Dan Passarelli, CEO - Market Taker Mentoring

Let's talk about where Twitter stock is heading next.

So I was talking with one of our 101 coaching students, I believe it was yesterday. You know who you are. I know you watch these videos, and we were talking about what the possibilities were for Twitter stock considering the Elon Musk potential takeover bid, for lack of a better way to put it.

So if Musk wants to buy the stock at $54 a share, then if that ends up being the number that finally is agreed on and he actually agrees to do it, then guess what? On the day he makes that announcement that is where the stock will jump up to, probably actually just a little bit shy of it, because there's always a little bit of risk of default in takeover situations like these stocks tend to always trade at least a little bit of a discount. But that said, if Musk comes out and he says, hey, you know what? Just kidding. I'm not going to buy this stock. Then it probably has a whole bunch of room to fall. Like a whole bunch of room to fall.

Because, look, if you look at some of the peers for Twitter, some of the social media names and that kind of stuff, they're all trading much, much lower from where they were back in, say, February. Right now, this stock is trading at a level pre-Musk announcement where it was trading around maybe March 23, where a lot of the stocks that we could look at in its peer group are trading much, much lower.

And so right now, Twitter stock is living in sort of a little bit of a hybrid world. It's trading at a fairly big discount from the potential buyout price because there's become a lot of risk of uncertainty there. But it's also trading much higher than it probably otherwise would be if Musk never made this announcement because all the other stocks are trading lower. So it's trading kind of in the middle. And so this ends up being a potential candidate, maybe for a straddle. We'll address that in a future video.

But when we finally get some visibility. And Musk said that he was going to address the employees of Twitter this week and personally, I don't see a whole bunch of actual information coming out of there. But we'll see. But if we ever get some very clear visibility on what will happen, we can see there's stock move a great deal higher or a great deal lower.