I got hosed on Twitter (TWTR) stock yesterday.
Here’s what happened…
Two weeks ago, Elon Musk revealed he had taken a 9.2% stake in Twitter.
The stock surged on the news.
Shares closed 27% higher the following day.
He was also scheduled to take a seat on the company’s board of directors.
He teased several potential changes to the platform from his personal Twitter account, but then things changed…
What Changed?
Suddenly, it was announced that he would not be taking a seat on the board.
Why the change? No one really knows.
But my guess would be a fight with upper management.
Then, yesterday morning, the big news came…
Elon made an official offer, filed with the U.S. Securities and Exchange Commission (SEC), to buy the entire company for $54.20 per share – all cash.
TWTR closed near $46 the day before. It was scheduled to open at $48.
But the richest man in America just made a bona fide offer to buy the whole thing for $54.
Once the offer was accepted, every TWTR shareholder would receive $54.20 for each share they owned.
Buy it at $48… Sell it at $54 a few days later… Sounds like a no-brainer, right?
I thought so.
But I was wrong.
What Actually Happened
Twitter stock actually went down at the Thursday open!
I told you how I missed out on the big move earlier this month. I wasn’t about to miss another opportunity in the stock.
So, I bought 1,000 shares at the open. Five minutes later, I was out and licking my wounds.
How could this be possible?
Honestly… I have no idea. This felt like a sure thing.
All the board has to do is say “yes,” and the stock jumps to $54 instantly.
Why would they say no? They have a duty to the shareholders to act in their best interest.
Selling their shares at a premium over the current price is definitely in their interest.
The only justifiable reason to turn down the offer is if they were confident that they could get a higher one.
Bidding War?
It’s possible that a bidding war could start, and another suitor could offer more.
In fact, one crypto-billionaire claimed he would pay $60 a share shortly after Elon announced his offer.
But that only adds to the bullish case. It just means that TWTR stock is worth at least $54 a share… maybe $60 or more.
Yet, despite all of this, the stock went down.
The only scenario that makes sense is this…
The Twitter board of directors plans to reject Elon’s offer. Hedge funds with inside knowledge must have known this and been behind the selling.
After his offer is rejected, Elon could dump his 9% position (roughly 78 million shares of TWTR) on the open market and crash the stock price out of spite.
This would scare traders out of buying the stock.
It’s the only storyline that makes any sense to me.
The stock market is a hard game. It has a way of humbling you end keeping your ego in check.
Any time something looks like a sure thing, it’s probably not. I was reminded of that lesson yesterday.
Become an Insider
Now, I consider myself to be an expert on insider buying and selling, but as you just read, I don’t win them all.
I’m not afraid to admit that… Why?
Because I have a proven track record of trading along the insiders like corporate CEOs, CFOs, executives and board members.
These folks are constantly buying or selling shares in their own companies.
And these folks have a footing of knowledge that Main Street investors simply do not.
I’ll cover my strategy for trading alongside corporate insiders — like Elon Musk — and generating potentially massive gains as a result.
Embrace the surge,
Ross Givens
Editor, Stock Surge Daily
