Tesla, Inc. TSLA shares came under significant selling pressure this week, with CEO Elon Musk’s announcement to revive the Twitter, Inc. TWTR deal partly to blame for the predicament.
Longtime Tesla bull and Loup Funds’ Gene Munster offered his take on three key questions surrounding the deal.
Almost A Done Deal: Munster thinks there is a 90% chance that the deal goes through, stating that Musk has realized the agreement to purchase Twitter will stand. The billionaire may also have realized that fighting a legal battle for an additional six months would mean spending more money and ultimately causing damage to the asset he is acquiring, he added.
There’s still a 10% chance that Musk was trying a “clever end-around” to exit the deal, the venture capitalist said. This could come to fruition only if Musk fails to muster financing, and in that case, he can walk away by paying a multi-billion-dollar penalty, he added.
Musk May Lack Skill To Build Free-Speech Platform: If the deal goes through, Musk will significantly “under-index his passion” on the topic of free speech, Munster said.
“His strength is solving technical problems with no discernible solution sets, including those at Tesla, SpaceX, The Boring Company and Neuralink,” the fund manager said.
“The skills needed to build a free speech platform fall outside of Musk’s wheelhouse and, ultimately, free speech is a puzzle I don’t believe can be solved,” he added.
Read next: How to Buy Twitter Stock Right Now
Will Musk’s Other Ventures Suffer? Musk purchasing Twitter means very little to the future of Tesla and SpaceX, Munster said, adding that the billionaire will continue to give the bulk of his energy and time to both companies.
Musk’s role at Twitter will be “month-to-month,” he added. His involvement will stop with bringing on a management team, which in turn will run with his ideas, the Loup Funds Managing Partner said.
The vision for Twitter that Musk laid out in May is better than the company’s current path forward, Munster said. Within five years, the company will return as a public company, at which time Musk will sell a part of his holdings, he added.
“And, during the next five years, Tesla and SpaceX will continue to grow, generating enough incremental wealth for Musk that any loss on the Twitter investment will be a rounding error in the grand scheme of his wealth,” Munster said.
Twitter closed Friday's session down 0.43% to $49.18, according to Benzinga Pro data.
Photo: Created with an image from Daniel Oberhaus on Flickr
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