Friday, May 13th 2022
Elon Musk Places Twitter Acquisition on Hold as Doubts Emerge Over its Userbase Data
Elon Musk in a late-Thursday tweet announced that he is placing his Twitter acquisition bid on "temporary hold" over doubts about the platform's spam-bot data. Twitter, in a recent SEC regulatory filing, disclosed that spam bots made up less than 5% of its userbase. The filing revealed that Twitter has 229 million users that viewed consistent ads, while fewer than 5% of the "monetizable daily active users" were fake or spam-bot accounts. Financial analysts predict the substantial fall in cryprocurrency values, as well as a $400 billion drop in market-capitalization of the Tesla stock since Musk announced plans to buy Twitter, may have made the world's richest man squeamish about buying Twitter, and that he is probably looking for a legally safe escape route from the deal. Twitter shares plummeted in value since the Musk tweet.
Source:
The Street
67 Comments on Elon Musk Places Twitter Acquisition on Hold as Doubts Emerge Over its Userbase Data
Musk have learn these tactics from other rich guys.
And 2: Don't get tricked into signing a $1 Billion penalty for falling off the $54.20 deal. (And as I stated earlier in this thread, the 1 Billion penalty is pretty restrictive. I can very well see Elon Musk paying more than $1 Billion in penalty over this whole issue)
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If the stock price's "true value" was ~$35, then Musk should have offered $35 to begin with, and avoided this whole hoopla over $54.20.
Why is walking into the escape-clause trap a "smart move"? If Musk really wanted to lower the value of Twitter, there were easier ways to do so (ex: selling his incredible 9% stake in Twitter before this whole event started).
Speaking of which, why would Elon Musk pump up the price of Twitter by buying huge amounts of it (9%) before deciding upon buying out the whole company? His own 9% stake was whimsical a few weeks ago, and counter-productive. Every time you buy a stock, you forcibly raise its stock price. Ex: If Musk wanted to artificially lower Twitter's stock price, he could have simply short-sold the company (ex: go to -5% ownership through short-selling, depressing the stock's price, and _THEN_ offering a buyout deal).
EDIT: Or he could have tweeted all of this "Bad information" before signing the contract. You know, like a reasonable person. You investigate a company, bring to light its deficiencies and use that as a negotiating tool. Musk is so stupid he signed the freaking contract before actually investigating.
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Look, Twitter's board is sitting on a $37.76 stock, with a contract that very reasonably can force Elon Musk to buy all of the shares at $54.20 in CASH right now, instantly winning +30% cash. How is any of this a good thing for Elon Musk?
Shorting twitter would also be very hypocritical since he's been ranting against the practice since forever ago because of the high short interest Tesla was often subject to (like it or not he's not completely wrong and for years many special interests and "smart" wall street guys tried, and some still do, to break the company by shorting beyond reason - one of the reasons so many die hard fans now do the opposite and the stock is pretty overvalued).
He probably only got more details on how much of a trashfire the situation inside twitter was after signing a couple contracts but that's not to say he wasn't a complete fool, the company never made any money and spends a stupid ammount in r&d for what they are actually producing. Someone, like anyone, under his employment should have advised him as such but maybe, like in other things, he got too much involved and didn't listen to the actual experts. Like even the stupid offer, throwing a couple extra million to meme it up with the 4.20, should have offered 42.0 billion or something, same effect and closer to reality.
It would be cute if the SEC eventually saves him because he technically bought his initial stake illegally (didn't disclose his position in due time allowing him to buy shares for much cheaper) so if he gets prosecuted for that there might be an avenue for him to walk away (like with the "funding secure" where he proffited from the settlement with the shares he bought as a result, though that case was a bit of an overreach and he has some reasons to be pissed).
That being said, I think a lot of that "Weaseling" comes down to TSLA's stock price perpetually moving up. People get more pissed off, angrier, and more likely to actually sue you for misdeeds if they can easily prove damages. As hard as it is to prove damages already, its that much harder when you've actually made money on a per-stock basis.
Both TSLA and TWTR are down, by significant margins, thanks to this whole scenario. People are therefore angrier, and less forgiving. Ex: SolarCity buyout, and "Tesla funding secured at $420" were both immoral and legally-suspect. But since the people (IE: SolarCity shareholders + TSLA shareholders) overall made money from the event, no one bothered to sue Musk. If those groups lost money from the event, they would have been better tested in court.
For the funding secure, well, it's complicated. In my opinion Elon Musk was stupid and jumped the gun publishing it on twitter but it was recently demonstrated that there were indeed talks with the Saudi wealth fund to take it private (funding secure was too aggressive but we don't know what was talked privately, just what's on paper/text). Would a different less "emblematic" person be prosecuted under the same circunstances? It all stinked of over reach and selective prosecution but he was "forced" to settle or let the boat sink because of it.
It's basically his pattern that many love and many others hate, be loud and rules or consequences be damned. It's part of what allowed for so many of the achievements he is involved with but also what prevents many others things from being realized.
Musk is valuable because the stocks he holds in companies are stupidly over valued. Tesla, and its ilk, and valued far above what the market reasonably can support. I don't say this as my opinion, but because I've heard multiple financial analysists say this is true. Personally, I view Tesla as Enron levels of hugely prized value with surprisingly little to support all of that supposed value.
