CEO Elon Musk’s bid for Twitter (TWTR) distorted not only TWTR stock valuations but also that of Tesla
(TSLA) stock. The two stocks are closely tied together for now. Until the deal closes, investors may trade
one or both stocks. The wide volatility will offer traders plenty of profit potential.
Twitter’s buyout price is $54.40. The stock traded as low as ~ $36 in recent weeks. Markets doubt that
the deal will go through. The Board must extract the highest price from Elon Musk. At best, it may
reinforce the original $54.40 offer.
Musk countered that Twitter over-stated its user base count. His claim that the company
underestimated its fake user count is not enough to justify a lower sale price. Musk also risks
reputational damage if he tries to cut the bidding price on those grounds.
The Board has too small a position in TWTR stock to enforce the deal. Investors should anticipate that
Musk would replace the entire Board when the deal closes.
Tesla stock is stuck among the TWTR stock buyout. The stock plunged recently but recovered. Musk’s
commitment to the deal removed some uncertainties. Fortunately, the company faces no real threat
from Lucid (LCID) or Rivian (RIVN). Its strong growth justifies a rebound from here. Therefore, Tesla has
better prospects.
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