Twitter Stock Surges After Elon Musk Announces Stake

The stock has added more than 22% this morning

Deputy Editor
Apr 4, 2022 at 10:09 AM
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The shares of Twitter Inc (NYSE:TWTR) are up 22.3% to trade at $48.07 this morning, following news that Tesla (TSLA) founder Elon Musk has taken a 9.2% passive stake in the company. This likely makes Musk Twitter's biggest shareholder, with a filing showing that he now owns 73.5 million shares, or roughly $2.9 billion, based on Friday's close. 

Today's pop puts TWTR back above its year-to-date breakeven to trade at its highest level since early December. The stock is also set to topple its 100-day moving average, which it's tested in the past few sessions, with just one close above here in nearly five months. In March, Twitter stock flashed a seasonal warning sign, and though the signal didn't quite play out like it has in the past, with the equity adding 8.8% in March, TWTR did log its lowest close in nearly two years on March 7. 

These recent lows have kept analysts cautious. Of the 21 in coverage, just five consider TWTR a "strong buy," compared to 16 "hold" ratings. What's more, the 12-month consensus price target of $43.82 is a 9.3% discount to Friday's close. 

Options traders, on the other hand, have taken an unusually bullish stance. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), TWTR sports a 10-day call/put volume ratio of 4.38, which sits higher than 91% of readings from the past year. In other words long calls are getting picked up at a much quicker-than-usual clip of late. 

This preference for calls is being seen in today's trading too. In fact, call volume is running at an eyebrow raising 40 times the intraday average, with 178,000 calls across the tape so far, compared to 61,000 puts. The most popular is the weekly 4/8 50-strike call, followed by the April 50 call, with positions being sold to open at both. 

 




 
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