Twitter stumbles after analyst sees price cut

Twitter shares fell as much as 4.1% Monday after Hindenburg Research, an investment research firm that focuses on activist short-selling, said it sees a “significant risk” that Elon Musk's proposed offer to buy Twitter for $44 billion gets repriced lower.

The share price recoverd just a notch and closed down 3.7%.

The billionaire disclosed an offer April 14 to buy Twitter for $54.20 a share and take it public.

Initially there was some skepticism over where the world's richest person would come up with the cash equity to fund the purchase.

But about 10 days later, Musk outlined his financing plans and the board agreed to the offer.

Hindenburg analysts said that “multiple developments have weakened the company's position” since then, “threatening the current deal dynamic.”

Hindenburg said it is short Twitter shares.

The researchers cited an ongoing meltdown in technology shares; Twitter's own weak first-quarter results, including restating several years of user numbers; and the prospect that Musk will sell his 9% stake if the deal doesn't come together.

“We are supportive of Musk's efforts to take the company private, and believe he could get it done, but see no reason why he should at these levels,” Hindenburg wrote.

The Nasdaq composite index has plummeted about 17.6% since the last trading day prior to Musk's disclosure of his stake on April 4.

Meanwhile Twitter has gained 23%.

“We believe if Elon Musk's bid for Twitter disappeared tomorrow, Twitter's equity would fall by 50% from current levels,” Hindenburg Research wrote. “Consequently, we see a significant risk that the deal gets repriced lower.”