Twitter stock received another downgrade on Friday, fueled by the uncertainty surrounding the company’s pending acquisition by Tesla CEO Elon Musk.
Susquehanna Capital lowered its rating on the stock to Neutral from Buy, with analyst Shyam Patil explaining his reasoning in just one sentence.
“We are downgrading TWTR to Neutral given the pending takeover, associated uncertainty and disruption, recent financial results, and limited visibility into business trends,” Patil wrote.
He also lowered his price target to $45 from $50. Twitter stock was up 0.7% to $41.37 on Friday.
Musk had offered to buy Twitter for $44 billion, an offer that the social media giant begrudgingly accepted earlier this year. But a few months later, Musk said he was backtracking on the deal due to concerns over the number of daily active users. Twitter management has since filed a lawsuit against Musk in the Delaware Chancery Court, with the intent of holding him to the acquisition. Musk has since filed a counterclaim against Twitter.
Patil’s downgrade reflects the market’s wariness at the ongoing battle between Musk and the social media giant. As of July, 91% of analysts rated the shares a Hold, while only 3% continued to rate it a Buy and 6% a Sell. In March, 29% of analysts rated it a Buy.
A catalyst for the stock would be if the acquisition closes, while a failed bid would be a downside, Patil said.
Write to Sabrina Escobar at [email protected]
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