The Fate of Twitter Stock Remains up in the Air, Says Analyst

It began with a soap opera in April but came to a screeching halt with a nightmare on a Friday night in July.

That’s how the Twitter (TWTR) – Elon Musk saga is framed, according to Wedbush’s Daniel Ives. But after the headline-hogging saga had taken several twists and turns, Musk has told Twitter his offer to buy the micro-blogging platform for $44 billion is now off the table. Musk’s rationale for walking away from the acquisition is because Twitter has not “complied with its contractual obligations.”

As the contract had stipulated, Musk was supposed to be provided with the relevant business info he asked for. This mostly pertains to Musk wanting to dig deeper on Twitter’s claims that only ~5% of its accounts were spam. The Tesla CEO has claimed that figure is far below the real number. But Musk’s lawyer has now said Twitter has “failed or refused to provide” the information required, while at times, the info given was “incomplete or unusable.”

For its part, Twitter is still keen on the deal and will take the matter to the courts. But with a prolonged legal battle expected, and its reputation tarnished, Ives envisions a rocky road ahead for the social media company.

“For Twitter, being in a ‘Game of Thrones court battle’ with the richest person in the world is far from the vision the company (and its Board) saw in April when this deal kicked off with the Musk $54.20 bid. Now the worries are on multiple fronts for Twitter. Employee turnover, advertising headwinds, DAU metrics (with fake account/bot issue looming front and center) that the Street will be skeptical of after this fiasco, brand issues, strategy changes, and myriad of other issues from this earthquake unleashed,” Ives commented.

Not to mention, all this is taking place in a macro environment potentially very hostile to the digital ad space.

Therefore, anticipating further downside for the stock, Ives has lowered the price target from $43 to $30, implying shares will be changing hands for an 8% discount a year from now. Ives’ rating stays a Neutral. (To watch Ives’ track record, click here)

What does the rest of the Street think? All of Ives’ colleagues agree with his stance; based on Holds only – 23, in total – the analyst consensus naturally rates the stock a Hold. However, most expect the shares to push higher from here; going by the $49.40 average price target, the stock has room for 12-month growth of 51%. It will be interesting to see whether the analysts cut price targets or upgrade their ratings over the coming weeks. (See Twitter stock forecast on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.