A Twitter short seller said on Friday after Elon Musk put an end to his $44 billion bid to buy the social media site with a bizarre tweet that claimed talks were “on hold”.
Short-seller Hindenburg Research wrote Monday that Musk “keeps all the cards” in the deal and may threaten to walk away if the company’s board agrees to a lower purchase price.
“Interesting,” replied a Musk at the time. “Don’t forget to look at the bright side of life sometimes!”
Then on Friday morning, Musk revealed that the deal was “temporarily on hold” due to concerns about “spam/fake accounts” – then insisted hours later that he was “still committed” to the purchase.
Hindenburg Research’s founder, Nate Anderson, claimed victory on Friday when Musk’s waffling caused Twitter’s share price to drop by a quarter early Friday before partially recovering.
“I am looking at the bright side of life this morning,” Anderson wrote.
Twitter shares were trading at $41.50 at midday on Friday, down 8% from the previous day and about 25% less than Musk’s marijuana-themed buyout price of $54.20 per share — indicating that Vol. The Street doubts the deal will be under it. Terms, if at all.
Hindenburg has a record of scathing criticism about overpriced tech companies including electric vehicle makers Nikola and Lordstown Motors, as well as controversial health insurer Clover Health.
When Hindenburg released its preliminary report on Twitter this Monday, the investment group revealed that it had taken a short position in the company, meaning it benefited from Friday’s decline.
“If Elon Musk’s bid for Twitter disappears tomorrow, Twitter’s equity will drop 50% from current levels,” Hindenburg wrote on Monday. “As a result, we see a significant risk that the deal falls short.”
“We support Musk’s efforts to take Twitter private and see a significant chance that the deal will close at a lower price,” Hindenburg said, adding that the deal has seen several developments — including funding and board approval. Involved – which could have weakened the position of the company.
Hindenburg said Musk could pay the $1 billion breakup fee and take advantage of renegotiating if he so desired.
Wedbush Securities managing director Dan Ives said Friday’s “Twitter circus show” meant Wall Street investors believed Musk could “negotiate a lower deal price.”
Even former President Donald Trump reiterated Hindenburg’s position on Friday, writing, “There’s no way Elon Musk is going to buy Twitter at such a ridiculous price.”
“If it weren’t for the ridiculous billion dollar breakup fee, Elon would have already been long gone,” Trump added in a post on his Twitter alternative website Truth Social.