Twitter has sued Tesla’s CEO Elon Musk after he backed out of the deal to acquire the company. Meanwhile, as the drama over Musk’s Twitter acquisition drags, analysts have been turning bullish on Tesla stock.
Tesla will report its second-quarter earnings this week, and Twitter will do the same. The conflict between the two is becoming more intense every day. Twitter wants the court to handle the case quickly, while Musk is pushing to postpone the trial until 2023. Musk withdrew from the deal, claiming there were fake accounts on Twitter and that the company fired some executives without his consent.
On the other hand, Twitter wants Musk to stick to his promise and purchase the company for $44 billion as he initially intended. It’s worth noting that Musk was eager to buy Twitter at first, even though the company’s board rejected his offer. According to the agreement, if either side backs out of the deal, they must pay a $1 billion penalty. However, Twitter has taken legal action against Musk for “specific performance” and is asking him to go through with the acquisition.
Musk offered $54.20 per share for Twitter which was a steep premium to the microblogging company’s then prevailing stock price. The price has “420” in it which is a reference to cannabis. US cannabis stocks have been quite volatile over the last week amid the chatter over the marijuana legalization bill making headway in Congress.
Deutsche Bank sees Tesla stock as a buy
Several analysts have been apprehensive about Tesla amid the Twitter acquisition drama. Many believe that it would be a distraction for Musk. The slowing economy is also making some analysts cautious about Tesla and even Adam Jonas of Morgan Stanley, who is arguably the face of Tesla stock bulls on Wall Street, also lowered his target price.
Deutsche bank meanwhile sounds bullish on the stock heading into the earnings and added Tesla to its short-term buy list. The brokerage believes that the company would reiterate its delivery guidance during the earnings call. The EV (electric vehicle) maker reported a fall in its second-quarter production amid the lockdowns in China. It also took planned downtime this month.
Notably, Tesla, which has held the crown of the world’s largest EV company, lost the title to Chinese company BYD Motors. The latter reported a four-fold rise in deliveries in the first half of 2022 and delivered 641,350 new energy vehicles which were far ahead of the 564,743 that Tesla delivered.
Twitter Stock Has Been Weak after Musk Declined to Buy the Company
Twitter stock crashed after Musk walked out of the deal to buy the company. However, DWAC, the SPAC (special purpose acquisition company) that is taking Donald Trump’s TMTG (Trump Media & Technology Group) public, rose after the announcement. DWAC is facing multiple investigations, inlcuidng from the US SEC.
TMTG has launched its social media platform called Truth Social, which is live on the Apple app store. Truth Social has been trying to capitalize on Trump’s popularity. Trump’s Twitter account was suspended in 2020 following the Capitol Hill violence. Truth Social has gained some traction among conservatives but otherwise, many have been complaining about the user experience of the Twitter-lookalike. On his part, Musk offered to restore Trump’s Twitter account, but the former President turned down the offer.
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