TWTR closed Friday at $49.02. This means there’s a 10.6% gain programmed into the stock IF Elon’s buy out happens at $54.20. Clearly there is risk this buy out may not happen, and if it didn’t, from what I’ve been reading, the stock price would likely drop to the low $30’s.
Anyone see any particular threat to this deal not proceeding as Elon wishes it to?
The best place to buy this, due to the short term capital gain nature of the buy out, is in an IRA.
Any insight appreciated
BruceM
Musk’s political bent far to the hard right, still supporting the coup creator has suddenly been exposed. In our case, it changed our view on the Teslas as being an option. We just cannot support that level of traitorous activity, in any way… There are others that should be written off for similar reasons…
There are other options…
Anyone see any particular threat to this deal not proceeding as Elon wishes it to?
I have seen some casual questions about the problem he may have in securing funding given that he seems to have no clear vision about how to make Twitter a financial success … indeed, that some of what he wants to do may actually hamper its current finances. I have not seen any speculation whether he is likely to have any issue getting stockholder approval.
Anyone see any particular threat to this deal not proceeding as Elon wishes it to?
Well, there’s a $1B penalty to pay by either side backing out of the deal. So that’s probably an incentive to get the deal done. (Although, when you’re talking $44B, $1B isn’t really that much.)
Because the current businesses Musk controls don’t really have any overlap with Twitter, there shouldn’t be any regulatory issues. So, the big hurdle remaining would be shareholder approval. Supposedly, Musk courted enough of the large shareholders that he should be able to get approval from the shareholders fairly easily. Of course, that assumes he doesn’t do something that pisses off a bunch of the shareholders between now and the vote - which given Musk’s past history, is not out of the realm of possibility. So I guess the question is - is the 10.6% premium enough to offset the possibility of Musk doing something that will torpedo the deal and result in a 20% - 40% drop?
AJ
Musk is personally going to be on the hook for over $1 Billion per year in debt service if the deal goes through. Is he really going to make a $1B/year charitable contribution to “free speech”? Or does he have some way to monetize twitter that previous management was unable to realize?
Twitter management is in favor of doing the deal at this premium, I don’t see them pulling up.
Elon on the other hand may decide to cut his losses at $1 B, and put an end to the transaction.
intercst
What do you know that the market doesn’t?
There’s a reason the market devalues Elon’s offer by 10.6%, I don’t know why.
The deal will probably close in less than a year and will pay in cash. If in a taxable account will pay short term capital gains rates on your gain. So must be in ira or Roth ira etc.
Just a thought here…. Elon was quietly buying Twitter stock for awhile and now owns 9% of the company. Meanwhile the price has nearly doubled since March. Even if he was fined $1B for backing out of the deal, couldn’t he have made four times that much from the rise in price due to his “decision” to buy the company? 9% of $45B could be an easy $3-4B if he could liquidate it at a decent price.
In other words, could this be the mother of all pump and dump schemes?
Like I said, just a thought. Probably not but if he suddenly backs out I’m going to wonder.
So, the big hurdle remaining would be shareholder approval.
Here’s where about 50% of the stock resides:
Institutionals
Vanguard:… 10.3%
Morgan Stanley: …8.4%
Blackrock:…6.5%
State Street:…4.8%
ACM…2.6%
Fidelity…2.2%
Clearbridge Cap…2.09%
Geode Capital…1.8%
Nikko Asset Mgt…1.3%
total:…39.8%
Private ownership
Elon Musk…9.1%
Jack Dorsey…2.0%
total…50.9%
Total insiders…4.2%
Whatever the personal feelings of fund/asset managers, I’d think it would be difficult to explain to shareholders how the fund manager voted against selling shares or private take-over that would improve returns to the fund over valuation without the tender offer…but that’s a guess.
BruceM
Elon on the other hand may decide to cut his losses at $1 B, and put an end to the transaction.
This is the guy who lands rocket boosters smack in the middle of a circle painted on a drone ship in the ocean, right? The same guy who put up Starlink internet over Ukraine in the blink of an eye? Who also worked around Russian jamming in about one day? Clearly a yokel.
Um, to Elon Musk, $1B is pocket change.
