Elon Musk's Twitter Bid Means Political Risk For Tesla As The Establishment Strikes Back

 Twitter Bid Adds Political Risk To Tesla

In recent posts, we've noted that Twitter, Inc.'s TWTR political importance to the current establishment far exceeds its market cap. That explains why Tesla, Inc. TSLA CEO Elon Musk has faced resistance to his takeover bid. 

“If you do this, you will expose how corrupt the system is. No one will ever trust you again.”$TWTRhttps://t.co/pcsJdfdcar

— Portfolio Armor (@PortfolioArmor) April 16, 2022

Now, Bloomberg reports that U.S. regulators are applying more scrutiny to Twitter's Autopilot feature than ever before. 

When you aim for the censoring king, you better not miss... "Now, U.S. regulators are applying greater scrutiny to Autopilot than ever before."https://t.co/4U4TSOL1Em pic.twitter.com/sBvJi5KAM7

— zerohedge (@zerohedge) April 19, 2022

The Timing Doesn't Seem Coincidental 

The timing of this record scrutiny of Autopilot doesn't seem coincidental. If it had nothing to do with Musk's Twitter bid, why wasn't this level of scrutiny applied after last year's deadly Autopilot wreck? 

As we predicted, not a big impact to the share price today, but Tesla’s self-driving mode needs work. Recall that the prospect of full self-driving is a big part of Cathie Wood’s thesis. $TSLA $ARKK https://t.co/gOy8wnl9mP

— Portfolio Armor (@PortfolioArmor) April 19, 2021

Even if the increased regulatory scrutiny in the wake of Musk's Twitter bid is a coincidence, it increases perceptions of regulatory risk for Tesla. 

A Recent Top Name

Tesla has been a recent top name for our system, including in our top ten cohort on March 17th. 

Tesla has been our third best performer so far from that cohort, after Peabody Energy Corporation BTU and ProShares Ultra Bloomberg Crude Oil UCO, but it wasn't in our top ten on Monday. If you're long the stock and looking to add some downside protection here, below is a way you can do so. 

Crash Protection For Tesla

As of Monday's close, this was the optimal collar to protect 100 shares of Tesla against a greater-than-20% drop over the next six months, while not capping your possible upside at less than 24% over the same time period. 

Screen captures via the Portfolio Armor iPhone app. 

The net cost of that collar was negative, meaning you would have collected a net credit of $975 when you opened it. That's assuming you bought the put and sold the call at the worst ends of their respective spreads, so you would have collected more if you placed both trades within the spread.