Wedbush Securities Analyst Dan Ives joins Yahoo Finance Live to discuss Elon Musk's bid to own Twitter and what this could mean for Snapchat and Meta.
Video Transcript
JARED BLIKRE: Big takeover bid from Elon Musk. $54.20 a share, funding secured by the world's richest man. And we have Dan Ives, Wedbush Securities, analyst here to break it all down for us. Dan, news of the day here. What's your quick take? What's your hot take on this story?
DAN IVES: I mean, quick take is, this is not just some side project I mean, this is corporate raider style. Musk is looking to own Twitter. And I ultimately believe, for the board, it's their worst nightmare. Backed against the wall, they either accept this bid or go around the globe looking for another one. But ultimately, the Twitter story that we've all known-- I think that clock just struck midnight.
BRIAN SOZZI: Dan, why is it their worst nightmare? Wouldn't a Twitter owned by a guy trying to change the world, whether it's rockets and EVs-- isn't that good for the platform.
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DAN IVES: Oh, it's very good for the platform. And I think that's how many individuals would read it. For the Twitter board, the fact that now Musk basically looks to be-- and we believe, when the soap opera ends, will own Twitter-- I mean, that's why it's their worst nightmare.
And I think, also, that should-- they try to play nice in the sandbox, give him the board seat, cap him at 15%. And like we've talked about, Brian, this was really the start of a "Game of Thrones." And now, I mean, this is really a get-out-the-popcorn time, because Musk is not going away. And obviously, richest person in the world-- he could clearly buy Twitter.
And we probably believe a handful of debt financing here sheet will the beat, ultimately, the next steps. But for Twitter's board, I think this really puts the feet to the fire.
JARED BLIKRE: And Dan, let's talk about some of this popcorn that we should be eating here. Because this is meta. That's the word I'm using to describe the situation. You have Elon Musk, who got in trouble with the SEC for tweeting, and now he's about to buy the media company under which that occurred.
In the old days-- I was talking about this with Brian-- you would have the billionaires buying up newspapers. But now we have a billionaire buying up, well, the modern incantation, or in-- you know what I'm talking about here, the modern form of this.
I'm just wondering, when you put it all there, is there any kind of regulatory crackdown that could happen? I mean the SEC must have a say with regard to the ongoing probe here, I would think.
DAN IVES: Yeah, it's essentially a modern-day Gilded Age in terms of what's happening here. And I mean, I think it's one where-- look, there's a host of regulatory issues for Musk to navigate, clearly, on both sides of the pond, both, of course, in the Beltway as well as EU. This is one that will have many hearings before it gets done.
And look, for Twitter's board, it comes down to fiduciary responsibility in terms of looking at the bid. And obviously, with it being an all-cash bid they have to finance it by about $15 to $20 billion of debt. And otherwise, OK-- if they just say, this is not the bid, this doesn't value the company, and walk away, I mean, they'd be eating shareholder lawsuits at breakfast.
So that's why I think investors right now are kind of-- I mean, I can tell you, from my conversation, trying to figure out, is it real? Or is this another Musk 420 tweet? Obviously, the filing is much more real, and this is a legit corporate raider story, and the fact that Musk being a corporate raider for Twitter is not something that was on anyone's radar in 2022.
BRIAN SOZZI: Dan, isn't this a major time, if you are a Tesla bull, to hit the sell button? Now, we're not saying longer term. We're not saying that Tesla is not going to continue to shake up the auto maker. But you have a person here that has been instrumental in bringing Tesla to where it is today now trying to be leading a social media platform. How does that not distract Elon Musk in everything he's trying to do at the company?
DAN IVES: Yeah, and it's a great point. And I think knee-jerk, stock's down because, of course, some will assume they'll have to sell Tesla stock. I believe he uses collateral rather than sell it just for that point. But in terms of the balancing act, I mean, look. I would not expect that Musk is going to be CEO of Twitter. I think he'd obviously have to do some sort of coalition, some collaboration, bringing in other experts to ultimately run Twitter.
And look, that balancing act-- but just go back. I mean, with SpaceX, it was viewed, you cannot do SpaceX and Tesla at the same time. That's impossible. Clearly, obviously, those have been historical successes.
So I think investors continue to kind of see what Musk has done. And it's hard to go against that, as he's had that golden touch. But no doubt, the knee-jerk reaction today will be negative for Tesla because of some of those words, Brian.
JARED BLIKRE: Dan, I'm just wondering how this affects some of the other social media components or stocks, because we have seen Twitter largely absent from the congressional circus, that surrounds Big Tech, most likely because of their size. But they are an important news organization, in my opinion, probably one of the greatest news tools out there. I'm just wondering, is there some kind of blowback to be seen from that, potentially?
DAN IVES: Oh, I mean, clearly the worry is that now Musk inserts themselves in that freedom-of-speech political firestorm, which, of course, could have other impacts, whether it's Tesla and SpaceX and another.
And look, that's something where-- these are things where by going down this path with Twitter-- and now, Alex, we have to see the board respond, cookie cutter, and then the next steps. I mean, this is something that, there's opportunities, but there's risks that come along with it. And Twitter, regardless of becoming-- we'll say, some challenges as an overall platform-- no one could argue its reach. And ultimately, Musk-- 80 million followers. I mean, a big part of Musk's global reach has been Twitter as a platform.
But again, being that that's part of his reach, it's different than actually owning the platform. And that's why, right now, this starts to really become a bit of a firestorm issue. I'm sure Twitter employees-- they're wondering what the next step, because going from working from Dorsey to Musk-- I mean, that's pretty stark differences.
BRIAN SOZZI: Dan, I was just thinking back to how my week started, reading a "Daily Mail" story naming you the next CEO of Twitter. It's been an interesting week for us all in this crazy world of business and finance. But as an analyst that has been at this for some time, have you ever seen anything like this before? What would you even compare this to, this moment?
DAN IVES: Yeah, and Brian, I'm still-- once I got named Twitter's CEO, I was disappointed you didn't accept being head of content--
[LAUGHS]
--for the same--
BRIAN SOZZI: We have to take that offline. We've got to take that offline. I can't get job offers on--
DAN IVES: But I won't hold it against you.
BRIAN SOZZI: No.
DAN IVES: But I won't hold it against you. But no. It's been a "Twilight Zone" from my perspective in 22 years doing this. And no one ever thought that Musk was going to aggressively go on a corporate raider prospective after Twitter this quick. I thought it was going to be a step-up action-- he'd ultimately file to a 15%, 20% stake.
And I think this is going to have massive implications across the board for social media, for Twitter, for Tesla, for SpaceX. But clearly, he's not joking around. This is a serious bid. And now it comes down to seeing what the boilerplate Twitter response will be.
JARED BLIKRE: Dan, par for the course. I think we've lived in "The Twilight Zone" for literally the last two years. Always great to see you here.
DAN IVES: Thank you.
JARED BLIKRE: Dan Ives, Wedbush Securities analyst.