Elon Musk: Genius or Jacka**? (Twitter Deal on Hold)

https://www.wsj.com/articles/elon-musk-tweets-tha….

Writing this post in light of Elon Musk's sudden decision to put the Twitter buyout on hold. Basically, Musk is saying that the deal is on hold pending details on the amount of fake accounts on the social-media platform. Stock is down ~15% pre-market. 

Firstly, with respect to the Twitter deal, my condolences go out to:

  1. The Twitter shareholders/employees with hard-earned RSUs, stock and options who were doing fine enough before Elon decided to buy the company on a whim, but are now bagholders in light of Musk's equally whimsical decision to pause the deal.
  2. The Twitter employees who have already been fired, and the incoming Twitter employees who had offers rescinded in light of Musk's takeover, which may now not happen (https://www.wsj.com/articles/two-senior-twitter-e…)
  3.  The many analysts and associates in IB across the street who had weekends/plans burned and lost hours of sleep on account of the whims of a single individual   
  4. The Twitter executives who are probably now scrambling on calls (likely at this very moment) to either salvage the deal or come up with a contingency plan   
  5. The retail investors who would follow Musk to the grave, who bought into Twitter stock after he announced the deal and are now bagholders

Secondly, I'd like to pose the question: is Elon a genius, or just an insufferable jacka**? I don't think we can underestimate the sheet magnitude of this man's success and all that he has achieved in his life, with his numerous successful startups and ventures and +$200B net worth (of course, let's not forget the dozens of extremely smart people under him that are making his success possible). That being said, a part of me feels that he is using his success as a weapon to make as much noise and kick up as much dust as he possibly could, just for the sake of attention. It's almost like if you took the silent kid that was bullied in elementary school and gave him billions of dollars and a mass of followers. A man absolutely starved of validation as a child, now with more validation than any human being on the planet. 

As a person who thinks of himself as decent, what I don't like is this whimsical behavior that is entirely unnecessary and leaves countless people affected negatively. All the moves I described above. Naming his child "X wing" or whatever. The completely unnecessary breaking of securities rules (https://www.wsj.com/articles/elon-musks-belated-d…). Putting the Twitter deal on hold due to "fake accounts", when this should (and could) very well have been diligenced prior to signing of definitive agreements.

As a society, at what point do we call a spade a spade and check this kind of behavior? Shouldn't we expect more responsibility from our leaders and the role models for the next generation? 

 

You mad bro!? This is business.First rule every executive learns is to never let the stock price be a bargain for a raider. Twitter did just that. Look at the industry growth and then Twitters growth. Every shareholder should have held the board responsible for complacency, but they never did.

 
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My brother in Christ, fake users are a real issue. I remember reading about this some weeks ago - it appears that Twitter was so incompetent (or malicious) that their formula for counting users was wrong (I think the issue was that it would count accounts ran by the same user as different accounts instead of as 1 unified user, not to mention their huge bot account problem). Now, you may think that is a simple blunder, but when you have a company that is for the most part failing to monetize its userbase then a lot of your company's valuation will come from your user count as the believe is that if you have 1,000,000,000 users then all it takes is for you to come up with 1 non-retarded idea to monetize them and now you are in the green. 

That whole premise breaks down if we find out that even 10% of your user count is wrong. Shareholders still have Elon's money on the table, including employees holding options. If they want it, all they have to do is to present a proper audit for user counts and if all is on the up and up then the deal will go through. If you don't think this is reasonable then you might be interested in this deal I have for you. It's a social media platform that you've never heard about, but I pinky swear it has 20 billion unique human users. I'm looking to sell it at $50B. Hit me up in the dms if you'd like to get a hold of this killer deal. 

 
Controversial
Hölder

My brother in Christ, fake users are a real issue. I remember reading about this some weeks ago - it appears that Twitter was so incompetent (or malicious) that their formula for counting users was wrong 

Lol. You fanboys aren’t required to parrot his bullshit reason for backing out. It was a secret to absolutely no one that Twitter has a bot problem. 
 

