Twitter Inc (NYSE:TWTR) shares are falling Monday after Tesla Inc (NASDAQ:TSLA) CEO Elon Musk on Friday filed to terminate his proposed deal with the social media company.
If Musk is able to successfully back out of the Twitter deal, one analyst warns that the stock is at risk of trading down to levels never seen before.
"I think that there's reason to be cautious and concerned about what could come," Rosenblatt Securities analyst Barton Crockett said Monday on CNBC's "Squawk On The Street."
What To Know: Musk has claimed that the number of bots or spam accounts on the Twitter platform is much higher than the 5% (or less) figure that the company has stood by. Twitter executives said last week that the company manually reviews thousands of accounts each quarter, which has helped them to accurately determine the 5% bot number, but the company claims it can't share the exact process without giving out private internal data.
Crockett highlighted Twitter's unwillingness to share how it calculates the number of bot accounts on its platform with the Tesla CEO.
"That would be easy for them to do," he said. "They haven't done it, so it suggests that maybe they don't want that [information] out there."
See Also: Elon Musk Feeds Twitter To The Bears On Attempt To Nix Merger Deal: What Does The Chart Say?
What's Next: If the deal fails to go through, the stock is in danger of trading "much, much lower," Crockett said.
He explained that the stock has held up well despite all of the factors weighing on markets because the deal has been in the spotlight. The Rosenblatt analyst argued that if the deal were off the table, Twitter would be trading even lower relative to its 52-week highs than most of its competition, which would put the drawdown somewhere around 90%.
"We're arguing that it could be suffering at the low end of peers, so it could be an $11 stock," Crockett said.
$11 Twitter shares would also reflect that the business has been meaningfully disrupted by ongoing takeover talks, the analyst added.
TWTR Price Action: Twitter has a 52-week high of $73.34 and a 52-week low of $31.30.
The stock was up 4.32% at $34.06 on Tuesday, according to data from Benzinga Pro.
