Elon Musk Places Twitter Acquisition on Hold as Doubts Emerge Over its Userbase Data

[Pjokerxp_]

don't buy it... build it

+1

 

[Totally]

Him backing out is a great way to kill twitter. "Even Elon won't buy it because of XYZ?? His replacement app must be the way to go"

You overestimate the critical thinking skills of blue checkmarks, those that follow them, and their bots.

 

[lexluthermiester]

Yeah, for $44 billion, I'd build bigger datacenters/CDNs than what Twitter owns for 1/4th the money, spend no less than $10 billion on global marketing, and start my own platform.

This! However, this would take a lot of effort. There is merit to the notion that buying an existing and already popular platform then reshaping it to fit your vision is a good plan.

 

[quantumd]

Nice tactics, expose the bots, then de-value the company, pause on the offer, NEXT buy at a much cheaper price.
Musk have learn these tactics from other rich guys.

 

[dragontamer5788]

Nice tactics, expose the bots, then de-value the company, pause on the offer, NEXT buy at a much cheaper price.
Musk have learn these tactics from other rich guys.

How about step 1: Don't offer $54.20 for a stock, when there's no other buyers in the market?

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.

 

[Steevo]

How about step 1: Don't offer $54.20 for a stock, when there's no other buyers in the market?

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)

-----

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.

The board would have refused the offer making the acquisition DOA. He had to offer enough incentive to sell that others wouldn’t want to ante up and if they refused it would be a matter he could settle with them in court for not fulfilling their fiduciary duty to share holders.

 

[dragontamer5788]

The board would have refused the offer making the acquisition DOA. He had to offer enough incentive to sell that others wouldn’t want to ante up and if they refused it would be a matter he could settle with them in court for not fulfilling their fiduciary duty to share holders.

But now Musk is trapped into paying an overpriced $54.20, unless he weasels out of the escape clauses written into the contract.

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?

 

[trsttte]

But now Musk is trapped into paying an overpriced $54.20, unless he weasels out of the escape clauses written into the contract.

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.

----------

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?

The board here doesn't care as much for the price/share because they surprinsingly own very few (they'll certainly have vested options but those move with the volatility more than with the price action).

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).

 

[dragontamer5788]

The board here doesn't care as much for the price/share because they surprinsingly own very few (they'll certainly have vested options but those move with the volatility more than with the price action).

Agreed on your point. But consider that the board has a legal fiduciary duty to protect its shareholders. So its a bit indirect, but they are interested in protecting the stock price (so that they don't get sued by shareholders, not for personal gain)

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).

Yeah. One thing I've seen from Musk, rather consistently, is that he's pretty smart at managing chaos and pitting various groups against each other. I'm pretty sure Elon Musk will do the wrong thing (morally and legally), but still find a way to get around / weasel his way out of tough decisions.

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.

 

[trsttte]

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.

That's not particularly correct. For the SolarCity case, the case was decided recently in favour of Elon Musk, he was able to produce enough evidence that buying it was part of "the plan" and the price was ruled as fair value. They said he was too close to the situation for confort, but it wasn't necessarily a problem.

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.

 

[lilhasselhoffer]

...so it seems like there's a lot of problems understanding the difference between "rich" and "has liquid assets.


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.

 

[Steevo]

Now the news is exactly what I said, Twitter is in possible deep shit for overstating users knowing a portion (20% according to some tech sources) were bits and their advertisers sales were based on these flagrantly falsified numbers making them directly liable for any recourse advertisers pursue against them.

lie ability.

Twitter CEO and Elon Musk clash over bot-battling metrics

Twitter is full of bots. But how full, and what kinds? It's a tricky number to nail down, as Parag Agrawal explained. Elon Musk responded with a poo emoji.

techcrunch.com

 

[trsttte]

Rest in peace twitter you had a good run

 

[dragontamer5788]

Now the news is exactly what I said, Twitter is in possible deep shit for overstating users knowing a portion (20% according to some tech sources) were bits and their advertisers sales were based on these flagrantly falsified numbers making them directly liable for any recourse advertisers pursue against them.

lie ability.

Twitter CEO and Elon Musk clash over bot-battling metrics

Twitter is full of bots. But how full, and what kinds? It's a tricky number to nail down, as Parag Agrawal explained. Elon Musk responded with a poo emoji.

techcrunch.com

Did we read the same article?

The most pertinent question here does not seem to be “how do we know engagement is authentic?” but rather, why has Elon Musk only begun looking into this now? It’s a bit like buying a horse and then looking up “horse” in the dictionary. The seeming lack of familiarity not just with the complexities of Twitter but with the way the social media ad market and authenticity metrics are defined and handled in general will surely only add to the worries of those who fear Musk is far from the best person to lead the company.

So why did Elon Musk sign a $54.20 buyout agreement before looking into this?

Furthermore: https://finance.yahoo.com/news/elon-musk-says-doesnt-care-111436647.html

Elon Musk said he doesn't care about the economics of buying Twitter at a TED2022 conference.

It's "not a way to make money," Musk said, adding, "I don't care about the economics at all."

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.

 

[lexluthermiester]

Nice tactics, expose the bots, then de-value the company, pause on the offer, NEXT buy at a much cheaper price.
Musk have learn these tactics from other rich guys.

That's actually not a bad game plan!

 

[dragontamer5788]

That's actually not a bad game plan!

Except Musk started this mess by becoming a 9% shareholder of Twitter.

He is devaluing his own company. He probably owns more TWTR stock right now than the rest of the Board combined.

--------

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

SAN FRANCISCO, April 25, 2022

“Free speech is the bedrock of a functioning democracy, and Twitter is the digital town square where matters vital to the future of humanity are debated,” said Mr. Musk. “I also want to make Twitter better than ever by enhancing the product with new features, making the algorithms open source to increase trust, defeating the spam bots, and authenticating all humans. Twitter has tremendous potential – I look forward to working with the company and the community of users to unlock it.”

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.

https://d18rn0p25nwr6d.cloudfront.net/CIK-0001418091/e61e4376-e2c5-4d54-8782-d63fc5e096e9.pdf

Notwithstanding the foregoing, the Equity Investor shall be permitted to issue Tweets about the Merger or the transactions contemplated hereby so long as such Tweets do not disparage the Company or any of its Representatives

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?

 

[trsttte]

Except Musk started this mess by becoming a 9% shareholder of Twitter.

He is devaluing his own company. He probably owns more TWTR stock right now than the rest of the Board combined.

--------

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.

-----

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.

--------

EDIT2: Another clause is being brought up from the contract.

https://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?

Holy fuck, talk about getting yourself put against a wall

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.

 

[dragontamer5788]

Holy fuck, talk about getting yourself put against a wall

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 mu

I'm against Musk on this issue. Not because I like Twitter, but because I believe that rule-of-law should be like, a thing? Billionaires shouldn't just sign contracts, negotiate in bad faith, and destroy a company because they don't like what they signed.

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.