Twitter can't afford to reject Elon Musk's takeover offer if it's serious, Wall Street analysts say

Published Thu, Apr 14 20228:35 AM EDTUpdated Thu, Apr 14 20224:02 PM EDT

Jesse Pound @/in/jesse-pound @jesserpound

Elon Musk's offer to take Twitter private is likely too good for the company's board to pass on if it turns out to be real, according to some Wall Street analysts. The Tesla CEO offered to buy out the social media company for $54.20 per share on Thursday morning. The stock initially rose in early trading but lost ground throughout the day and closed down 1.7% at $45.08. The offer is 18% above where Twitter's stock closed on Wednesday and roughly 38% above where shares were trading before Musk unveiled an initial stake in the company earlier this month. Musk has a checkered history with takeover offers, once saying that he had "funding secured" to take Tesla private in a deal that never materialized. However, if the serial entrepreneur has the money lined up, Twitter's leaders will likely have to agree, according to Wall Street analysts. "It probably happens. Management is in a tight spot here," Gene Munster of Loup Ventures said on " Squawk Box ." Though the offer is below Twitter's 52-week high, other investors would be unlikely to match that offer. "I see no other bidder for Twitter. He went so above and beyond here," Wedbush's Dan Ives said on "Squawk Box." The securities filing detailing the offer said it was the "best and final" deal and that Musk would reconsider his position as a shareholder if rejected, creating downside risk for the stock. "A rebuff would be a powerful mistake ... for management," Munster said, with the stock potentially falling to $35 per share or lower. Investment firm CFRA downgraded Twitter to hold from buy, saying that the offer would be "difficult to reject" and highlighting the risk of Musk walking away instead of coming back with a higher price. Other analysts disagreed, with Gordon Haskett's Don Bilson writing that Musk may need to increase his offer . Though the proposed value of Twitter is well below Musk's total net worth, it was not immediately clear where the funding for the deal would come from. The securities filing detailing the offer said it was nonbinding and dependent upon the "completion of anticipated financing," among other items. Ives said he believes Musk could line up the financing without having to sell more of his Tesla stock, but Lightshed Partners' Rich Greenfield was more skeptical of the seriousness of Musk's offer. "Elon is not the most predictable human," Greenfield said on "Squawk Box." "Part of this is, is he even serious? Is this just a game? Is he having fun and making a point about free speech and trying to hold management's feet to the fire, or does he actually want to own and control Twitter and run it?" If the Musk deal fails to come through, the offer does raise Twitter's profile as a potential takeover candidate from someone else, Greenfield said. "It reminds shareholders that unlike most of the companies in tech, heck, most of the companies in media land, there's no control shareholder. You can buy Twitter," Greenfield said.

Pool | Getty Images Entertainment | Getty Images

Elon Musk's offer to take Twitter private is likely too good for the company's board to pass on if it turns out to be real, according to some Wall Street analysts.