Musk Offers a 100% Buyout of Twitter, Stock Booms then Falls
"Billionaire entrepreneur Elon Musk offered to take Twitter Inc. private in a deal valued at US$43 billion, lambasting company management and saying he’s the person who can unlock the “extraordinary potential” of a communication platform used daily by more than 200 million people.
The world’s richest person said he’ll pay US$54.20 per share in cash, 38 per cent above the price on April 1, the last trading day before Musk went public with his stake. The social media company’s shares were little changed at US$45.81 in New York on Thursday, a sign there’s skepticism that one of the platform’s most outspoken users will succeed in his takeover attempt.
Musk, 50, announced the proposed deal in a filing with the U.S. Securities and Exchange Commission on Thursday, after turning down the chance to take a board seat at the company. Musk, who also controls Tesla Inc., first disclosed a stake of about 9 per cent on April 4, making him the largest individual investor.
In an interview at a TED conference on Thursday in Vancouver, Musk said he’s not sure he’ll succeed with the acquisition, and indicated that he has a Plan B if Twitter’s board rejects his offer. He declined to elaborate." - read more on BNN here
Breaking Thoughts: As we outlined in last week's post when Elon had initially acquired 9% of Twitter, we had expected more developments as well as increased volatility in Twitter's stock which has so far proven correct. $TWTR popped to above $54 per share on this news and then declined to $44 before recovering back to the high $40s, as investors weigh the likelihood of a deal.
In response to this new offer the Twitter Board has activated the "poison pill" to dilute shares in order to make it difficult to acquire more than 15%. However, the Board itself owns very little TWTR stock, and founder Jack Dorsey has been highly critical of them on his Twitter while supportive of Elon's proposed changes.
Given Elon Musk and Jack Dorsey seem to be on the same page its possible that they could work together to make a deal happen. Other potential allies in this could be Peter Thiel (a long time free speech advocate) and Larry Ellison. Combined these four billionaires have a net worth of over $400 billion, more than enough to buy Twitter in the $40-50 billion range.
For current and future investors the stock will continue to be volatile as news comes out about this buyout offer as well as potential competitor buyouts (such as from Google), overall it seems unlikely for Twitter to survive in its current form given the level of interest.
Tesla Q1 Earnings This Week
"As usual, Tesla already disclosed its Q1 vehicle delivery and production numbers, which drives the vast majority of the company’s revenue.
Earlier this month, Tesla confirmed that it delivered just over 310,000 electric vehicles during the first three months of the year. That’s yet another all-time quarterly record for Tesla, the seventh in a row, and a massive result for a first quarter, which is generally weaker.
Delivery and production numbers are always slightly adjusted during earning results.
For revenue, analysts generally have a pretty good idea of what to expect, thanks to the delivery numbers. The Wall Street consensus for this quarter is $17.659 billion, and Estimize, the financial estimate crowdsourcing website, predicts a higher revenue of $17.866 billion." - read more on Electrek here
Major Earnings This Week
Tuesday April 19:
Interactive Brokers (IBKR): Expected Q1 earnings of $0.82 per share
IBM (IBM): Expected Q1 earnings of $1.38 per share
Netflix (NFLX): Expected Q1 earnings of $2.89 per share
Wednesday April 20:
ASML (ASML): Expected Q1 earnings of $1.79 per share
Carvana (CVNA): Expected Q1 earnings of $-1.42 per share
Lam Research (LRCX): Expected Q3 earnings of $7.56 per share
Rogers Communications (RCI): Expected Q1 earnings of $0.82 per share
Tesla (TSLA): Expected Q1 earnings of $2.26 per share
Thursday April 21:
AT&T (T): Expected Q1 earnings of $0.59 per share
Danaher (DHR): Expected Q1 earnings of $2.66 per share
Snap Inc. (SNAP): Expected Q1 earnings of $0.006 per share
Friday April 22:
American Express (AXP): Expected Q1 earnings of $2.44 per share
Verizon (VZ): Expected Q1 earnings of $1.35 per share
Major IPOs Expected This Week
None
See you next week!
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The Market News Reel for this week! Get the most important market news & updates for the week ahead! Major headlines, excerpts from news sources are shown above. "Breaking Thoughts" section is purely our opinion.