Key points:
- Twitter up 22% as Musk at least says he's going through with the deal
- There's still a margin there for those who want it
- But perhaps attention should turn to TSLA and DWAC, which will also be affected?
Twitter (NYSE: TWTR) stock is up 22% yesterday, down 0.60% premarket this morning, on the news that the Elon Musk deal now seems to be going ahead. One way of thinking about this is that Musk wasn't able to use that upcoming court case, claims about ‘bots and so on, to back out of the deal. It's also possible to think a little more deeply and note that Musk now has Twitter positively pursuing him to ensure that he buys. Which is an unusual thing in a formerly thought to be hostile takeover bid.
The effects on TWTR stock are obvious – that 22% and change rise yesterday. That left the closing price last night at $52 even, as against the $54.20 takeout price that Musk is offering. That gives us a little under a 5% difference between the current price and the cash that will – we assume will by now – be paid. Which might be of interest to those who wish to trade on that basis. Even with inflation and interest rates as they are 5% is a decent enough margin to make in a couple of months. Certainly, if that expands out again then that's something to think seriously about.
The bigger effects though of the deal are likely to be on other stocks. Those who might be seen to be affected by the completion here, even if they're not directly involved.
Also Read: How To Buy Tesla Shares
Given that we'd expect TWTR to be relatively solid now in pricing – there's that cash bid – attention should probably turn to who else might be affected. One of which is Tesla (NASDAQ: TSLA) of course. All along there's been a certain nervousness that Musk would have to sell out some considerable portion of his TSLA stake in order to be able to fund the Twitter buyout. Some think that he's already sold enough to do this. Others that more has to go. There's even been the very fun rumour that the whole Twitter thing was to provide an excuse to sell down TSLA.
There's another one out there though. Which is Digital World Acquisition Corp (NASDAQ: DWAC). This is what was going to, is going to, bring Trump's Truth Social to market. It's possible to think that if Musk goes through with his insistence upon clearing Twitter moderation of wokeness then the attraction of that non-woke social network will decline. It's even possible that this will spread to Rumble (NASDAQ: RUM) which is currently doing rather well, up 30% odd since the completion of the SPAC process. Yes, that's video but still, there could be an effect there.
It's clearly not wholly and entirely true that the Musk and Twitter deal is locked. Given what's happened so far it might not be entirely wise to wholly assume that anyway. But we are at the stage that we should perhaps be looking at the effects elsewhere if the deal goes through. On Tesla, given Musk's financing needs, on other social media sites given the de-wokification of TWTR promised.
