Wall Street expresses doubts about Elon Musk's Twitter takeover proposal.

• On Thursday, when Elon Musk proposed to purchase Twitter at a 18% premium, the stock's value decreased.
• Little was disclosed by Musk regarding the financing of the deal and the individuals he would seek assistance from.
• Stifel analysts have downgraded the stock due to the ongoing "Elon circus" at the company.

Often, a company experiences a decline in stock prices after receiving a takeover bid that offers an 18% premium.

On Thursday, after CEO Elon Musk submitted a bid to buy the company for $54.20 a share, or about $43 billion, the stock dropped 1.7% to close at $45.08 for a market cap of $34 billion.

Stifel analysts downgraded Tesla stock to a sell on Thursday, citing the ongoing Elon Musk drama as a "full blown circus."

Despite his legions of followers and his success in turning Tesla and SpaceX into innovative businesses, years of bluster, hype, and unfulfilled promises have left Wall Street skeptical of Musk's intentions and his ability or willingness to follow through, especially when it comes to big financial deals.

In August 2018, Musk tweeted that he had secured funding to take Tesla private at $420 a share, which was later revealed to be a price influenced by his love for marijuana. This tweet led to a lawsuit from the SEC and resulted in a settlement requiring a "Twitter sitter" to review Musk's tweets about the company's stock price.

Tesla's stock has increased by over 1,300% since the tweet, and it was never taken private.

Elon Musk has surpassed Jeff Bezos as the world's richest person while running multiple companies and being an active Twitter user with 81.7 million followers.

Twitter is where Musk communicates his views on various topics, including crypto tokens, politicians, and Tesla's technology. He also frequently uses the platform to criticize Twitter itself, particularly regarding free speech principles and technological limitations.

But buying the company? Analysts don’t see it.

Analysts at Mizuho Securities, who have a hold rating on Twitter stock, agree with Mr. Musk's assessment that the platform is under-monetized. However, they expect the Board and key shareholders to resist the offer due to philosophical differences. One concern the board could have is the limited time that Mr. Musk has to focus on Twitter as he is CEO of various technology companies, including Tesla, SpaceX, and The Boring Company.

Although Musk's net worth is estimated at $265 billion by Forbes, almost all of his wealth is invested in his ownership of Tesla and SpaceX. In late 2021, he sold over $12 billion worth of Tesla stock, which is still a small fraction of the $43 billion offer price for Twitter.

This year, prior to the bid for Twitter, Musk had already purchased 9.1% of the company's outstanding shares for over $2.6 billion. On April 4, the day of Musk's initial disclosure of material ownership, the stock soared 27%.

If my offer is not accepted, I may have to reevaluate my position as a shareholder, as stated in my proposal to the Twitter board on Thursday.

Musk admitted in a filing with the SEC that he hired a financial advisor but did not mention partnering with other financiers or firms to fund the acquisition. Later, Musk acknowledged that he is uncertain if he will be able to purchase Twitter.

During the TED2022 conference in Vancouver, Musk was questioned by TED's Chris Anderson about a "Plan B" if the proposal was rejected. Musk responded, "There is," but he did not provide further details.

Anderson queried about Musk's "funding secured" status, referring to the notorious tweet regarding taking Tesla private.

"If possible, I have the necessary assets to accomplish it," Musk stated.

The board met to discuss Musk's bid on Thursday, and CEO Parag Agrawal reportedly informed employees that the company was not being held hostage by Musk's proposal.

According to David Trainer, CEO of New Constructs, Musk's bid may be a desperate attempt to gain attention rather than an honest effort to add value.

Trainer stated in an email on Thursday that Musk's popularity on Twitter is the only reason he is willing to buy the platform, and that his lack of operational value to shareholders makes it unlikely that he can transform the company in the long run.

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