Not Musk deal, monetization key for Twitter shareholders

Technocrat Elon Musk terminated the $44 billion deal to acquire Twitter after which the social media network sued the world's richest man for violation of the deal.

Twitter Inc has appealed to a Delaware court to order Musk to complete the merger at a value of agreed $54.20 per Twitter share.

Shares of Twitter, meanwhile, have seen a sharp decline of more than 50 per cent in the last one year. The scrip settled just a tad above $34 on Tuesday.

"Musk apparently believes that he - unlike every other party subject to Delaware contract law - is free to change his mind, trash the company, disrupt its operations, destroy stockholder value, and walk away," said the complaint.

Even Indian investors trading in the overseas counter are worried about the future of the social media major and its stock performance, which has been muted in recent times. However, investors' interest in the stock remains intact.

Viram Shah, Co-Founder and CEO, Vested Finance said there were many sellers of Twitter shares on its platform last week but Musk's decision has multiplied the number of net buyers by 15 times compared to the previous week. He said that the decision from Elon Musk has definitely had some impact but one must not jump the gun to reach any conclusion in a hurry.

On the other hand, Asheesh Chanda, Founder and CEO, Kristal.AI said that there was no noticeable impact on their platform. Investors are demonstrating a neutral response, for now, he said.

Last week, Musk terminated the deal saying that Twitter violated the agreement by failing to respond to requests for information regarding fake or spam accounts on the platform, which is fundamental to its business performance.

The decision to invest in any stock should be based on the company's fundamentals and not on the euphoria created by some buzz or news flow, Shah from Vested Finance advised.

"Twitter’s user growth and ad revenue are slowing. An overall slowing market may bring down ad spends across all social platforms. Monetizing users in these challenging times is a concern for all social media platforms," he added.

Musk's announcement has no bearing on the US market as a whole, said market experts. The acquisition seemed less driven by any business fundamentals and more by Elon Musk's desire to own the microblogging network, they add.

Market analysts suggested that Twitter shareholders can expect some volatility in the counter over a few months, thanks to the expectations of a long-drawn legal battle.

It was also not clear how the Twitter acquisition will complement Musk's existing businesses, Chanda added. "We believe that acquisition is still on the table, but the price may get renegotiated and one must brace for that," he said.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)