The richest man on earth does it again and surprises the markets. On Monday the 4th of April of the year 2022, Elon Musk announced (Figure 1) that he now holds a 9.2% stake in Twitter Inc. (TWTR). This share purchase makes him the biggest shareholder in the company so far with a total value of $3Bio.
The instant effect on the stock price was a sudden increase in demand for the company, whereby the price hiked by over 27% during yesterday’s trading session.
The main target of this action is to promote free speech on Twitter which he regularly was talking about previously.
Shortly after revealing this decision, he tweeted a poll “Do you want an edit Button”, with only 2 answers “Yes” or “No”.
Being one of the first steps done by the new biggest shareholder in Twitter attracted further demand for the stock as it shows that he is seriously willing to promote free speech and a more user-satisfying experience based on various demands from the users.
Similar polls were issued previously by Musk as if he was signaling that this move was inevitable. For example, he tweeted previously if the Twitter algorithm should be changed to become open-source. Surprisingly, most users voted for yes, whereby 82% were backing this decision. This might be one of the stress tests done by Musk in order to decide if the share acquisition should take place.
The stock price has been trending (Figure 2) downwards since February 2021, and this movement was confirmed by the lower highs and lower lows formed in the shape of a downward trending channel and was further confirmed by the strong resistance created by the 200SMA.
Figure 2: Source, TradingView Twitter 2021-2022
Currently, the price rested directly o the 200SMA gapping more than $7 in only one session. Usually, gaps tend to close in the future meaning that the price should test the $40 range anytime in the future, however, this doesn’t mean that it will 100% occur, especially with Elon Musk’s outlook for the company.
If the price breaks above the 200SMA on the daily TF, RSI continues above 70, and MACD continues above 50 in an uptrend, this might trigger further bullish momentum.
Elon Musk is known to have big dreams and a wide imagination, he had failed multiple times, however, he is now one of the most successful technology influences in the world, not to mention the richest man on earth. Will this step be a successful one for Twitter, or will the dreams be too big to be true?
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