CNBC
Billionaire Elon Musk’s reversal of his decision to join Twitter’s board opens the door to a hostile takeover and could lead to additional volatility in the stock, according to analysts.
Musk’s decision not to join Twitter’s board means he’s no longer limited to owning just 14.9% of the company. Now, many analysts suggest the Tesla CEO could bolster his stake and eventually try and establish control.
″[T]his weekend’s change-up spares the company from having to deal with a renegade director tweeting about board-level discussions. That would have been untenable,” Gordon Haskett Research Advisors’ Don Bilson wrote in a note Monday. “The flip side to this is TWTR must deal with a wild-card investor that already owns 9% of the company and has the resources to buy the remaining 91%. As volatile as Musk is, we could see a move like that made shortly. Or we could never see it all. This overhang that TWTR now lives beneath certainly qualifies as a distraction.”
Bilson pointed to Twitter CEO Parag Agrawal’s statement announcing Musk would no longer join the board, in which he warned employees of “distractions” ahead. Bilson told CNBC in a phone interview Monday that the company’s messaging was “sort of ominous.”
Ultimately, Twitter could decide to swallow a “poison pill,” or a shareholder rights plan to defend against a hostile takeover. But Bilson wrote such a measure comes with the risk it “might anger Musk and perhaps it would be best for TWTR to keep that arrow in its quiver for the time being.”
“It’s going to be pretty hard to get committed to an investment thesis because you never know where the winds are going to flow,” Bilson told CNBC. “I don’t think anything is off the menu with this guy.”
Wedbush Securities analyst Dan Ives offered a similar sentiment on Monday morning…