Now, looking at where Musk is...he really can't put forward twice the amount of stock that he had previously set forward...to cover the fractional percentage of the actual purchase that he is funding himself. Remember, most of the acquisitional capital is in fact from other entities.
Do I think twitter should burn...? I say yes, but I also believe that most social media is poison. Seeing both Tesla and Twitter start to actually adjust to market values based upon their deliverable goods is great. It's hurting people who artificially viewed their opinions as somehow better than any others. That kind of poison needs to be rooted out in a decent democracy. It's kind of nice seeing both a professional snake oil salesman and a hive of hate burn in one glorious movement.
I just hope the next twitter is less...of a caustic mess. I'd gladly take all input from everybody, in lieu of only the input that some people want.
lie ability.
techcrunch.com/2022/05/16/twitter-ceo-and-elon-musk-clash-over-bot-battling-metrics/?guccounter=1&guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAAQsdCzXg4HbfM8uLQXh_fK7lmyazI69JsboHT-aGG6B6CFZzOYgHrHzOsUmAw_c0vMYESVxFgnLXX5Y6wwwBAOZCv-F6aMkj-LHwKaEnDcIpYKtOBssl65fVQxZv58X6Ki0mrs3nNLTFaK9FTZi2UQ1hbY70xZtxnxC6N7oXzvD
goodrunFurthermore: finance.yahoo.com/news/elon-musk-says-doesnt-care-111436647.html Musk royally screwed himself. Not only did he make an absurdly overpriced buyout offer here, he also publicly stated that he doesn't care to make money on it. So why does he care about the money all of a sudden? (AFTER signing the buyout contract, nonetheless). Musk has stated his intent before signing and everything here. The contract will be considered valid in court.
He is devaluing his own company. He probably owns more TWTR stock right now than the rest of the Board combined.
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The traditional strategy is again, to short the company before you go public with adverse information. Not buy 9% of the company and write a $44+ Billion contract with them.
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EDIT: Matt Levine highlighted Elon Musks' words from the buyout form today:
The Twitter buyout form from the SEC Elon Musk proving that he knew about the Spam bots on April 25th, 2022 in his official SEC filing to buy out Twitter. The dude is so clearly screwed legally, he doesn't even remember what he wrote 3 weeks ago.
Don't get me wrong: this is also an embarrassment for Twitter. Twitter walked into this mess because they thought that Elon Musk was a reasonable person who could be reasoned with. Twitter should have ignored Musk's offer 4 weeks ago, because the dude is clearly a loony. It doesn't pay to make any kind of deal with Elon Musk.
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EDIT2: Another clause is being brought up from the contract.
d18rn0p25nwr6d.cloudfront.net/CIK-0001418091/e61e4376-e2c5-4d54-8782-d63fc5e096e9.pdf Seems like Elon Musk has broken his side of the contract first: "Do not disparage the Company or any of its Representatives". I dunno, it really seems heavily in favor of the Twitter board, no matter how I look at this. But the question remains: what does Twitter's board want to do about this?
Defeating the SPAM bots is a bit vague (could be a reference to the public reports from twitter of only 5%) but he clearly acknowledged it was an existing problem he knew about.
This is looking more and more like a plan to completely destroy twitter than to buy the company. I don't know what it will work out to but in the end he's getting more and more leverage to negotiate the price down, he can easily pay the 1 Billion breakout and then embark in another buyout for much cheaper after tanking the stock and lawsuits are certain to ensue from many different directions that will bog down the platform to death
So, though Elon Musk is an asshole and in the wrong while buying a shitty company out of the gutter, it's in twitter's board interest to accomodate a lot of it because they are getting screwed from any positive way out. I don't even know who to root for, as much as this kind of dealings is super unethical and might even cross some legal definitions regarding stock manipulation, twitter is also a terrible company that's has been lying to investors while they burn through cash and make modern society rot from inside out.
That being said, if Twitter implodes over this mess, I won't shed a tear. Its a shithole company. But they're a law-abiding company, as far as I can tell. (Or at least, Twitter seems to be following the law to the best of its ability with regards to this issue).
4 possibilities:
1. Twitter wins, Elon wins -- Some kind of agreement gets negotiated that both sides like. I'm neutral to this. I think this is the highest-chance of happening, because finding a silver-lining to any situation is what respectable adults should be doing.
2. Twitter wins, Elon loses -- I'll be happy. Elon has negotiated in such bad faith I want to see the man punished.
3. Twitter loses, Elon wins -- This goes to court, Twitter tries to punish Elon against this, and the court either rules in favor of Elon, or Elon ignores the court order and continues to act like laws or contracts don't apply to him. This has a realistic chance of happening. I won't be "sad", but this will further confirm to me how rigged our justice system is today. Words and statements don't matter, because everyone forgets what they say just 3 weeks later.
4. Twitter loses, Elon loses -- Ex: Twitter forces Elon to buy Twitter at $54.20, and then the company goes bankrupt. Everyone's embarrassed. I'd be happy for this, lol. I really don't care too much about Twitter, there's other social networking sites I use more.