The Twitter stock price is up this Thursday after it emerged that new Twitter owner Elon Musk had secured additional financial backing from Oracle founder Larry Ellison and the Binance exchange for the leveraged buyout of Twitter Inc.
Musk had reached a deal with the Twitter board for a sale of the social media giant for $43 billion, out of which Musk would only pay about $24 billion in cash from his own money. The rest of the funding for the deal would be from loans taken from investment banks and other backers, using Musk’s Tesla stock as collateral in what would be the biggest leveraged buyout in history.
According to the SEC filing disclosing the deal, Ellison will contribute $1 billion while Binance will come up with a $500m contribution. Sequoia Capital will also be part of 18 known investors in the project with an $800m contribution. Also making up the 18 forms include Aliya Capital Partners LLC ($360m), Qatar Holding ($375m), Fidelity ($316m) and Brookfield ($250m).
The Twitter stock price first stormed higher by 27% when the deal was announced on 1 April. Despite pulling back from those heights, the stock still looks attractive to investors who are keen to jump on the train.
The upside gap takes the Twitter stock price above the 50.23 price resistance (19 November 2021 and 29 April 2022 highs). This move opens the door for a further push to 52.84 (16 November 2021 and 6 April 2022 highs). Above this level, additional targets to the north lie at 56.10 and 58.89 (10 September 2021/6 October 2021 lows in role reversal).
On the other hand, a decline below the 50.23 support opens the door toward a potential decline to 48.46 (19 November 2021 and 4 May 2022 lows). The ascending trendline that connects the recent lows cuts across this support level. A decline below this support and the ascending trendline allows the bears to push towards the 45.01 support (11-21 April lows). The 42.33 support level only becomes viable if there is further price deterioration.
Follow Eno on Twitter.
This post was last modified on May 06, 2022, 07:10 BST 07:10