Elon Musk announced late on Friday that he is no longer interested in continuing to pursue talks of a deal with Twitter. Dan Ives Managing Director and Senior Equity Research Analyst at Wedbush Securities joined Cheddar News to weigh in on Elon Musk notifying Twitter he is terminating the deal. “It's gonna be a category five storm for Twitter," he said. "It's a worst-case scenario for Twitter. I mean they never expected in April that ultimately in July they'd now be setting the stage to face Musk in what's going to be an ugly and nasty court battle in Delaware." Ives also pointed out that the failed acquisition attempt had been a "nightmare" for Tesla investors as well.

Closing Bell

Dan Ives on 'Worst-Case Scenario' for Twitter as Musk Terminates Deal

Welcome back to cheddar news closing bell, everyone, I'm christian Schoeller down here on the floor of the stock exchange and let's turn to a story that we've been following closely here on cheddar news for weeks but certainly months as well. Finally Elon musk attempting to walk away from this $44 billion deal to buy twitter that he had agreed two months ago and the Tesla ceo claiming that twitter breached the deal by failing to report the true number of fake accounts on the platform. There are still many unknowns, but this will almost surely set up a lengthy court battle as twitter may try to enforce the agreement signed by both sides and of course walk away with a significant sum of money. So joining me now is dan Ives, managing director of equity research at Weber Securities dan, it's good to see you. This has been a mess, hot and cold since the start, months ago. What's your reaction to the official news? Look, it's been a circus show since april you know, when, when this all started and it ends with a nightmare in july in terms of what happened friday night after the close, I think now it really starts a game of Thrones battle into the courts from muskets, a black eye in terms of how he's handled every I think part of the twists and turns here and for twitter, you know that there's obviously so many questions right now in terms of the bot fake account employee issues, it's gonna be a category five storm for twitter uh, interesting. So I do want to ask about twitter. Um, a lot of people within this company, some actually departed in the wake of this news before it was officially a done deal with news that must at one point was going to be the interim ceo, Well now we know the deal isn't actually going through but lost morale, damaged morale. Of course advertising deals day to day business and operations. What is the effect that this has had on twitter and what happens going forward? Well, it's a, it's a worst case scenario for twitter. I mean they never expected in april that ultimately in july they now be setting the stage to face mosque in what's going to be an ugly and nasty court battle in Delaware. I think for twitter as a stand alone public company, it's, it's employee morale, its advertisers, it's also, You know, really them trying from an investor perspective, there's gonna be skepticism about the metrics stocks obviously down today and I think it's going to continue to go further towards fair value. We've used $30 a share the legal issues in terms of playing out in Delaware, that's almost separate in terms of now, the day to day operations, it's going to be an Everest like uphill battle for Prague and team, you know, it is interesting. I'm glad you mentioned your fair value price 30 bucks apiece currently at $33 a share and of course the takeover price was $54. So there was a huge boost, a lot of momentum musk, the richest man in the world. That's something at one point could actually be done to monetize twitter in a better way but the future here clearly a bit in the balance. Do you think that there is any truth to the box numbers, the issue that musk has had for a while now or do you think that really was just in the end of scapegoat for Elon musk? Yeah look I think there's two cams, you know it was this cold feet scapegoat musk ultimately waking up in a much different market and really using this as a way to get out of the deal that's obviously one camp and No look this was the head scratcher from the beginning in terms of why he was ever gonna pay 44 billion for Twitter and there was not another bidder within miles of that just given fair value is much lower. Now of course the fake account body issue taking on a life of its own and now obviously it's front and center in terms of the 13 D. Filing and going into court that's why they're both sharpening their knives going into court and unfortunately for twitter it's caused the fiasco internally and externally and for musk I leaves I think it leaves the steam in terms of negatively and that's why you're not seeing a lift in Tesla stock because this has been a nightmare for Tesla investors as well. Right, right. And must actually selling Tesla stock to actually fund this deal at one point as well. Are there any positives to come out of this dan when it comes to twitter? Even though the stock is down today, does musk walking away from the deal give advertisers on the platform any more certainty? Look, I think there's no winners, I'm ultimately losers in terms of musk and twitter, maybe the winners of the lawyers, but you know, I think now for twitter it's back to the white board navigating through this choppy period emerge stronger on the other side, in terms of court, you know, if they get to break up the punitive damages, obviously if they win there, that that would be incremental for for twitter, but in the near term it's uncertainty and, and I think that's the problem, you know, that, that ultimately really started in april and it's been just a continued soap opera and I think the fact that musk ended it the way he did on friday night, I think surprised the street, there was a view, maybe there'll be a renegotiation here and that's why it's really been a, it was a friday the 13th and in terms of twitter, we are showing some memes here, of course Elon musk mocking twitter on his platform of choice twitter, which has been the effective marketing mouthpiece for Tesla, right? We can't overlook that either. I mean, I don't, I don't know if Tesla actually had a marketing team but sterling musk was the marketing guru and the brand himself. How long will it take Tesla shareholders to feel a bit more confident dan in that stock in the wake of this? But even like those tweets today, I mean, I think just personally, I think it's unconscionable relative to what's going on in the broader situation here and I think it's, it's frustration all around, especially in a risk off market that for Tesla investors, one must focus on supply chain navigating issues in china. In terms of the zero, Covid, not the sort of side show that's really taken on a life of its own. And for twitter, you know, it's obviously as a company perspective, it's an all hands on deck, there need gonna need to navigate many challenges that had, and investors are gonna be skeptic. Uh, still so many questions, no doubt about that. Just in terms of, I think musk's businesses going forward and of course, um, what it's gonna take to get twitter on the right path dan Ives, managing director of equity research at Wedbush Securities dan, thanks so much