomorrow, Twitter's market value will fall by 50% from the current level." But Musk responded, "Don't forget to look at the bright side of life!" ”
Previously, on April 25, Twitter announced that it would accept Musk's privatization proposal, agreeing to the latter's acquisition for $54.20 per share, a total of $44 billion, and the transaction is expected to be completed in 2022, which has become one of the largest privatization transactions in the world in nearly 20 years.
It is understood that Musk's acquisition of Twitter included a "break-up fee". According to the agreement, if Musk interrupts the acquisition of Twitter due to reasons such as not being able to obtain sufficient financing, it will need to pay a $1 billion "break-up fee" to Twitter, and if Twitter obtains a competitive offer or rejects the acquisition transaction, it will need to pay Musk a $1 billion "break-up fee".
Not long ago, Musk disclosed that he had received about $7.139 billion in financing commitments from Sequoia Capital, Fidelity Management and Research, and Qatar Holdings to support the $44 billion acquisition of Twitter.
However, Hintenburg Research recently said that it supports Musk to take Twitter private, but believes that the transaction is likely to be completed at a lower price, because as Musk's acquisition of Twitter has a series of progress such as board approval and financing commitments, Twitter's voice in the transaction is also gradually weakened, and Musk is likely to withdraw from the transaction at the cost of $1 billion in breakup fees and renegotiate the purchase price with Twitter. However, there are also views that the transaction is likely to be completed according to the original offer.
In addition, Hindenburg Research also mentioned Twitter's previously released first-quarter 2022 earnings report. In response, the agency said that "Twitter's recent earnings performance represents a further downward trend, which has not yet been counted in the stock price, but will be counted in the event that Musk's quote is not completed."
According to this earnings report, Twitter's revenue in the first quarter of 2022 was $1.2 billion, lower than the previous market expectation of $1.23 billion, up 16% year-on-year from $1.036 billion in the same period last year, and net profit was $513 million, a substantial increase from $68 million in the same period last year, and the net profit margin was 43%. In terms of business composition, Twitter advertising revenue for the quarter was $1.11 billion, up 23% year-over-year, while subscription and other revenue was $94 million, down 31% year-over-year.
It is reported that Twitter shares fell nearly 4% to $47.76 per share on Monday local time, which is also the lowest price since Musk announced in April that he would buy Twitter at $54.20 per share.
However, it is worth mentioning that in December 2021, the US Department of Justice rectified short sellers who violated the rules of the securities market, cracked down on short trading, and has rectified more than 30 related institutions in February this year, including Hindenburg Research.
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