Jefferies analyst Brent Thill believes Elon Musk’s intentions to terminate his buyout of Twitter (TWTR) are more based on the recent market selloff than the percentage of fake accounts or the company’s failure to comply with his requests. In the absence of a deal, the analyst thinks the stock could go as low as $23.50, implying nine-times estimated 2023 EBITDA. Attention will then turn to core fundamentals, which “have been rattled by this process and headwinds facing the online ad industry,” Thill tells investors in a research note. Given the potential downside to the stock in a no-deal scenario, Twitter’s board will be incentivized to renegotiate a deal, even if below the initial $54.20 bid price, contends the analyst. Thill sees Musk’s “unsubstantiated claims” that Twitter is misleading investors about the percentage of fake accounts as an excuse to back out of the deal. However, Musk’s concerns of ongoing employee turnover, layoffs and hiring freeze are warranted, contends Thill. The analyst keeps a Hold rating on the Twitter with a $40 price target. The stock in premarket trading is down 6% to $34.68.
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