- Hindenburg Research announced it had built a "significant long position" in Twitter stocks Wednesday.
- The research firm's founder said that Twitter will rally after the collapse of Elon Musk's takeover deal.
- Twitter surged 8% after Hindenburg's announcement.
Hindenburg Research has built up a significant stake in Twitter as a legal battle brews between the social media company and Elon Musk.
The research firm said that it is bullish on Twitter after the seeming collapse of Musk's $44 billion takeover bid.
"We have accumulated a significant long position in shares of Twitter," Hindenburg tweeted Wednesday. "Twitter's complaint poses a credible threat to Musk's empire."
Musk is attempting to terminate the merger agreement he signed with Twitter in April, which said he would take the company private at a price of $54.20 a share. Twitter intends to sue him for backing out of the deal.
Twitter shares initially rallied 8% on Wednesday, before slipping 0.2% at the opening bell Thursday.
Hindenburg is renowned for its activist short-selling approach, having published high-profile reports criticizing companies including Nikola, Kandi Technologies, and Lordstown Motors. It's much rarer for the investment firm to make a long position public.
"Musk has squandered much of his leverage, largely through misadvised and compulsive tweets," Hindenburg founder Nate Anderson told the Financial Times this week. "Twitter has a strong case."