While I know I will get lambasted for posting anything other than “recession incoming”/”sell sell sell”, I'm seeing the price of Twitter at $50 which is $4.20 below Elon's now accepted offer from 4/20 and I'm realizing that means there is a appx. $3.5 billion arbitrage opportunity that the market is declining to take. Sure, things can go wrong with any deal, but $3.5 billion is a pretty big gap…
Why is this happening? Well the only legitimate reason I can think of is the overall market is realizing there are even better opportunities elsewhere. SPY is currently trading at $420… Should it come back to recent highs of $470 that's an 11%+ gain, which is “better” than the appx 9% max gain you could get from Twitter… Personally, I think the Twitter opportunity is less risk, but I'm slightly tempted to go with SPY for a larger gain (more risk, more reward). Point is, I think the market is selling Twitter knowing the max gains they can make there are 9% in favor of other equities that could yield even bigger gains in the near term.
I'm wondering if anyone else is looking at the share price for Twitter @ $50 and thinking “man, I could easily pocket a 9%+ almost risk free gain in a few short weeks when the deal closes”, but deciding not to do this simply because there are better opportunities on your buy list… Or is the general consensus that the Twitter deal is not a “sure thing” at this point. If that's the case, interested to hear why people feel it's still risky… regulations? Funding not secured? Elon trolling? 420 a sign for weedstocks?
Please note, I'm not interested in hearing your bear thesis about how rate hikes going to make things worse, etc… Obviously, the future is unknowable; more interested in why the market is not closing the Twitter gap…
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