Don’t ever change, intercst. Don’t ever change. You do you.
Um, to Elon Musk, $1B is pocket change.
One time Billion, maybe. Billion per year on closing the transaction – I doubt it.
Also the coming changes to Section 230 rules would seem to frustrate Elon’s vision for “free speech”. Why buy the sandbox if they won’t let you play in it?
Section 230 of the Communications Decency Act
https://www.eff.org/issues/cda230
intercst
Just a thought here…. Elon was quietly buying Twitter stock for awhile and now owns 9% of the company. Meanwhile the price has nearly doubled since March. Even if he was fined $1B for backing out of the deal, couldn’t he have made four times that much from the rise in price due to his “decision” to buy the company? 9% of $45B could be an easy $3-4B if he could liquidate it at a decent price.
I don't trust Elon at all, and often wonder to myself what else might be the real motivating factor here. One thing is for sure, Elon would never do or say something to manipulate the value of a stock.
lol
But then again, if he did back out, I don't think he would be aloud to sell all of his stock at once. He would probably only be aloud to sell X amount per quarter or whatever rule(s) apply to such things. And the stock would likely will have dropped back to whatever it was selling at by the time he could sell his.But then again, if he did back out, I don’t think he would be aloud to sell all of his stock at once. He would probably only be aloud to sell X amount per quarter or whatever rule(s) apply to such things. And the stock would likely will have dropped back to whatever it was selling at by the time he could sell his.
Yes. I don’t think this is the blueprint for a successful “pump & dump” operation.
intercst
It was suggested this week in the All-In podcast, that Elon Musk’s end game could surprise you.
In summary:
Clean up the censoring mess
Bring Twitter to centerline with a view of the 1st amendment and 200+ years of settled case law
Develop useful features to monetize advertisements more
…
Hold for 10 years and then DONATE the entire institution to a trust to be run as a public good for a 2-4x.
Strip the profit motive from this communication platform and insulate it from potential corruption of capitalistic influence.
Use that charitable donation to blunt the tax burden of his private and much larger potential enterprises.
The podcast is quite lengthy: https://www.youtube.com/watch?v=7gS9UVSve0s
The podcast is decidedly gen-x, campy and intellectual.
Musk’s political bent far to the hard right
Elon’s explanation of how that happened:
https://pbs.twimg.com/media/FRcu9TeXEAMjvTM?format=jpg&n…
Elon’s explanation of how that happened:
Musk is wrong. Again. Blaming others for his own actions.
—Peter
This is the guy who lands rocket boosters smack in the middle of a circle painted on a drone ship in the ocean, right? The same guy who put up Starlink internet over Ukraine in the blink of an eye? Who also worked around Russian jamming in about one day? Clearly a yokel.
Tesla, SpaceX, etc. are technical marvels. When it comes to technical matters, Musk is an idiot savant.
Twitter is a social activity. When it comes to social matters, Musk is an idiot.
AW
So glad this is Retirement Investing and the topic of a 10ish percent gain on a buy out. This is going to be a marvelous buy out and sure you could bank the 10% in an IRA or taxable account. Go for it in the IRA and then swing those profits to something else.
TWTR closed Friday at $49.02. This means there’s a 10.6% gain programmed into the stock IF Elon’s buy out happens at $54.20.
A friend and colleague urged me to get a TWTR account over a decade ago. I couldn’t figure out why he thought it was so great. I got rid of the account less than 2 months later.
I have a managed IRA account. It started buying TWTR shares in 2016. I never understood the rationale for the purchases. Perhaps they realized that some guy named Elon Musk would come along and offer $54.20/share for the company. If it goes through, I’m looking at about a 250% long-term capital gain. At least, it’s in an IRA account.
Tesla, SpaceX, etc. are technical marvels. When it comes to technical matters, Musk is an idiot savant.
Twitter is a social activity. When it comes to social matters, Musk is an idiot.
Then it must be hugely profitable to have ‘idiot’ in your name?
Elon is not a technocrat nor is he a social engineer. What he is is what every other hugely successful entrepreneur is…one who can see opportunity and then can get others to do great things to make his vision profitable…and…ignore name-calling from small minds.
BruceM