Ask HN: Can I make a financial bet on Twitter?

20 points by MarkMc 3 years ago | 26 comments

Unlike many people I think that Elon Musk's shakeup of Twitter will make it significantly profitable in the next few years. But I cannot buy shares in the company because he has taken it private.

Is there any way that I can make a large bet with the naysayers about the future of Twitter? Maybe taking a position in some kind of credit default swap or some other derivative?

ksherlock 3 years ago |

Morgan Stanley has lots of twitter bonds they'd like to get rid of. You could probably buy the bonds directly (at a 70% discount).

more_corn 3 years ago | |

^ one of the few responses actually answering the question. Everyone else wants to argue OP out of their bet.

staticman2 3 years ago | |

I looked up what Twitter bonds I could find for puchase today and if I'm reading this web site correctly a Twitter bond that runs till 2030 has an effective yield of between 4.86% and 5% depending on daily price fluctuations.

This isn't a very exciting investment opportunity.

https://markets.businessinsider.com/bonds/twitter_incdl-note...

A 2030 treasury ETF has a yield of 3.86%. This means you'd be compensated around 1.15% per year for taking on the risk of Twitter going bankrupt.

mattbrewsbytes 3 years ago |

The result of the purchase has saddled the company with debt around $13B and historically the balance sheet hasn't shown a consistent cycle of profits, user growth, etc.

What is making you think it will be significantly profitable, much less just profitable?

sidibe 3 years ago |

You can invest in Ark Venture Fund which has some stake in Twitter, but is run by Cathie Wood so it is basically like throwing money away (though most would say that about Twitter anyways).

Otherwise Twitter exceeding expectations might bleed into Tesla share prices because the opposite is definitely true, but it wouldn't be a long term effect since mostly it's because people are scared of Elon having to sell more TSLA

meltyness 3 years ago |

You could maybe lever into their bond issuances, if you can find a seller and suitable leverage? On BusinessInsider's screener I see as high as 5% coupon which isn't great in this environment.

It's less direct, but the battle for eyeballs is sort of zero-sum, so if you think that Twitter could take a chunk out of META, SNAP, PINS, userbase then inverse exposure there may be your route, or possibly the news media... businesses hedge their model against this sort of risk too by M&A.

neural_thing 3 years ago | |

The bonds are bid at 60 cents on the dollar IIRC, so the yield is significantly more than 5%

meltyness 3 years ago | | |

I don't really know how to read this[0], honestly.

[0] https://markets.businessinsider.com/bonds/finder?borrower=29...

Bubble_Pop_22 3 years ago |

> Is there any way that I can make a large bet with the naysayers about the future of Twitter?

Make the most flattering posts about Musk on Twitter, do that for at least a month, guy loves fluffers so chances are he'll notice at least one and will retweet, from there you have a chance at getting in the special club of favorites fans like that guy from India.

It's the same of groupies showing their breasts to band members on stage, the social dynamics are incredibly similar too!

jross225 3 years ago |

For non-accredited investors, getting a job at Twitter would likely be the best way to get a meaningful position.

blitzar 3 years ago | |

Even for accredited investors I doubt there is anyone wanting to sell the stock they picked up at a $54.20 a month or two ago at where it is likely to be trading now ... $24.20 is probably around where the bid is.

more_corn 3 years ago | | |

There are secondary markets for shares in privately held companies. I signed up for one but I never followed through and did anything with the account so I can’t describe the process. I disagree that OP won’t find anyone willing to sell. I expect many people will jump at the chance to unload their shares.

lupire 3 years ago | | |

> where it is likely to be trading now

Is pretty much the definition of

> anyone wanting to sell the stock

nonameiguess 3 years ago |

I don't have a specific recommendation because I don't use any of them, but as far as I understand, prediction markets allow users to propose new predictions that can be bet on. Another option is to simply attempt to directly bet someone who is willing to take the opposite bet. There should be no shortage of takers. This is obviously riskier since you're not a book and can't do much to enforce payment, so usually a very public bet with someone who is well-funded and would rather pay than suffer the embarrassment of backing out is a typical approach.

HappySweeney 3 years ago |

Is this predicated on analysis, or is it more gut feeling and Elon's past performance? I ask because I don't see a path to profitability for Twitter, and would love to know what I am missing.

MarkMc 3 years ago | |

Yes Musk's track record is one factor, but mostly it's my personal experience seeing how poorly targeted Twitter's ads are. For example:

1. When I go on vacation I see ads in a language I don't understand

2. When I sign up for a service like Disney Plus I still see ads for that service

3. When I sign into a real estate website and mark some houses as 'favourite', that website doesn't show me ads on Twitter for similar houses

4. When I put an item in an online shopping cart and leave it there for a few days, I don't see any Twitter ads suggesting I complete the purchase

5. I live in an inner-city area, but for some reason Twitter shows me ads for combine harvesters and Starlink

FranzFerdiNaN 3 years ago | | |

For better targeted ads you must have advertisers. Musk has done an excellent job of chasing most if not all of them away within two weeks of taking over the company.

cactusplant7374 3 years ago | | |

> 1. When I go on vacation I see ads in a language I don't understand

Advertisers are probably not going to indulge this. After all, it's possible that you moved.

jollyllama 3 years ago |

I'm inclined to agree with your prediction.

Maybe identify stocks that have an inverse relationship to Twitter. Meta perhaps? I don't know.

GaryNumanVevo 3 years ago |

https://careers.twitter.com/

cochne 3 years ago |

The question of investing is not whether they will be successful or not. It is whether your estimate is better than the markets. Consider that the market is not composed entirely of HN/Reddit pessimists, so what you think may be a good bet, may not be.

rsynnott 3 years ago |

I assume you could use a prediction market; someone must be offering odds.

chadlavi 3 years ago |

I'll gladly take your money. I've got some prime beachfront properties you may be interested in as well.

TrinaryWorksToo 3 years ago |

Buy shares in Tesla. If Twitter succeeds Elon will need to sell less stock to fund Twitter.