Twitter: Elon Musk Closes the Credibility Gap

InvestorPlace2022-05-10

Twitter(TWTR) stock is still selling for $5/share less than Elon Musk’s offer.Musk has the money lined up thanks to SpaceX.What happens after the purchase isn’t your problem.Since Elon Musk said he ...

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Toh_Chris
2022-05-10
Toh_Chris
Hold on tight while going through the waves
WaiSiong81
2022-05-10
WaiSiong81
👍
SGDarrenC
2022-05-10
SGDarrenC
Thanks for providing some assurance that my stocks are worth to hold.
MGHuat
2022-05-10
MGHuat
like pls
xnicx
2022-05-10
xnicx
Comment
AhHuat2021
2022-05-10
AhHuat2021
Like

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This means you can buy TWTR stock today and book a profit of 10% before the end of the year. In a market that’s falling like a knife, that’s good business.But Elon has bigger problems. Since the bid came out Tesla(NASDAQ:TSLA), which he’s using as collateral, is down 14%. It was trading May 9 at $835. His fortune, and rising credibility, are now based more on the success of SpaceX.Despite having the cash for his bid lined up, Elon Musk seems to have a credibility gap. The question is why?Musk in SpaceMusk’s fortune is still listed byForbesat$240.8 billion. That’s 10 times what he was worth in 2020, when his fortune was listed at $24.6 billion.You might say his fortunes have gone up like a rocket ship. Most call Tesla the rocket ship. The stock is up 428% over the last two years.But the real rocket ship is SpaceX. Musk has full control over that private company. 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He has brought several other oligarchs into the deal, from Oracle(NASDAQ:ORCL) CEO Larry Ellison to Saudi princeal-Waleed bin Talal. The Tesla stock used as collateral is now just $6.25 billion.The outside investors bought based ona “pitch deck” that claims Musk could quadruple revenue in 2028 with advertising, data licensing, and subscriptions. He also claims he can get $15 billion next year from a payments business that doesn’t exist today.As with other leveraged buyouts, the deal would load Twitter with debt. The plan is to transform the company’s prospects, then bring it back to the public market.But for current Twitter shareholders, this shouldn’t matter. All that should matter is getting the $54.20. Since Twitter doesn’t own broadcast licenses and there are no monopoly issues, regulatory approval should be routine. Despite claims by some writers that Twitter is worth more, Twitter couldn’t find another bidder.The Bottom Line on TWTR StockAs a risk arbitrage opportunity, Twitter looks like a no-brainer.Morningstar believes the transaction will close before the end of the year. There are regulatory hurdles, but no real issues. Twitter isn’t combining with another company and it’s far from a monopoly in the social media space.What if Musk backs off? While some analysts insist the company is worth $50 billion, I would say not in this market. Twitter lost $221 million last year, 28 cents per share, on revenue of $5.07 billion. The days of money-losing companies being valued at 10 times revenue based on their growth, even Twitter’s growth of 37%, are over.That means if you buy Twitter today, you’re betting Musk will buy you out. That’s a lot less risk than the oligarchs are taking, that Musk can make people pay for what’s now a free service. But it is a risk.For a speculative investor, I call it a risk worth taking.","kind":"news","is_publish_news":true,"is_publish_highlight":true,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":9065607222,"gmtCreate":1652182727366,"gmtModify":1676535046998,"author":{"id":"4092275556517550","authorId":"4092275556517550","name":"Toh_Chris","avatar":"https://static.tigerbbs.com/59542e8b00ca7947839b37f753f1b0c2","vip":1,"crmLevel":4,"crmLevelSwitch":0,"idStr":"4092275556517550","authorIdStr":"4092275556517550"},"htmlText":"Hold on tight while going through the waves&nbsp;","listText":"Hold on tight while going through the waves&nbsp;","text":"Hold on tight while going through the waves","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9065607222","repostId":1194744770,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9065177085,"gmtCreate":1652162108347,"gmtModify":1676535043779,"author":{"id":"4092698747642690","authorId":"4092698747642690","name":"WaiSiong81","avatar":"https://static.tigerbbs.com/81c10c8d3ad2387a719eaa62a541371f","vip":1,"crmLevel":1,"crmLevelSwitch":0,"idStr":"4092698747642690","authorIdStr":"4092698747642690"},"htmlText":"👍","listText":"👍","text":"👍","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9065177085","repostId":1194744770,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9065155414,"gmtCreate":1652159071738,"gmtModify":1676535043212,"author":{"id":"4113265924591412","authorId":"4113265924591412","name":"SGDarrenC","avatar":"https://community-static.tradeup.com/news/490332054db9b9bfd6e97300caaec5ec","vip":1,"hat":"https://static.tigerbbs.com/f84859c65fc2d7681e28f6b8e9b0535a","crmLevel":2,"crmLevelSwitch":0,"idStr":"4113265924591412","authorIdStr":"4113265924591412"},"htmlText":"Thanks for providing some assurance that my stocks are worth to hold.","listText":"Thanks for providing some assurance that my stocks are worth to hold.","text":"Thanks for providing some assurance that my stocks are worth to hold.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9065155414","repostId":1194744770,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9065169400,"gmtCreate":1652155259400,"gmtModify":1676535042461,"author":{"id":"3572388238861982","authorId":"3572388238861982","name":"MGHuat","avatar":"https://static.tigerbbs.com/bd2cbc6e014ed9c700e2d9cd01ae2b08","vip":1,"crmLevel":3,"crmLevelSwitch":0,"idStr":"3572388238861982","authorIdStr":"3572388238861982"},"htmlText":"like pls","listText":"like pls","text":"like pls","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9065169400","repostId":1194744770,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9065188477,"gmtCreate":1652154188899,"gmtModify":1676535042303,"author":{"id":"3570854254904038","authorId":"3570854254904038","name":"xnicx","avatar":"https://static.tigerbbs.com/2b4f8b6a208de92c4d6b4c87e044514c","vip":1,"hat":"https://static.tigerbbs.com/b073a07f77dbe6b3bec6b12311fde6bd","crmLevel":2,"crmLevelSwitch":1,"idStr":"3570854254904038","authorIdStr":"3570854254904038"},"htmlText":"Comment","listText":"Comment","text":"Comment","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9065188477","repostId":1194744770,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":9065181475,"gmtCreate":1652154059697,"gmtModify":1676535042295,"author":{"id":"3576386999150318","authorId":"3576386999150318","name":"AhHuat2021","avatar":"https://static.tigerbbs.com/3c20c9b8aace5e0ccfd594666a3ef199","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"3576386999150318","authorIdStr":"3576386999150318"},"htmlText":"Like","listText":"Like","text":"Like","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/9065181475","repostId":1194744770,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":180,"commentSize":34,"repostSize":0,"favoriteSize":1,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 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