31–40 of 119 posts
Earlier quoted context omitted.
How do you short "Elon Musk" stock? You can only short companies the acquirer owns, not the acquirer himself, so this does not count as "merger arbitrage" under the definition you linked.
This is a cash merger. You buy TWTR stock.
People seem to be discounting the fact that Elon still owns 9% of the company and is one of the largest shareholders. He just wants a chance to renegotiate as he know if he actually walks away he will lose around $5B.
If he's allowed to actually walk. Legally speaking he waived due process and twitter is suing with the specific performance clause. If it were just about anyone else I'd say there's 0 chance they'd be getting out of this, but since it's musk he might be able to walk.
People seem to be discounting the fact that Elon still owns 9% of the company and is one of the largest shareholders. He just wants a chance to renegotiate as he know if he actually walks away he will lose around $5B.
However, I'd propose there is also a counter-intuitive case to be made that Twitter's management has an incentive to drag out the court case and delay the sale even at the cost of wrecking the company stock if it preserves their control for just a few more months because it gives them one last election cycle of popular narrative influence before the U.S. midterms. It's just a company that has made money for some people, but the party is facing an existential threat at the ballot box in November, and it's plausible they agree to damn the torpedoes and unleash legal chaos that sinks Twitter's stock price but hangs on to control of the company (and its narrative) for just a few more weeks in support of the elections. They would even have tacit support of establishment (R)'s who would be glad to see their MAGA problem handled for them with deplatforming policies.
The strategy there is like burning your ships during a retreat to prevent the enemy from using them after it overruns your perimeter with an (R) controlled house and senate, and a weak record going into 2024. These platforms are political operations, and they're not going to risk a repeat of 2016. This is wildly speculative, but maybe Twitter takes advantage of Musk's balking on the deal and holds on to content policy control until after midterms, then they scuttle the ship and hand over the ashes to him at the reduced price.
Crazy?
Inspired by Matt Levine's awesome reporting on the Elon/Twitter purchase fiasco. Just a little app to model the arbitrage (gamble) opportunity.
> Just a little app to model the arbitrage (gamble) opportunity. This isn't arbitrage at all. That is taking advantage of a price difference of an asset between two markets by buying and reselling it (nearly) simultaneously. If you are holding the asset longer than strictly necessary it isn't (only) arbitrage. Your intended action is just timing the market: buying stocks based on the belief they will soon rise in pri…
Imo, the only hypothetical reason for Musk not to buy it would be because the real numbers on the bot issue showed the company has seriously defrauded investors, and the stock goes to almost zero. That's implausible to me. It's kind of an outsider case where shorts could get squeezed pretty hard if they're wrong about that, as a Musk owned Twitter has huge growth in front of it. However, I'd propose there is also a c…
My understanding, at least from reading Twitter's lawsuit and other's commentary on it, is that Twitter lying about bot numbers is irrelevant because Musk agreed to, in contract, buy it regardless of those facts.
Imo, the only hypothetical reason for Musk not to buy it would be because the real numbers on the bot issue showed the company has seriously defrauded investors, and the stock goes to almost zero. That's implausible to me. It's kind of an outsider case where shorts could get squeezed pretty hard if they're wrong about that, as a Musk owned Twitter has huge growth in front of it. However, I'd propose there is also a c…
> Imo, the only hypothetical reason for Musk not to buy it would be because the real numbers on the bot issue showed the company has seriously defrauded investors, and the stock goes to almost zero. My understanding, at least from reading Twitter's lawsuit and other's commentary on it, is that Twitter lying about bot numbers is irrelevant because Musk agreed to, in contract, buy it regardless of those facts.
Imo, the only hypothetical reason for Musk not to buy it would be because the real numbers on the bot issue showed the company has seriously defrauded investors, and the stock goes to almost zero. That's implausible to me. It's kind of an outsider case where shorts could get squeezed pretty hard if they're wrong about that, as a Musk owned Twitter has huge growth in front of it. However, I'd propose there is also a c…