Tweet This: I Finally Agree with Elon Musk

You're receiving this email as part of your subscription to Lou Basenese’s Trend Trader Daily [Unsubscribe](. [Trend Trader Daily] Tweet This: I Finally Agree with Elon Musk Thursday, April 7, 2022 I can’t believe I’m actually going to say this… But I’m bullish on Elon Musk’s latest move! For too many years to count, I’ve criticized the quirky and brilliant billionaire for being overly promotional, and for thumbing his nose at regulatory agencies. Particularly, the Securities and Exchange Commission (SEC). But in this case, his brash approach and bold move taking a 9.2% stake in Twitter (TWTR) — and in turn, taking a seat on the board — makes imminent sense to revitalize growth at the social media OG. Shares are responding accordingly, rallying nearly 30% on the news. However, the devil is in the details, as they say. And as you’ll see, for all the good Musk promises to bring to the struggling company, he’s also a massive liability. What’s all this mean for the stock? We’ll get to that in a moment — but first… > ADVERTISEMENT < >> SUBSCRIPTION UPGRADE PENDING If you're seeing this message, your Trend Trader Daily subscription may be INCOMPLETE. And a massive upgrade** in YOUR name is still pending. (**This upgrade could expire any day) [Click here now to review all the details of this subscription upgrade.]( In Desperate Need of a Shakeup After suffering through years of two-timing CEO Jack Dorsey trying to manage Twitter and his fintech Block, Inc. (SQ), formerly known as Square, Twitter was in desperate need of a shakeup. Obvious and long overdo changes failed to get made that promised to deliver meaningful growth and profits. I’m talking about things like an edit button and premium subscription offerings. Once Dorsey finally stepped aside, the door swung wide open for these changes to be made. But they were still slow to come to fruition. And then, of course, the social media company got embroiled in a nasty free speech and censorship debate, after permanently suspending President Trump from the platform. Talk about a double-whammy impact on growth! As I’ve contested before during media appearances, including yesterday morning (click the image below to watch a replay), censoring, silencing or siloing voices is not the formula for success in social media. click image to watch video) To create a reason to engage (and therefore, to attract more users to the platform), you need opposing allegiances. Without the back and forth, all you have are echo chambers where people easily get bored and disengage. Or put more simply, just like you need the Yankees and their fans to make the Boston Red Sox and their fans relevant, you need hardcore conservatives and extreme liberals on Twitter. If opposing sides are kept from interacting with each other, rivalries can’t exist — which brings us back to Musk… In the Name of Free Speech… In recent weeks, Musk has become a harsh critic of Twitter. He alleges that, as a de facto public square, it falls far short in terms of adhering to free speech principles. And no surprise — after being added to the board, Musk immediately telegraphed that changes would be forthcoming. As he tweeted, “Looking forward to working with Parag & Twitter board to make significant improvements to Twitter in coming months!” The very first move should be to revoke President Trump’s permanent suspension. By doing so, Twitter would instantly eliminate a fledgling competitor in Truth Social, and more importantly, immediately boost engagement on the platform. After all, Trump’s rabid fans hung on his every tweet, as did his fanatic opponents, wondering what perceived line he would toe or offensive thing he would say next. Again, without a reason to engage, people simply won’t. And no matter what you think about Trump, he gave everyone a reason to engage. Adding an edit button immediately makes sense, too. Shocker: the company announced it’s finally testing one. Forget testing, though. It’s long overdue, and it should be rolled out immediately, too. I’d contend those two moves alone should help Twitter break through its growth plateau and top its internal goal for 315 million daily active users. And that’s key for shares. Why? Because the power and profit potential of any social media company lies solely in the size and growth of the network. Once it stalls, a whole host of problems start to materialize, and as a result, share prices suffer. If you have any doubt, spend a few hours reviewing the quarterly call transcripts and stock price performance for Facebook and Snap and Twitter during prolonged periods of user stagnation. Add it all up and Wedbush analyst Dan Ives thinks it’s “time to get out the popcorn and watch the developments over the coming months with Musk on the Board.” But forget about just grabbing the popcorn and watching. Instead, consider picking up some shares (or cheap options). Here’s why… … And Capitalism Make no mistake, Musk is a capitalist first. He cares most about making money. That’s what motivated him to buy a 9.2% stake in Twitter. He wants to make money. Even if it means running afoul of clear SEC regulations. His actions leave little room for argument here. Consider: - Musk has routinely used Twitter to “goose” shares of Tesla Inc. (TSLA) by making promotional tweets, including ones that crossed clear regulatory lines indicating Tesla was the target of a takeover offer at $420 when it was most decidedly not. - He waited 21 days before revealing his 9.2% stake in Twitter. But per SEC regulations, he’s required to file a Form 13D or 13G within 10 days, indicating his interest in the company crossed the 5% threshold. Speaking of the filing… - The difference between a 13D and 13G form is that a 13D indicates an active involvement, whereas a 13G indicates a passive involvement. Despite clearly and aggressively engaging to make changes, Musk originally filed a passive 13G form, ostensibly thumbing his nose at the SEC once again. He’s since filed a new form, this time a 13D. Bottom line: Look for big, needle-moving changes at Twitter with a new Agitator in Chief in Elon Musk. This could include the possibility of Musk buying the company outright. In terms of upside, I can rationally justify shares rallying another 25% to 50% per year, based on Twitter’s size, market cap, and average revenue per user in relation to the $62 billion Snap Inc. (SNAP). Just realize the profit potential here comes with the risk of Musk going about the changes in potentially risky ways. If results are all that matter, though, I expect Musk to deliver here.   FOR TREND TRADER PRO READERS ONLY > [LEARN MORE]( < Ahead of the tape, Lou Basenese Founder & Chief Investment Strategist   Copyright © Trend Trader Daily, All rights reserved. You signed up on []( Our mailing address is: Trend Trader Daily 301 S. Perimeter Park Dr. Suite 100 Nashville, Tennessee 37211 [Update Subscription Preferences]( | [Unsubscribe from this list]( RISK NOTICE: All investing comes with risk. That includes the investments teased in this letter. You should never invest more than you can afford to lose. Please use this research for the purpose that it's intended — as research only. You should consult a professional financial advisor before ever taking a position in any securities you see herein. 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