Twitter may continue gaining as Musk targets a higher stake. Trade the hype but cautiously

Twitter Inc. (NYSE:TWTR) has been in the news lately. The hype comes from Elon Musk becoming the largest shareholder in the company. He was set to become a board member whose opportunity cost would be not increasing the shareholding to more than 14.5%.

Elon Musk rejected the offer to join the board. He is now free to buy whatever stake he deems right. What should the investors expect?

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Twitter gained from $32 when SEC filings revealed that Elon Musk had become the largest shareholder. Today, the stock is trading at $47.01. The thing that is more critical for investors is how the ongoing interactions between Musk, the CEO, and the board is likely to alter the company.

Changes could be expected in the company’s revenue model. On stock valuation, success in changing the revenue model would result in gains in the market. Whatever the way, investors target higher returns.

Twitter still has room for gains as the price is still below 50-day MA

Price chart analysis shows that Twitter is trading above the 200-day moving average but below the 50-day. Though the lower-term moving averages have picked bullish momentum, they are still below the longer-term averages. Investors may not yet be convinced that the stock rally is above $50. Therefore, more action from the company and the leading investors will certainly determine the stock trends.

Summary

This analysis considers that Twitter is still far from a full valuation. Knowing the behavior of the lead investor and the influence on the market, it could be expected that Twitter will gain significantly. Investors could focus on trading the hype.

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