Twitter (TWTR) arb, mcap=$28bn, price $36.81 vs $39.40

Pitch:
– Elon is having buyer’s remorse and trying to walk away from buying Twitter.
– Strict contract terms make this almost impossible.
– High number of arguments and examples of why Musk’s attempt is bound to fail.
– He would almost certainly lose in court.
– 95%+ chance the deal closes on terms or with a slight haircut.
– Market is mispricing the situation creating a very favorable risk/reward at current levels.

Valuation:
– Market is pricing in only a 56% chance of transaction closing on terms, assuming a downside at $20/share.
– The actual probability is closer to 95%.

Exp. gain: +40% to $54.2.

Full TWTR write-up (free guest account required): https://www.valueinvestorsclub.com/idea/TWITTER_INC/4957783492

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