Elon Musk's sale of another $7 billion in Tesla stock makes his Twitter takeover more likely, Wedbush says

  • Elon Musk’s latest sale of $7 billion of Tesla stock means his deal with Twitter is more likely to close, according to Wedbush. 
  • Musk said he sold the stock to prevent emergency selling of his Tesla stake in case he is forced to buy Twitter.
  • “The situation has dramatically changed in our opinion heading into Delaware Court this October with the odds stacked against Musk winning,” Wedbush said.

It’s looking more likely that Elon Musk will be forced to close on his deal to buy Twitter after the world’s richest person sold $7 billion worth of Tesla stock, according to a Wednesday note from Wedbush.

Musk himself said on Twitter that his sale of Tesla stock over the past few days was “to avoid an emergency sale of Tesla stock” in the event that he is forced to buy the social media platform and some of his equity financing falls through.

According to Wedbush analyst Dan Ives, Musk’s Tesla stock sale is “writing on [the] wall [that a] deal could be in the cards,” the note said. Ives raised his Twitter price target to $50 from $30, just shy of Musk’s agreed upon buyout price of $54 per share, or about $44 billion.

“The Street and legal experts across the board view Twitter as having a ‘strong iron fist upper hand’ heading into the Delaware court battle this Fall after months of this fiasco and nightmare playing out since April,” Ives said, adding that “Twitter’s board is holding Musk’s feet to the fire to finish the deal at the agreed upon price.”

Musk has been attempting to back out of his agreed upon deal, which includes a signed contract that waived due diligence rights, arguing that there are more bots on Twitter’s platform than originally disclosed. 

Ultimately, Ives’ sees four different scenarios playing out for Musk and Twitter as they potentially seek a settlement before reaching the courtroom.

Scenario 1: “Deal ends, Musk pays $1 billion breakup fee and walks (very low likelihood in eyes of the Street).”

Scenario 2: “Specific performance’ uphold by the court; Musk needs to buy Twitter at $54.20 in the $44 billion agreed upon deal (high likelihood in the eyes of the Street).”

Scenario 3: “Musk needs to settle or pay significant damages to Twitter with Street ranges from $5 billion to $10 billion based on court ruling/trial trajectory (high likelihood).”

Scenario 4: Musk wins in Delaware and pays no breakup fee around fake account/bot information cited in 13D filing (very low likelihood).”

Ultimately, Twitter shareholders are expecting a deal to get done, as the stock price surged more than 4% on Wednesday following news of Musk’s Tesla stock sales. 

Leave a Reply

Your email address will not be published. Required fields are marked *