Twitter: why do Elon Musk’s “hypotheses” lower the rating of the social network he wants to buy?

The more time passes, the less a buy-back agreement Twitter by Elon Musk according to the offer sent about a month ago, on April 14, seems plausible.

Several internal parameters, namely the current management of the social network at the blue bird, but also external, with Musk’s recurring statements, contribute to reducing the value of Twitter to the advantage of the billionaire.

Twitter’s credibility at stake

It’s no longer a secret for anyone for long weeks now, the truculent Elon Musk seeks to afford his favorite social network. But the conditions of this takeover combined with the more or less skilful but very often effective communication from the CEO of Tesla will certainly lead to a review of the rules of the game. Indeed, it is essential here to remember that the offer to purchase Tesla Twitter formulated by Musk a month ago is equivalent to a repurchase of all shares on the stock exchange of the social network for a total of 44 billion dollars, or 54.20 dollars per share.

While the initial buzzword following Musk’s bid previously helped boost Twitter’s value, water has flowed under the bridge since then. It must be said that confidence in the success of the transaction diminishes as time passes, and today Twitter’s stock is only $40, 14 points lower than a month ago. . Musk’s first hypothesis, that 90% of social network users could be bots or fake accounts, strongly discredits Twitter.

Buy 44 billion dollars a social network populated by ghost users, that’s enough to cool all those and those who can believe it. Mechanically, this influences the share price, since listing on the stock exchange in such a deleterious climate reduces market confidence and amplifies sales without many buyers. As if by magic, Twitter is not “worth”, this May 16, more than 44 but 36.8 billion dollars.

Elon Musk (almost) always achieves his goals

Perfect therefore to suspend its offer, despite the clause of one billion dollars to be paid by Musk if the takeover under the current terms is not effective. But that’s not all, since the economic health of Twitter is not at its best either. The $537 million in losses in the fourth quarter of 2021 combined with the recent layoff of two senior analysts are adding millstones to Twitter’s feet. It must be said that, during the last three years, the social network would have overestimated its number of active users according to The Verge.

Between chilly markets, in a context of war in Ukraine and after the last two years of pandemic, not to mention the growing uncertainties about the veracity of the information transmitted by Twitter, the rating of the social network can, for the time being, only drop . To the misfortune of some, and the happiness of others, including Musk. Craig Huber of Huber Research Partners sums it up nicely. The Verge : “ Our view is that Elon Musk […] will go all the way by buying Twitter. As he has demonstrated time and time again, he knows what he’s doing “.

Sources: The Verge (1) , The Verge (2) , WCCFTech