• Andres Chocron

Elon Musk: Tesla after Twitter

$TSLA Stock after $TWTR takeover bid

Hello everybody! Lets talk about the Israeli tech ecosystem.

Elon Musk, Twitter, Tesla. What a couple of weeks we've had with this story.

Let's talk about this. Tesla is at around 900 dollars. And we're used to seeing Tesla going down to 850 back to 1,100, but I think this time is different and let's see why.

Lets cover:

The Market this week

The whole market is in red. We've seen a horrible, horrible last week. Well, horrible year in general, but, this last week has been really, really bad for the markets just yesterday was green but the rest all red, if we see here the last five days NASDAQ 100 minus 7% Russell, 5.65% down, Dow Jones Industrial avg down 3.68, and S&P 500, 5.15% down in the last five days. The VIX on the other hand is up 52%.

Now everything's in red everything's specially, technology and consumer discretionary, but utilities and energies are in green very very tight green utilities up 0.4% and energy, 2.3%.

Tesla down 10%

But the overall market is red. Very, very red. Tesla 900.64 down 9.76%. And there's a reason why, and let's check it out. We know Elon Musk has, made an offer to acquire Twitter.

Now the offer was accepted, supposed to be done in the next few months. It's a big acquisition of $44 billion, but let's remember Elon doesn't have $44 billion in cash. Ready to be submitted so he had to go out and talk to a bunch of banks. I think it was 12 all from JP Morgan to Goldman Sachs, to all of the big ones, to get commitments from them, to buy Twitter.

But if you're the bank, you have to ensure that you're giving money to a person that's going to pay it back. You want to see the accounting of Twitter and everything but because it's a hostile takeover, it's not a friendly, Twitter didn't come out and said, please buy me. It was what they call a hostile takeover.

Hostile takeover of Twitter

Only the accounting that is public was available for the banks and for Elon Musk to present so the banks are assuming that the managerial expertise of Elon Musk is going to do wonders for this don't know how much money he's going to be making with Twitter. And he has said many times that the economics of Twitter is not something he's focused on, especially now, which is a weird statement to make.

Now, Elon Musk has 3 billion in cash or near cash assets. He already has 10% of the company, so he needed these loans and the loans can be in two ways. Let me show you what they did morgan Stanley one of the principal banks for the acquisition said that they helped secure 25.5 billion in funding for the deal, including 12.5 billion in loans that use Musks Tesla stock as collateral.

And this is one of the most important things because. Tesla stock has been so high. So high reaching 1,220. If I remember correctly, when a Timbal Musk sold, which by the way, the sec is investigating Elon Musk's brother for insight training, because he sold, just at the tippity top.

Now we know that Tesla is overvalued. A lot is expected of this company. And at some point they're going to miss some earnings, even though it's a fantastic company, it's still valued. And let me show you this, it's still valued at 121 PE that means price earning ratio. That means it's very, very expensive stock

if you believe it's going to keep continuing to grow a hundred percent quarter after quarter. I understand, but for investors and especially in this environment where high inflation and wars going on, especially Ukrainian Russia, a lockdowns in China, inflation all over the world, especially in Europe and the US, US getting into 7.5%

Twitter Tesla debt payments

the stock market is getting a little fragile. So it's going to go down. A lot of people are expecting, Tesla PE to contract, meaning the stock price will go down around 20%. that's the number that I've been hearing around. So now its down 10% in one day and it's open that Elon Musk will have to sell billions of this stock to fund Twitter.

The only reason that he wouldn't have to do this is if he makes the turnaround of Twitter be so dramatic and so fast that they're going to start making so much money and he can, convert it and go back to an IPO, relisted to the public and pay, the debt. Now it's very hard for a 16 year old company to turn around fast if somebody can do it, that's Elon Musk, but let's see what Jack Dorsey has to say because he was the founder and CEO for many years.

Jack Dorsey on Elon Musk Twitter

And if we check here, Jack Dorsey says the idea and service is sold and matters to me talking about Twitter, obviously, and I will do whatever it takes to protect both Twitter. As a company has always been my sole issue and my biggest regret, Has been owned by wall street and the ad model, which obviously the ad model is not going away.

Maybe they're going to do more of the blue service so that you can get, a blue tick and more, features on the platform for a couple of bucks a month, A lot of people would do it, but if you really want to make billions of dollars and make it a money-making machine like other social media platforms You're really gonna have to rely on ads.

In principle, I don't believe anyone should own or run Twitter. It wants to be a public good at a protocol level, not a company solving for the problem of it being a company however, Elon is the singular solution. I trust. I trust his mission to extend the light of consciousness. This is bullocks but this is what the founder of Twitter said about Twitter accepting Musk's offer.

I followed Jack Dorsey for many years. He's a CEO of, square in that the only reason I don't invest in square it's because he's a little bit in a huge high horse with a lot of hallucinogenics, I guess, or, or hayahuasca or whatever it is. And he hates capitalism. He wants crypto, but he has two public companies under his name. very interesting fella.

Jeff Bezos on Elon Musk and Twitter

And the other billionaire to come out of the gate and come out swinging was Jeff Bezos. And he, published a tweet, which was obviously trying to mess with him. he said some nice things about Elon Musk, but everybody forgot about the nice things. And they focused on the negative, which is Tesla. Second biggest market is China. That means China has an influence on Elon Musk. So he made the connection while he retweeted the connection and made the suggestion that now China is going to have an interest in Twitter. This has gone wild. and it's interesting because it's just clickbait.

But if you see here that the, let me show you here. Jeff has this takes a swipe and must Twitter. He basically went out and said " interesting question. The Chinese commerce just gain a bit of leverage over the town square". He asked for sure jokingly, because afterwards he said my own answer to this question is probably "NOT" the more likely outcome in this regard is complexity in China for Tesla rather than censorship at Twitter. But we'll see, Musk is extremely good at navigating this CA this kind of complexity. So they've basically owned the news for the last couple of days or weeks.

Investors beware

Elon has, a flare for the dramatic. So everything he does has to be with a splash so it's going to be very interesting to follow this up. Remember if you own 📍 Twitter it's going to close when they finish this acquisition at 54.20 and if you're a Tesla shareholder, expect the stock to be a little bit more volatile and pay very much attention to this deal and the following months, because at some point Elon is going to have to sell stock to pay this debt that's the only way to do it. It's billions and billions of dollars, and he doesn't have a liquid position to cover that.

So it's going to have to come from somewhere. The only liquid place is the Tesla stock if he sells and, uh, that's it for today. Thank you very much. Good luck and let's hope this week ends on a better note than today

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