Hindenburg Research’s founder, Nate Anderson, coyly claimed victory on Friday after Musk’s waffling sent Twitter’s share price plummeting as much as a quarter early Friday before it partially recovered.
“I’m looking on the bright side of life this morning,” Anderson wrote.
Twitter shares were trading at $41.50 mid-day on Friday, which is 8% lower than the previous day and nearly 25% below Musk’s marijuana-themed buyout price of $54.20 a share — indicating Wall Street is skeptical the deal will go through under its current terms, if at all.
When Hindenburg released its initial report on Twitter this Monday, the investment group revealed it had taken a short position in the company, meaning that it likely profited from Friday’s plunge.
“If Elon Musk’s bid for Twitter disappeared tomorrow, Twitter’s equity would fall by 50% from current levels,” Hindenburg wrote Monday. “Consequently, we see a significant risk that the deal gets repriced lower.”
“We are supportive of Musk’s efforts to take Twitter private and see a significant chance the deal will close at a lower price,” Hindenburg added, arguing that the deal has seen a number of developments — including financing and board approval — which could have weakened the company’s position.
Hindenburg said Musk could walk away paying the $1 billion breakup fee and has leverage to renegotiate if he chooses to.
Wedbush Securities managing director Dan Ives said that Friday’s “Twitter circus show” means Wall Street investors believe Musk could be “negotiating for a lower deal price.”