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CapitalPanda | Can Twitter bring down Tesla?

Latest news

Read current news from the financial markets and expert articles from our analyst.

Can Twitter bring down Tesla?

Twitter decision[1]

Elon Musk bought Twitter for $44 billion on Monday, according to the business, giving him control of a hugely powerful social media site that acts as a forum for political leaders, a sounding board for specialists across sectors, and an information center for millions of regular users.

The acquisition came after weeks of proselytizing on the importance of "free speech," as Tesla CEO Elon Musk pounced on Twitter's status as the "de facto town square" and objected to content filtering initiatives he sees as a step toward censorship. He stated that he considers Twitter to be crucial to the operation of democracy and that economics are unimportant to him.

Twitter will become a private corporation, with stockholders receiving $54.20 per share, according to a news statement. The transaction is likely to finalize this year.

twitter 1

Image 1. Twitter performance for the last five years (source: tradingview.com)

Where Will He Get the Money for Twitter?

Musk has detailed the $13 billion in bank funding acquired by the social media business, as well as the $12.5 billion backed by a commitment of a portion of his $170 billion Tesla Inc. shareholding. But he's been tight-lipped about how he'll pay for the rest.

According to the Bloomberg Billionaires Index, he is the world's richest individual, with a fortune of $257 billion. According to Bloomberg, he possesses around $3 billion in cash and reasonably liquid assets.

Following his original bid to purchase Twitter, Musk stated at a TED event that "the objective is to retain as many stockholders as the law allows." Private firms in the United States, on the other hand, are normally limited to less than 2,000 stockholders. As a result, if the deal is completed, most individual investors will no longer own Twitter.

The second thing he can do is sell holdings in his businesses. Even if Musk is unable to attract many additional equity investors, he has the financial clout to do it mostly alone, due to the crown jewel of his immense fortune: his ownership in Tesla. It's possible that he'll sell his holdings in his private firms, SpaceX and The Boring Company, but it's improbable because they're so much less liquid.

twitter 2

Image 2. Tesla performance for the last 5 years (source: tradingview.com)

 

The last option is that Musk is even wealthier than the Bloomberg Billionaires Index estimates. Musk said in July that he owns Bitcoin, Ether, and Dogecoin. While it's unclear how much he owns or how long he's had them, the first two cryptocurrencies have risen by around 720 percent and 2,600 percent, respectively, since March 2020, a significantly higher rise than the S&P 500 Index's about 90 percent rise.

Tesla Short Positions

On Friday, April 22, claimed images of a text message exchange between Tesla CEO Elon Musk and Microsoft co-founder Paul Allen were released on Twitter, which Musk is purchasing for $44 billion.[2]

The conversations appeared to show Musk declining a charitable offer from Gates after inquiring whether the software mogul had shorted his electric vehicle firm, implying that Gates would profit if the stock's value plummeted.

According to screenshots, this was communication:

E.M.: "Do you still have a half billion dollar short position against Tesla? B.G.: "Sorry to say I haven't closed it out. I would like to discuss philanthropy possibilities." E.M.: "Sorry, I cannot take your philanthropy on climate change seriously when you have a massive short position against Tesla."

Asked on Twitter if the messages were “real,” Elon replied “yeah”.

 

Disclaimer:

The content of this material constitutes marketing communication and should not be considered as any type of investment advice and/or investment research and/or a solicitation for any transactions. This material was prepared for informational/educational purposes only and does not imply an obligation to perform investment transactions nor does it guarantee or predict future performance. BCM Begin Capital Markets Cy Ltd and its relevant persons including affiliates, agents, directors, or employees do not guarantee the accuracy, validity, timeliness, or completeness of any information/data provided by third parties and assume no liability for any loss arising from any investment made based on the said information/data.

Overview report prepared by Jozo Perić, Head of Portfolio Management Department and Investment Research Department

 

[ ] Forward-looking statements are based on assumptions and current expectations, which may be inaccurate, or based on the current economic environment which is subject to change. Such statements are not guaranteeing of future performance. They involve risks and other uncertainties which are difficult to predict. Results could differ materially from those expressed or implied in any forward-looking statements.

 

*Past performance is no guarantee of future results.

 

[1] Twitter: https://www.barrons.com/articles/twitter-stock-price-return-arbitrage-51651009399?siteid=yhoof2

[2] Twitter Musk: https://twitter.com/elonmusk/status/1517702987359133696

The content of this material constitutes marketing communication and should not be considered as any type of investment advice and/or investment research and/or a solicitation for any transactions. This material was prepared for informational/educational purposes only and does not imply an obligation to perform investment transactions nor does it guarantee or predict future performance. BCM Begin Capital Markets Cy Ltd and its relevant persons including affiliates, agents, directors, or employees do not guarantee the accuracy, validity, timeliness, or completeness of any information/data provided by third parties and assume no liability for any loss arising from any investment made based on the said information/data. Past performance is no guarantee of future results.

CapitalPanda | Where is Yen right now?
17.05.2022

Where is Yen right now?

According to a Nikkei survey of experts, consumer prices in Japan are on track to climb 2% this month for the first time since 2015. Despite the Bank of Japan's efforts to ensure stable 2 percent infl...

CapitalPanda | Price of gold is going… where?
09.05.2022

Price of gold is going… where?

Gold prices are influenced by a mix of supply, demand, and investment activity. That appears to be straightforward enough, yet the way those components interact is sometimes counterintuitive.