Rosenblatt Securities believes Twitter ‘s whistleblower complaints call into question the social media giant’s deal with Elon Musk. “The surprise news Monday (8/23) that a former Twitter executive has lodged a whistleblower complaint compels us to step back from our formerly bullish stance on the Elon Musk deal,” wrote analyst Barton Crockett in a note to clients Wednesday. “We now see meaningful uncertainties, prompting a downgrade to Neutral, and reduction of price target to $37 from $52.” The complaints, obtained by CNBC and filed with the Securities and Exchange Commission, Federal Trade Commission and Department of Justice, alleged that the company misled regulators about its security and data privacy risks. According to Crockett, the filing offers further ammunition to Musk’s claim that he’s been misled by Twitter in his ongoing legal battle to back out of the deal . He believes Musk could now utilize the whistleblower’s complaint to assert that “security malpractice constitutes a material adverse effect.” “Twitter won’t want this to drag on, or risk losing everything,” he wrote. “Musk might be willing to move ahead if he gets a big concession. So we now assume a bigger compromise than we had formerly presumed.” Rosenblatt’s fresh price target suggests shares could fall more than 7% from Tuesday’s close. — CNBC’s Michael Bloom contributed reporting
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