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Hindenburg Research takes 'significant long position' in Twitter stock

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Yahoo Finance's Brian Sozzi, Julie Hyman, and Brad Smith discuss Hindenburg Research's stake in Twitter stock.

Video Transcript

- --Twitter shares after Hindenburg Research announced they have taken a position in the company. Guys, I got to exchange a couple of messages with Nathan Anderson. He's the founder of Hindenburg Research. He's telling me that the size of this stake is under 5%. So let's swap the deck there. But again, he still has the stake. He's telling me, quote, "there's a common misconception that only $1 billion is on the line here for Elon Musk. Twitter is suing to enforce the entire $44 billion merger price and they have a strong case. Musk has squandered much of his leverage, largely through ill advised compulsive tweets." So that's the founder of Hindenburg Research kind of breaking down his call or his play here on Twitter.

And I guess it would be, guys, he suspects that Musk may have to be forced to assume Twitter, potentially putting pressure on his overall Empire, and I would guess, Tesla.

- Well, that comes back down to the courts as well, and how Delaware is actually going to have to look through this case. Have to also decide where they can actually enforce power to enforce an acquisition based upon the details that were put within, not just the offer, but also the agreement for the acquisition that took place between Twitter and Musk as well, at that $54.20 a share price.

And so with this, this question of, whether or not Elon Musk had actually waived the ability to do that due diligence, and for Hindenburg, I think with them accumulating this position, they're just making a bet that, for Elon Musk, this is going to, one, damage his own reputation. But what are some of the other brands? And in that reputation-- I think we asked this question as well just in our own discussions, what type of reputational hit could this ultimately mean for Elon Musk? Who knows?

- I'm loath to say this, but none. I mean, we keep discussing this like he's a regular guy and this is a regular situation. So what if the chancery court-- as we've discussed before, so what if the chancery court says, you have to go through with the deal?

- Yeah.

- Will he? What are the penalties if he does not? I mean, we have seen this guy, time and time again, sort of blow off authority, not face the consequences of his actions. You know, yes, it's-- maybe you could argue, more is at stake this time, but I don't see how this would necessarily play off any differently. And again, although I'm loath to say it, you know, folks who have bet against him in the past have not ended up on top. Well, we'll see what happens in this particular case. I mean, one would hope that, you know, that the letter of the law, if indeed that's what the court ends up ruling, that that will prevail. But I don't know that it will. I don't know. I don't think we can assume that it will.

- No.

- Right?

- I'm sure we will find out very soon in some capacity.