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I think you should look at the historical volatility of TWTR before calling a 22% move "insane pressure". It's also worth noting that the stock price is almost
by williamsmj 5y ago
I think you should look at the historical volatility of TWTR before calling a 22% move "insane pressure".
It's also worth noting that the stock price is almost unchanged today as of this writing, which tells you that the market thinks he's not serious, or his lowball offer is going to be laughed out by the board, which significantly reduces the amount of "insane pressure" he's exerting.
- llbeansandrice 5y agoWhat does historical volatility have to do with it? If Elon can basically manipulate his investment into a 22% return why on earth wouldn't he do that? A single person able to pressure a single commodity to the tune of 22% is bonkers. I'm not debating whether that will happen, just contending your first statement.
- infofarmer 5y agoIt's not just any single person.
- williamsmj 5y agoI agree it's bonkers that this is possible. I agree, in an environment where the SEC seems unable to stop him, Elon Musk might well consider 22% return worth doing. None of that is relevant to the point I'm making. I'm contending the claim that the implicit (and completely pro forma!) threat in his SEC filing places "insane pressure" on the Twitter board. The the possibility of a 20+% stock price change will not play a large part in their calculations. It's just not a big deal in the context of such a volatile stock.
- cambaceres 5y agoDon't you think he would lose a lot of reputation in future deals like this? I wouldn't trust him.
- edmundsauto 5y agoHe hasn't needed any trust to go this far, his MO here is more of a hostile takeover, and he doesn't need any permission from Twitter to do it.
- cambaceres 5y agoGood point.
- aiisjustanif 5y agoBecause the existing volatility sets the tone for the underlying risk tolerance that shareholders already deal with. It sucks, it’s not insignificant, but I do agree it’s not immensely significant as you are making it seem. It’s just the exposure a public company on the market can have have these days.
- darawk 5y agoHe can't manipulate it into a 22% profit, for exactly the reason you articulated. His buying pushed the price up - his selling will push the price down. He might might make a small profit from the increase his buying news generated if he were to sell now, but his VWAP would be well below 22%.