An explosive whistleblower complaint unveiled Tuesday prompted CFRA to cut its Twitter price target by nearly 30%.
, the whistleblower complaint from Peiter Zatko, a well-known hacker who worked at Twitter from 2020 until he was fired this January,"compels us to step back from our formerly bullish stance on the Elon Musk deal," Crockett told investors.
He said the complaint could allow Musk to allege"materially inaccurate representations" by Twitter in order to help drag out the lawsuit, or get out of the deal altogether, potentially without paying a $1 billion termination fee. In a Tuesday note, CFRA analyst Angelo Zino echoed the sentiment, writing that the complaint"provides [Musk] with much needed ammunition" that could help build a case against Twitter, or provide some leverage in seeking a settlement.
Though he still believes Twitter has the upper hand leading up to the trial in October, Zino also said Twitter's decision to dismiss Zatko earlier this year"now looks more ominous" after the complaint, which means the company's will"clearly be called into question"; CFRA maintains a hold rating on Twitter shares.
Twitter stock ticked down 0.9% in early trading Wednesday to $39.50, tacking on to a 7.3% decline after the whistleblower report on Tuesday; shares are down 7% this year, compared to a 22% decline for the tech-heavy Nasdaq.that Twitter misled investors, users and the federal government by falsely claiming it had a security structure in place even though half of its servers were running out of date.
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