Twitter Analyst Cuts Price Target By 40% After Former Company Exec Files Complaint

A former Twitter Inc TWTR executive has filed a whistleblower complaint with the SEC, which gives Tesla Inc TSLA CEO Elon Musk the opportunity to “allege materially inaccurate representations” by the company, according to Rosenblatt Securities.

The Twitter Analyst: Barton Crockett downgraded the rating for Twitter from Buy to Neutral, while reducing the price target from $52 to $37.

The Twitter Thesis: The SEC filing opens another avenue for Musk to move on “from a fishing expedition on well-hedged spam disclosures,” Crockett said in the downgrade note.

Musk could use the whistleblower's claims “to argue that security malpractice constitutes a material adverse effect,” he added.

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The claims filed by former Twitter security chief Peiter Zatko could be “portrayed as fitting a pattern” at Twitter, the analyst mentioned.

“Twitter won't want this to drag on, or risk losing everything. Musk might be willing to move ahead if he gets a big concession,” Crockett further mentioned.

TWTR Price Action: Shares of Twitter were up 1.30% to $40.38 at the time of publication Wednesday.