In the latest edition of Twitter vs Elon Musk, the tech billionaire is backing out of the deal. Why? Bots. Elon Musk claims that the company didn’t grant him transparency into just how many bots are running rampant on the social media platform. While he has yet to provide a source, he estimates that as many as 20% or more of Twitter accounts don’t belong to a real human being. These accounts are being used for ill intent – from scamming to hacking to spreading misinformation and fake news. If nothing else, they are an annoyance that hampers user experience on the app. Twitter, on the other hand, is claiming bots take up less than 5% of daily active users which can be monetized. As a result, the two parties are set to face off in a Delaware court to determine whether Elon Musk is going to be forced to buy Twitter after all.
Twitter Bots Aside, Elon should not pay $44 billion…Here are 4 Reasons Why:
Our objective analysis suggests that Twitter is not valued anywhere near $44 billion – and thus, Elon is right to back out of the deal. Bots aside, the Twitter purchase didn’t make sense in the first place. When evaluating the company’s stock purely through technical and fundamental analysis, there are 4 red flags. We ran an in-depth, independent analysis of Twitter using the VectorVest stock analysis system – which tells you what a stock is worth, how safe it is and whether you should buy sell or hold. We’ll explain the VectorVest system more below. But first, here are four reasons the Twitter purchase is a bad deal for Elon:
- It is significantly overvalued – Twitter is trading near $40 per share, but VectorVest has computed its current value at just $14.37.
- It has poor upside potential – Twitter has a Relative Value (RV) rating of 0.78, which is poor on our scale of 0.00-2.00. RV is an indicator of long-term price appreciation potential, so this shows that the near future is bleak for Twitter.
- It has a poor safety rating – With a Relative Safety (RS) of 0.78, the risk associated with Twitter is too much to justify a buy. RS measures the consistency and predictability of the company’s financial performance and Twitter is lacking.
- It was and still is in a down trend – Twitter is down 32% since VectorVest rated it a Sell on September 13, 2021 at $59.66 per share. Our system’s intelligent trend indicator, Relative Timing (RT), is still telling us that the stock is in a moderate downtrend with a rating of 0.87.
VectorVest advocates buying safe, undervalued stocks that are rising in price for consistent results in the stock market. Right now, Twitter is missing the mark.
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VectorVest advocates buying safe, undervalued stocks, rising in price. As for Twitter, it is not safe, it is not undervalued, and it is not rising in price.
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