Good morning. With the broader market taking a beating, there is a risk that Elon Musk could reprice his bid to take Twitter private — at least according to one short seller.
As markets buckle, the Musk-Twitter drama could potentially enter a new chapter. Let's take a look.
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1. A short seller sees risk of Musk repricing the Twitter deal. According to Hindenburg Research, the Tesla CEO has all the leverage and the stock price would be a lot lower without his bid.
The deal in its current form, the analysts wrote, may be threatened thanks to several key developments in the broader market, including the Nasdaq's nearly 20% dip since Musk disclosed his 9.2% stake in the company on April 4.
In the absence of Musk's takeover proposal, Twitter's implied stock price is about $31.40, the analysts wrote. That's good for roughly 37% downside from its current trading price.
"Twitter has outperformed the Nasdaq by ~43% since Musk disclosed his initial position, setting the stock up for a material downside reversion should Musk walk away from the deal," the report reads.
And there's still a looming threat of the $1 billion breakup fee that lets Musk ditch the deal. This piles more risk on top of the potential that Musk sells his 9.2% stake if a deal fizzles out.
"In our view, Musk holds all the cards here," the analysts concluded.
In other news:
2. US stock futures rallied early on Tuesday. It comes after Monday's trading saw the S&P 500 sink below 4,000 for the first time in over a year as each of the three major indexes turned red. Here is your morning market snapshot.
3. On the docket: Norwegian Cruise Line Holdings, Aramark, and Hyatt Hotels, all reporting.
4. The risk of a stock market crash is rising. But according to UBS, these 40 high-quality stocks should beat the market by around 15% in a recessionary environment. See the firm's full list of picks here.
5. There's nowhere to hide in markets. Diversification has failed to protect portfolios from a myriad of macroeconomic risks, including inflation and rising interest rates. This is why stocks, bonds, and crypto are all getting crushed.
6. Bitcoin briefly fell below $30,000 on Tuesday and is now almost 60% below its all-time high. Crypto has come under fire as investors prepare for a hawkish Federal Reserve. As one analyst put it: The "dramatic reversal of Fed liquidity…will collapse the pandemic-era bubble in cryptocurrencies." More here.
7. Goldman Sachs is moving to halt work on most SPACs due to liability concerns. As regulators beef up guidelines, the investment bank is backing away from the space, Bloomberg reported Monday. In March, the SEC proposed rules that call for greater disclosure of conflicts of interest, and would make it easier for investors to sue over false projections. Here's everything you want to know.
8. Cryptos are getting killed right now, but the investment chief at a digital asset firm still believes in this batch of altcoins. Ben McMillan isn't losing hope on a turn around for digital assets. He shared the five cryptos he has his eye on — and the ideal percentage of your portfolio that should be in virtual tokens.
9. As stocks nosedive, Goldman Sachs named which companies investors should buy right now. David Kostin of Goldman Sachs said companies that spend big on stock buybacks should outperform, and they might contribute to a notable rally soon. He highlighted these 17 stocks.
10. This graph shows how inflation is outpacing wages. At a glance, it looks like wages are going up — but they aren't keeping up with skyrocketing inflation.
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Curated by Phil Rosen in New York. (Feedback or tips? Email [email protected] or tweet @philrosenn.) Edited by Hallam Bullock (tweet @hallam_bullock) in London.