Today(well yesterday its 3 am) the news was twitter been bought, the right believes there’s a savior, leftists are crying, trump isn’t joining for an unknown reason, and the naysayers are saying “well technically there’s still some paper work to sign”.

BUT… the share price is 49$ when the buyout is 55$; which gives me pause, and the more I think about it the less coherent the story is.

This isn’t my market, I don’t know the politics around hostile takeovers, their success rates, or have a frame work for estimating how they will go. So don’t trade on this but that’s wrong, something here must be a lie.

The mathz in my head goes as follows: if you assume that twitter buyout fails and it would collapse to 30$, that suggests the market gives 80% credence to the buy out. At 40$ its 66% at 45$ its fifty fifty.

Playing fast and loose with the math, lets try a thought experiment, should you take a bet that given a coin flip where you pay in 10 dollars, if you lose you get 9 dollars, if you win you get 12.

I would simplify this question by subtracting 9 from 10 and 12; cause 9 is small, if it was 1000 maybe you worry about the effects of trust and interest rate, but at 9 lets linearize it and assume trivialness. And 1 dollar to get a 3 dollar coin flip is a good bet. 1<3*.5.

So in my head buyin - payback == (payout - payback) * odds and I see little reason why that wouldn’t apply to the 50$ range with dollar sized payouts.

So assuming that the market trys to make fair bets and that 30$ estimate: 50-30==(55-30)*80%; I know I’m breaking ground on math here.

But that’s what the market is saying. I see 3 options to consider here: the stock market has a massive left wing bias, insider information knows something is coming to attack the deal, or hostile takeovers fail even at this stage.

But the thing about the left wing bias is they would have different math, if you believe elon in hitler defeating hitler wouldn’t make the stock price drop to 30$ it could stay the same or raise slightly. If you assume a left winger believes that the price was 45$ after a failed deal, the math above says 66%. Maybe your looking at 4/12 price of 44$ as a low for when twitter is in the news. If your completely delusional and say twitter is worth 50$ without elon this buyout is free infinite money printer. So I discard it as an option.

That leaves the other two, insiders know something or hostile take overs fall at a high enough rate to justify <80% credence on the news, probably less.

With 50/50 credence I think there is another blockaid in the future that will say “twitter buyout cancelled says regulators” in the next 2 weeks. And 30% odds that the deal does fail from something that insiders have planned. I’m just bothered by this seemingly simple math, when I don’t see doubt anywhere.