Why Elon Musk Capitulated On Twitter Deal And What Would Be The Hard Part For Him Now: Analyst Shares Thesis As He Ups Price Target

Zinger Key Points
  • The uncertainty that prevailed since April over the Twitter deal has almost come to an end following Musk renewing his interest.
  • Musk knew his chances of a victory in Delaware court were slim, Daniel Ives says explaining the rationale behind the development.

In a U-turn, Elon Musk decided to go ahead with the deal to buy Twitter Inc. TWTR for the originally agreed price of $44 billion.

The Twitter Ananlyst: To give effect to the development, Wedbush analyst Daniel Ives raised his price target for the Twitter stock from $50 to $54.20. The analyst maintained his Neutral rating on the shares.

The Twitter Thesis: Tesla Inc. TSLA bull Ives offered this take on the development in a note released late on Tuesday.

Musk’s Twitter deal will likely close over the next few weeks with minimal speed bumps, Ives said in the note. The consummation will happen once Twitter’s board officially accepts and pulls out the lawsuit from the Delaware court, he added.

“The soap opera now comes to an end with Musk owning Twitter at the original $44 billion price tag after this rollercoaster ride since April,” the analyst said.

See Also: Elon Musk's Purchase Of Twitter Will Be A 'Win-Win-Win,' Says Dogecoin Creator

Why Musk Went Ahead With The Deal: “Musk saw the writing on the wall,” Ives said, adding that the billionaire knew that his chances of a victory in Delaware were slim. Musk may have realized the best path was accepting the deal and moving forward, said Ives.

The easy part of the deal for Musk, according to the analyst, was buying Twitter. The hard part would be fixing it with monetization and subscriber engagement, which Ives termed a “Rubik’s Cube problem” for Twitter over the past decade.

Price Action: Twitter closed Tuesday’s session 22.24% higher at $52 and Tesla gained 2.90% to $249.44, according to Benzinga Pro data.

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Posted In: Analyst ColorM&ANewsSocial MediaPrice TargetReiterationGlobalAnalyst RatingsTechMediaGeneralDaniel IvesElon MuskWedbush
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