Twitter Stock News and Forecast: TWTR stock bows to Tesla king's takeover

Cash is king they say and that certainly seems to be the case for the Twitter (TWTR) board as they did one of the sharpest 360s in stock market history. After only last week more or less rejecting Elon Musk's takeover approach they did a swift u-turn that an indy car driver would have been proud of. Last week the board was adamant that they would fight to the last against Elon Musk's bid and even instigated a poison pill defense. This was an unusual and highly aggressive move and is not one often used in corporate takeover battles. So it came as quite a surprise when the Wall Street Journal ran a story saying the Twitter board was meeting to reconsider their position and behold they took the second bite of Musk's cherry! 

Twitter (TWTR) stock news: Cash is King

Elon Musk, the Tesla CEO – or to give him his official Tesla title – 'The Technoking of Tesla', looks to have forced a change of heart from the Twitter board once the cash was put on the table. Cash is always king and especially in this market. Once reports surfaced that Elon Musk had secured funding for the deal then the Twitter board made a sudden about-face from their strong initial defense. So Elon Musk's original and final offer as he put it for $54.20 per TWTR share was accepted by the Twitter board. No other bidders had materialized it seemed so the floor was open to Musk and only Musk.

There had been speculation as to how he would secure funding or whether he would need to sell a large chunk of Tesla (TSLA) stock to fund the deal but given his status, it always seemed fairly odds on that someone would deem him good for the cash. 

Musk has made some pledges on how he sees the future for Twitter but these have been broad-based and vague. He says he wants to keep the platform open and hopes his worst critics will remain on the platform as he is a free speech devotee. He also reportedly wants to give users the ability to edit tweets. It remains to be seen how this advocacy of free speech will go down with regulators and governments.

Already, the EU is cracking down on big tech companies and their content moderation. It seems Musk wants to move Twitter in the other direction. The White House commented on the deal saying 'No matter who owns or runs Twitter, the President has long been concerned about the power of large social media platforms [and] the power they have over our everyday lives'. Donald Trump has already come out and said he has no plans to return to Twitter even if his account is unlocked.

The former President is of course bringing an alternative social media project to fruition, Truth Social via a SPAC deal with Digital World Acquisition Corp (DWAC). DWAC stock fell on Monday as Twitter now looks like a more open rival to this social media startup.

TWTR stock forecast

$54.20 is the offer level and with no other bidder appearing it seems likely this one will trade at a discount until closer to the final deal date. Merger arb players will work out the risk premium and cost of carry and determine the risk worth taking in buying Twitter.

Likely to be north of $50 with somewhere around $3 the likely risk premium. 

TWTR stock chart, daily

*The author is short Tesla stock.