Hi YXI friends,

After rescuing TikTok back online this week, Trump has tapped Elon Musk and Larry Ellison to purchase TikTok in a potentially win-win situation.

While it is unclear whether TikTok’s Chinese parent company will bite an offer, it is interesting to think about what could happen to Tesla shares should Elon bids for TikTok.

Today, we examine the current situation, Musk’s history of buying Twitter, and a technical analysis of Tesla’s price chart.

Separately, I have provided an updated chart analysis on Netflix after yesterday’s positive earnings. I will put out the fundamentals analysis and valuation multiples in a later note.

Table of Contents

• 1. Is What’s Good For Musk Great For Tesla?

  • Musk and Ellison Pair Up Again

  • TSLA Technical Analysis

• 2. Netflix Blockbuster Q4

DISCLAIMER: This newsletter is strictly educational. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.

1. Is What’s Good For Musk Great For Tesla?

Musk and Ellison Pair Up Again

On Tuesday, Trump said that he is open to the possibility of either Elon Musk or Larry Ellison buying TikTok. The purchase would be in the form of a JV (50% ownership) with TikTok’s parent company.

The choice of Ellison is not random. Back when Musk purchased Twitter, Ellison committed $1 billion very early on. Today, Ellison has also quietly become the 3rd richest person ($217B) on the Forbes list, ahead of Zuckerberg and Arnault. I think the pair likely share the pie together, possibly with Musk taking the lead role.

Considering there are 170 million US users who are obsessed with the app but the data are controlled by a Chinese company, it is of course in the US interest to rein it in. And instead of shutting it down, if an US entity can access the data and algorithm, there would be huge economic and potentially political benefits.

Interestingly, until now, TikTok’s parent company preferred to shut down the app than to divest. Were they bluffing? I actually don’t think so. I think they genuinely want to protect the secret sauce (TikTok’s algorithm) as well as any evidence of what the US has accused them of doing, which is sending data back to China. This is a particularly sensitive issue for China too, who ordered the delisting of Didi in the fear that the US authorities could access Didi’s user and locational data.

It cannot be understated that TikTok’s algorithm is the best in class, with a far higher engagement rate than its rivals, Reels (owned by Meta) and YouTube Shorts (owned by Alphabet).

Musk would definitely be delighted to own half of TikTok, further growing his enormous social media presence. This will be great for his personal influence, political ambitions, and business empire.

But is this necessarily also a good news for Tesla shareholders? I think if Musk does end up buying 50% of TikTok, a much more expensive entity than Twitter, there could be short term headwinds for Tesla shareholders.

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