Is Twitter turning the tide?
$Twitter(TWTR)$will be holding an extraordinary shareholder meeting tomorrow to vote on Elon Musk’s proposed $44 billion acquisition of the social media platform, which the $Tesla Motors(TSLA)$'s CEO has since attempted to walk away, with both parties accusing one another of non-compliance of its contractual obligations.
After Twitter filed a lawsuit against Musk to hold him to the original acquisition agreement and an unsuccessful bid by Musk to delay the court hearing, a 5-day trial is set to commence on Oct 17.
I would expect the EGA to pass the vote overwhelmingly in the meantime. Twitter’s share price has since recovered from its low after Musk announced his abandonment of the deal, as the market doubted that Musk’s bad faith and buyer remorse will go well with the judge and get him out of the agreement.
Will you take a position in Twitter now in anticipation of a favourable legal outcome for the social media company? There’s almost 30% profit to be had based on its last-traded share price if Musk were to be forced to honour his best and final offer to buy the company for $54.20 per share.
On the other hand, the stock is likely to retest its low of $31 and perhaps even breach that and set another record low if the outcome turns out otherwise.
I’m not sure about the fortune of Twitter eventually, though I believe the court case is going to consume much of Musk’s bandwidth in the near future and deprive Tesla of the CEO’s dedicated attention at a time when that is most critical to helm the electric car maker amidst tightening business environment and fend off increasing competition from other EV makers and incumbent conventional car makers jumping onto the EV bandwagon.
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