The curious thing about the news at the time was that, a few days before it was made public, Musk had made some posts against the social network in question. The renowned businessman had been critical of the platform and its policies. In fact, he came to believe that the company was undermining democracy by not respecting the principles of freedom of expression.
In this way, several analysts were encouraged to argue that the Tesla CEO was planning to create his own social network. This is why, when it became known that he had bought Twitter shares, the news took a large number of investors by surprise.
The back and forth between Musk and Twitter management
Once the purchase of shares was completed, Twitter executives announced that they offered Musk a seat on the firm’s board of directors. However, the CEO of Tesla chose to reject this offer and has even continued to criticize the social network, even threatening to fire the managers through a publication he made from the same platform.
After the back and forth between Musk and Twitter executives, the businessman decided to double down and made a controversial offer to buy Twitter, arguing that the company has extraordinary potential and that he is the right person to unlock it. As it became known, the current richest man in the world prepared to offer up to a few $54.2 for each Twitter share, which would value the company at about 43,000 million dollars.
For its part, Twitter announced a measure with which it intends to delay or prevent the purchase by the CEO of Tesla. The maneuver, known as a “poison pill,” is basically a defense mechanism that seeks to protect the company against a possible hostile takeover.
This measure allows current shareholders to grant you the right to purchase additional shares at a discount. This strategy was initiated in order to prevent an investor from having more than a 15% stake in the company, which ends up effectively diluting the holding of the hostile party.
It should be noted that a takeover bid is considered hostile when one company attempts to acquire another against the wishes of that company’s management. Just like what happens in the case of Twitter.
What could Elon bring to the social network?
Now, after analyzing the context in which this entire dispute over the social network occurred, we must analyze what impact Elon Musk’s presence and participation in this company may have. From a corporate point of view, we should mention that Twitter is under some pressure to speed up the creation of new products.
Faced with a scenario where one of its main competitors, such as Facebookannounced last November a significant restructuring of his company with the development of the metaversethe birdie’s social network would seem to be running behind.
Additionally, it is worth remembering that Twitter set ambitious goals in terms of revenue and user growth, precisely with the aim of convincing investors that it was working on business expansion.
Nevertheless, Although it has been growing for the past several years, reported earnings for the past few quarters have been lagging industry peers.
This is where the figure of Elon Musk becomes vitally important. We must not forget that the eccentric businessman has managed to place Tesla as the main producer of electric cars worldwide, while developing state-of-the-art technology with the aim that in the not too distant future, fully electric cars will finally be possible. autonomous.
It is what Musk has done in his other companies that positively drives Twitter action. Namely, the potential that the social network that has almost 400 million users around the world can have, in the hands of one of the most innovative minds at the moment.
Is it advisable to invest at this time or wait for the conflict to be diluted?
For those interested in investing in Twitter, it is important to reiterate that after Elon Musk’s purchase of the 9.2% of all the shares, their price registered an increase of approximately 27%.
In this way, it managed to break upwards the resistance that was located in the 45 dollars. However, the main question is what we can expect in the coming months.
In the short term, perhaps the most prudent thing to do is wait for a definition on this topicas stocks have risen sharply in a relatively short time and any negative news could deal a serious blow to an investor entering from current levels.
In the event that Elon Musk manages to actually form part of the board, or acquires the necessary shares to be considered as the owner of the company, Twitter stocks could continue their uptrendin order to achieve in the long term, an objective around the 77 dollarsits all-time high.
However, if this does not happen, the stock of the little bird could return to the values prior to the purchase made by the eccentric owner of Tesla, in order to return to levels close to 30 dollarsthe point at which they were being marketed in March of this year. Therefore, given the context, we recommend staying out of the action.
Research Analyst at IOL Invested Online.
Source: Ambito
