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Creating a New Platform is a Must says Analyst as Musk Teases Turning Twitter into Super 'X' App

October 5, 2022 6:37 AM EDT
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Price: $53.70 --0%

Rating Summary:
    10 Buy, 47 Hold, 5 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 8 | Down: 33 | New: 18
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Shares of Twitter (NYSE: TWTR) closed over 22% higher yesterday after Elon Musk committed a u-turn and said he plans to close the $44 billion deal at the original price. As always, Tesla (NASDAQ: TSLA) CEO took to Twitter to discuss his latest moves, this time saying that buying Twitter will accelerate “creating X, the everything app.”

Responding to a comment from a user saying “I think it would have been easier to just start X from scratch tho,” Musk replied:

“Twitter probably accelerates X by 3 to 5 years, but I could be wrong.”

For Stifel analyst Mark Kelley, building an “all-in-one app” is the only way forward for Musk.

“We believe the company he may soon own is considerably less attractive at this point, with a steady drum beat of departures across the ranks and a product that has been in limbo since April when the deal was originally announced. As such, utilizing the underlying technology as a means to create a “new” platform is a must, in our view,” Kelley told clients in a note.

Moreover, if Musk really gets rid of ads on the platform, Kelley sees this potential development as marginally positive for other social media platforms, mostly Snap (NYSE: SNAP) and Pinterest (NYSE: PINS).

In the meantime, Wall Street analysts have reflected on yesterday’s developments and Musk’s surprising u-turn. Here are the thoughts from three Twitter analysts.

Citi’s Ronald Josey (raises PT to $54.20 from $40): “While there remain some unknowns around the transaction, we believe the transaction is now likely to close which is also likely to improve overall operations going forward.”

Wedbush’s Daniel Ives: “This is a clear sign that Musk recognized heading into Delaware Court that the chances of winning vs. Twitter board was highly unlikely and this $44 billion deal was going to be completed one way or another. Being forced to do the deal after a long and ugly court battle in Delaware was not an ideal scenario and instead accepting this path and moving forward with the deal will save a massive legal headache.”

Stifel’s Mark Kelley: “This is yet another surprising twist in the ongoing back and forth between the company and Mr. Musk, but it’s likely the last change of course, in our view. We find it hard to believe that Musk is more comfortable with the growing list of concerns he highlighted as a means to back away from the proposed transaction (bots, spam, security concerns) and we believe he had come to the realization that he would likely be forced to proceed in the end.”

By Senad Karaahmetovic



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