"Musk holds all the cards here," Hindenburg, which
has a short position on Twitter, said in a report. "If Elon Musk's bid for
Twitter disappeared tomorrow, Twitter's equity would fall by 50 percent from
current levels. Consequently, we see a significant risk that the deal gets
repriced lower."
Shares of the social media platform were down as much as 4
percent amid a broader market decline and touched $47.76, their lowest level
since Musk made his $54.20 per share offer in April, calling it "best and
final".
Twitter declined to comment.
"Interesting. Don't forget to look on the bright side
of life sometimes!" Musk tweeted in a light-hearted response, to which the
short-seller said it expects Tesla shareholders will thank him if the deal is
done at a "more reasonable price".
Hindenburg said the deal has seen a number of developments,
from financing to board approval, which could have weakened Twitter's position.
"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 said.
The short-seller said Tesla chief executive could walk away
paying the $1 billion breakup fee and has an incredible leverage to renegotiate
if he chooses to.
Last month, Twitter secured a $44-billion cash deal to sell itself to Musk, who received over $7 billion in funding from high-profile investors, including Oracle's co-founder Larry Ellison and Sequoia Capital.
Angelo Zino, analyst at CFRA Research, said there is a high
probability that the deal would close at the stated offer price, except if Musk
has a change of heart. © Reuters