Buzz Update Elon Musk’s bid for Twitter is likely to face resistance TOU

Buzz Update Elon Musk’s bid for Twitter is likely to face resistance

 TOU

Elon Musk’s bid for Twitter is likely to face resistance

Trolling is widespread on social-media platforms, but when social media itself is trolled, it reaches a different level. Exactly the same thing happened to Twitter with Elon Musk’s enemy bit to take the company private with his $ 54.20 / share offer for the company. His offer company is valued at approximately $ 43 billion

This is a take it or leave it bid, indicating that he may not be interested in raising his offer price and may consider selling his current stake in the company for around 10% if his bid is rejected by the board / shareholders. The Board has a trusted obligation to take its proposal to the shareholders and make a decision.

At $ 54.20 Twitter value is 72 times CY22 PE and EV / EBITDA is 29 times and EV / revenue is 7.2 times. On the face of it, these are good multiples for investors to cash in on. Despite being one of the most popular and active social media apps worldwide, Twitter has failed to do justice to its monetization potential. This is exactly what Musk sees, too – he sees a lot of potential in Twitter after its transformation, and he believes it’s better when the company is private. However, the current board and management are unlikely to see it that way. They are likely to push back against the offer as Twitter has just embarked on a new transformational journey without Musk’s involvement.

CEO Parag Agarwal recently took over the company after founder Jack Dorsey decided to step down. Investors also saw this as a positive response to the stock on the announcement. Twitter had its IPO at $ 26 in 2013 and crossed $ 60 in a matter of weeks. The shares have been performing poorly since then and quoting far below the 2013/14 highs.

As mentioned above, the monetization of the user base is an issue and the value can be released if it is resolved. On an EV / DAU (Daily Active User) basis, Musk Twitter value for Facebook is at levels between $ 200 and over $ 300. Furthermore, it should be noted that Facebook has corrected significantly in recent months and its value on this metric is even greater. So the chances for Twitter‌ in this calculation are also huge.

Still, Musk is not the only person interested in buying Twitter. Software giant sales force also considered buying Twitter in 2017, but sales force shareholders backed down after expressing their dissatisfaction. Salesforce sees synergies between its marketing offers and marketing insights for consumers that can make money from Twitter’s user data and analytics. Salesforce CEO Mark Beanoff said it would be worth it if the controversy was ‘polished’ on Twitter.

So the Twitter board and management can try to sell the underlying value of Twitter to shareholders and point out why the Musk offer is not enough. Now another thing that is working against Musk’s bid for Twitter is that in 2018 he made a half – hearted hint that he wants to take Tesla private. The offer he intended (which has just been tweeted) did not go through. From the offer price quoted by Musk, Tesla shares gave 20 times the return. This is another item that the Twitter board can sell to its shareholders.

But one thing is certain. If Musk’s bid is rejected, Twitter may realize its full potential and cross the Musk offer price, but it will not be in a straight line. The share is likely to have a volatile path as it takes time to transform into the current form

Published

April 14, 2022

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