One is a 12-month price target for the stock, the other is a takeover price (based on the long term) where GS is acting on behalf of the company and its existing shareholders. This is really not "gotcha" like ZH try to pretend it is.
According to the picture in the tweet they actually have a sell "rating", meaning that they expect the stock to very possibly go down until it hits 30$ and therefore they recommend selling as a primary strategy to deal with current twitter stock. So the tweet in my opinion is correct to call this awkward.
Wouldn't the 12 month price target also be based on the long term? Whether it's today or a year from now, it should tend toward the present value (at that time) of all of its future cash flows.
Stock price isn’t fixed. It’s based on how much you want to buy. Only the front of the order book is for sale at the quoted price. Everything after that is more expensive.
TWTR trading volume is I guess $1B - $2B a day (Y! says 38M units avg) shuffling stock between lots of small buyers and sellers. Musk wants to buy 25x to 50x that.
If you sell oranges, you might have them priced at a dollar each. The guy in the stall next to you thinks the exact same oranges are worth more. He prices them for sale at $2, and the guy next to him for $4. Neither of then sell anything though. A single person comes by for an orange every morning and that’s all the oranges that get sold that day in your town. This person buys their one orange from you and the town crier reports the ORNG stock quote as being $1.
If some rich guy comes along and says “I will now buy all the oranges from all of you”, the average price is going to be higher. The town banker advises you all that while their offer of $2.69 is high, you could definitely, ahem, squeeze them for more.
Following your example, after the offer of $2.69 and the counter offer of $4, there are two possible scenarios: The buyer accepts the offer (and pay $4 per share making it the real market value) or the buyer rejects it, leaving the market value at a max of $2.69. The price is not the market value (If I value my orange at $1,000,000 and nobody buy them, that's not the market value.)
If it the $2.69 buyer, now happens to own a large share of oranges, and also has open and stand next to the other sellers, but priced at $0,50. What will happen with $1, $2 and $4 sellers? Let's see in a few days :)
Equity Research and the Investment Banking Division are completely different groups with procedures in place to make sure they never interact with each other.
Nope. Look at the dot-com bubble and bust when in a single firm equity research pumped and investment banking got people to buy.
I asked a banker this exact question back then. All I got was flowery language of great walls and reputational damage.
We all know what happened. The bubble popped. The two sides don't need to talk. The equity research is public. Incentives are such that both sides want to pump.
Many takeover offers tend to fall towards the high end of the stock's all time high so that shareholders feel like they are at least getting out without a loss. He needs to go closer to $70 if he wants to be taken seriously. If he can't justify the $70+ price then the investment is not worth it. If it's true what he said that he is buying it to help the world rather than for profit then $70+ price should be easy to justify.
>>If it's true what he said that he is buying it to help the world rather than for profit then $70+ price should be easy to justify.
Where on earth do you get that
$70 is insane, Twitter will likely never reach that again, it for sure will not under current leadership. Twitters current leadership is killing the platform
Goldman Sachs is more like a collection of companies (divisions) than one company. Further, there is often a Chinese Wall between divisions preventing them from having access to one another to prevent insider trading.
That price target is public. I'm pretty sure chinese wall wouldn't prevent the other guys and GS from reading TipRanks.
Goldman Sachs will look stupid if they advise against a sale at $54 if they also advise to sell and believe the price will be $30.
Twitter board is not buying GS opinion. It's clearly worthless if one guy says "Twitter is worth $30" and the other guy says "Twitter is worth more than $54".
They are paying GS to tell them what they want to tell the public i.e. don't sell to Musk.
Twitter board is just too incompetent to execute such cover up. I assume there's at least one bank they could hire that has buy rating on Twitter to justify their "don't sell" advice.
In the commodities world it's expected that Goldman's physical position is the opposite of what would be expected from their analysis. It's also worth pointing out that it's perfectly reasonable for a forecast to be very different to a current price due to price being a function of time and different risks and time horizons involved.
They want the deal to be rejected (i.e call it too low), so musk sells his current shares, dropping the price into the 30’s, so they cN cover their short sale.
[+] [-] this_user|3 years ago|reply
[+] [-] Meai|3 years ago|reply
[+] [-] Dylan16807|3 years ago|reply
If you expect a certain price in the future, then you should want to buy/sell toward a similar price (minus interest) in the present, shouldn't you?
> where GS is acting on behalf of the company and its existing shareholders.
That explains wanting some premium. It doesn't explain the difference between 30 and >54.
[+] [-] m101|3 years ago|reply
[+] [-] bitshiftfaced|3 years ago|reply
[+] [-] gorgoiler|3 years ago|reply
TWTR trading volume is I guess $1B - $2B a day (Y! says 38M units avg) shuffling stock between lots of small buyers and sellers. Musk wants to buy 25x to 50x that.
If you sell oranges, you might have them priced at a dollar each. The guy in the stall next to you thinks the exact same oranges are worth more. He prices them for sale at $2, and the guy next to him for $4. Neither of then sell anything though. A single person comes by for an orange every morning and that’s all the oranges that get sold that day in your town. This person buys their one orange from you and the town crier reports the ORNG stock quote as being $1.
If some rich guy comes along and says “I will now buy all the oranges from all of you”, the average price is going to be higher. The town banker advises you all that while their offer of $2.69 is high, you could definitely, ahem, squeeze them for more.
[+] [-] mromanuk|3 years ago|reply
If it the $2.69 buyer, now happens to own a large share of oranges, and also has open and stand next to the other sellers, but priced at $0,50. What will happen with $1, $2 and $4 sellers? Let's see in a few days :)
[+] [-] tmitchel2|3 years ago|reply
[+] [-] brycelarkin|3 years ago|reply
[+] [-] formercoder|3 years ago|reply
[+] [-] Dylan16807|3 years ago|reply
[+] [-] fakethenews2022|3 years ago|reply
I asked a banker this exact question back then. All I got was flowery language of great walls and reputational damage.
We all know what happened. The bubble popped. The two sides don't need to talk. The equity research is public. Incentives are such that both sides want to pump.
[+] [-] quantified|3 years ago|reply
[+] [-] WheelsAtLarge|3 years ago|reply
[+] [-] syshum|3 years ago|reply
Where on earth do you get that
$70 is insane, Twitter will likely never reach that again, it for sure will not under current leadership. Twitters current leadership is killing the platform
[+] [-] buzzard1|3 years ago|reply
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[+] [-] landa|3 years ago|reply
[+] [-] kjksf|3 years ago|reply
Goldman Sachs will look stupid if they advise against a sale at $54 if they also advise to sell and believe the price will be $30.
Twitter board is not buying GS opinion. It's clearly worthless if one guy says "Twitter is worth $30" and the other guy says "Twitter is worth more than $54".
They are paying GS to tell them what they want to tell the public i.e. don't sell to Musk.
Twitter board is just too incompetent to execute such cover up. I assume there's at least one bank they could hire that has buy rating on Twitter to justify their "don't sell" advice.
[+] [-] eoghann|3 years ago|reply
[+] [-] newhaus1994|3 years ago|reply
[+] [-] tootie|3 years ago|reply
https://apnews.com/article/russia-ukraine-coronavirus-pandem...
[+] [-] syshum|3 years ago|reply
The 3 letter agencies have lost my trust and many (if not most) of my fellow Americans trust.
Like wise the AP has lost a lot of trust as well, they are not immune to posting fake stories and propaganda either.
Could zh have posted Russian propaganda maybe.. likely even. That will not stop me from reading the site
[+] [-] floatinglotus|3 years ago|reply