Its been headline news by the risk hungry genius Elon Musk. “Musk Buying Twitter!” for $54.20 a share or about $44 billion. There are plenty of skeptics and plenty of fans but the gist of both arguments is that you have a buyer for Twitter Inc. for face value if you read all the major news media sources that this is a forgone conclusion. Many have circum to the temptation of the news jumping in to buy up shares of Twitter as it did not sell up to $54.20 as Musk stated he will pay shareholders. WHY THE HELL NOT?
Like most at this point who have bought $TWTR on the day of the hype. Investor mistakes happen most during the hype and mistakes particularly done by retail investors. This lesson being learned from personal experience and a professional standpoint as I brokered for retail investors/traders accepting their trades on their own decisions never offering advice. Its very tempting but always a gut punch to watch your $5 to $100 hopeful investment go down by 50% after making the trade.
Despite the current trading price of $TWTR as of today April 27, 2022; you do not (I have long options positions on $TWTR)
have to recover your market losses the way you invested. There a number of pundit opinions for and against the execution of this Twitter sage untethered to emotions as to why $54.20 paid out to shareholders by Elon Musk will not happen:
his own track record in taking companies private;
his mercurial lose attitude toward his public investments(he touts his positioning after the fact and does something else entirely privately to ensure his own profits; no even mention the borderline legality and moral issues he has bordered in these actions;
The deal itself has only a $1Billion termination fee which is about 2% of the the $44Billlion deal Musk says he is going to finance himself. 4) the Musk $TWTR acquisition is contingent upon Tesla trading price which has high sensitivity to being margin called and Musk having to giving up his own personal holdings of TSLA (he will give this up to no one)
Seems the U.S. Congress is taking a keen interest into the acquisition which I expect nothing to happen except a drawn out delay
Musk partially at face value has met the financing requirement but people are overlooking the business due diligence that has to take place for Musk to accept the deal and the earnings report will give a huge amount of insight giving Musk another way out of this bad deal
Today Musk made public disparaging comments against high executive employees violating a clause in the deal terms.
And yet all of these issues have to been done and resolved at warp speed by October 2022 or either party can walk away from the deal
Better risk arbitrage spreads to play that his a higher probability of executing that I would suggest analyzing is the Mandiant Inc $MDNT acquisition by Google Inc. for $23 per Mandiant $MDNT shares. At $21.92 currently that should give your about a 4.5% aggregate return safer higher probability deal close v. $TWTR 50/50 (at best) probability deal close and should Musk not buy Twitter your are stuck holding the bad shares that will certainly trade substantially lower ~low 30s? I am offering this idea because I understand where most might be after having jumped into a trade like $TWTR and say that its ok to sell your $TWTR position and make the money back in other similar trade structured ideas. Don’t hold onto this lose!!!