A fight is set: Elon Musk has pulled out of his $44 billion takeover of Twitter, and, in response, the social media company is taking the world’s richest man to court (a Delaware court, specifically).
One bookmaker, popular short-selling firm Hindenburg Research, has placed Twitter as the favorite in the legal battle. The markets are already moving.
The Long and the Short of It
Hindenburg on Wednesday disclosed a “long position in Twitter stock” and, what else, a Tweet. The company’s blunt and neutral message warned that “social media company complaints threaten Musk’s empire.” Hindenburg founder Nate Anderson told it Financial Times that Musk “lost much of his power, largely through ill-advised and forced tweets,” and dismissed his excuse for ending the deal — that Twitter has too many bot accounts.
Ironically, Anderson was in the Tesla CEO’s corner as recently as May, when his company closed a short position on Twitter and said Musk held “all the cards” to bring the deal back from $54.20 per share to around $48. Hindenberg’s sudden rise adds up to a history of intense turmoil, cautious ironies, and high-stakes sales:
- Last year, amid the SPAC boom, Hindenburg established short positions in DraftKings and electric car makers Lordstown Motors and Nikola. Nikola’s founder has since been charged with securities fraud, Lordstown’s CEO resigned amid an SEC investigation alleging the company misled investors, and DraftKing’s stock has fallen more than 80% since Hindenburg claimed the sports betting company had ties and the black market.
- “There’s just a lot of disgusting companies,” Anderson, who spoke out for the first time noting the $1 billion fraud case handled by hedge fund Platinum Partners, said. New York Times last year. “Some of these companies we have looked at, they have no income at all.”
Twitter shares jumped nearly 8% on Wednesday after Hindenburg’s confidence vote. Suffice it to say for Musk and Twitter, the company has a knack for seeing winners — and losers — when it sees them.