The 38% is just the one day premium. The offer was at a discount to the stock price less than six months earlier. It was possible that the stock price had overreacted to a tech sell off, and if the market had rebounded by the summer the bid could have looked genius.

Market pricing in M&A is somewhat opaque and different than trading prices because it's based partly on synergy value to a bidder. To use your house example, if the house next door was willing to pay $1.5 million for your house, then the $1.38M is not above market even if Zillow and the list price say it's $1 million.

There were other potential suitors for Twitter, like Microsoft, Disney, Salesforce and private equity. They might have valued it more than Musk based on the benefits it brought their firms. Twitter would be a lot more valuable inside Amazon, Google or Meta but there were probably antitrust issues there.

Plus Twitter's board and management team had access to a lot of material non public information that investors did not. Even if you thought the market price in early April accurately reflected all the public info on Twitter, the Board was looking at 5 year projections and much more detailed pricing/demand/customer info.

The Delaware Courts give a lot of deference to board judgment in these situations, and Twitter's board would have been well within their rights to say "no, that 38% is not good enough" if that was their conclusion after a good faith and reasonable process.