The real reason he’s bailing (or renegotiating) is because he pledged Tesla stock which is down 25% in the last month + Twitter stock would be 30%+ cheaper in this tech drawdown if not for his bid. 
 

He’s 50% genius, 25% opportunist, 25% charlatan (half his Twitter takes are ignorantly wrong; he predicted zero covid by April 2020)

"I don't know how to explain to you that you should care about other people."
 

When you play poker, you can't come crying to your opponent when they go and use the cards they have to beat you. Sure, maybe this was known. But it was Elon's call to use it or not. He decided to use it. Twitter employees and the board should have thought about that before they gave him a perfectly good reason to strong arm them like this. They could have dealt with the bot problem years ago and they decided not to. Now someone is using that to fuck them. Sounds like business as usual to me.

This is the real world dude. Crying to mommy does not get you far here.

 
Funniest

Alt-Ctr-Left

Lol. You fanboys aren't required to parrot his bullshit reason for backing out. It was a secret to absolutely no one that Twitter has a bot problem. 

You mean it's no secret Twitter was committing blatant fraud while their board made decision after decision that destroyed shareholder value, causing the company to lag behind every other leading social network? Wow, sounds like someone should expose the fraud and propose a plan for delivering value to the defrauded shareholders and turn the company around. At the very least that's a massive lawsuit just sitting there waiting to be filed. 

The real reason he's bailing (or renegotiating) is because he pledged Tesla stock which is down 25% in the last month + Twitter stock would be 30%+ cheaper in this tech drawdown if not for his bid. 

Totally has nothing to do with the fact that the value of Twitter would likely have also cratered after the bad earnings report and confirmation that they can't even count their own users correctly. It's not like misreporting the key metric for all social media companies could possibly have an effect on the intrinsic value of the company and violate the fine print stipulated in any of the financing documents from Morgan Stanley or anything silly like that.

He's 50% genius, 25% opportunist, 25% charlatan (half his Twitter takes are ignorantly wrong; he predicted zero covid by April 2020)

And the "experts" predicted that Covid would stop spreading with the vaccine, that tens of millions could die without it, and that the rising inflation was "transitory." His takes are more often correct than the ones I see you spouting off on here so by your logic you should probably just stop talking. By comparison, this must be you. 

"The obedient always think of themselves as virtuous rather than cowardly" - Robert A. Wilson | "If you don't have any enemies in life you have never stood up for anything" - Winston Churchill | "It's a testament to the sheer belligerence of the profession that people would rather argue about the 'risk-adjusted returns' of using inferior tooth cleaning methods." - kellycriterion
 

I generally agree with your take, but my thing is this: why didn't they perform an audit and get comfortable about the user count and fake accounts prior to signing definitive agreements? If this is important enough to pause a deal, then why didn't they do more to understand this during their diligence process? It's not like this is a newly discovered issue: TWTR puts this statement around their 5% spam accounts number in their 10-K, which was available prior to Musk buying his stake. Musk is trying to frame this like its something newly discovered, that has now surfaced after signing the deal. That is not true.

You don't use your sign/close period to identify red flags, that is what pre-signing diligence is for. As a result of how he's run this process, he has unnecessarily created chaos.

 

This argument would be rock solid if it wasn't the case that new information regarding user count just recently came out. I'm sure Elon was aware of the spam bot problem (he even mentioned how he was going to personally get rid of them) but you have to remember that the day Elon announced that his offer would go through, millions of twitter users suddenly vanished. One of the most high-profile cases (high-profile enough where you can google it) is how Barack Obama, someone who almost every days gets thousands of new followers, suddenly lost over 300,000 followers the exact day the announcement came out. That to me is really suspicious.

Now, that drop in followers could have been anything. It could be:

1) Millions of people were checking the news 24/7 so that the moment Elon announced his deal they could immediately in that same millisecond delete their twitter account.

2) It could have been an internal bot cleansing procedure - in which case I'd at least investigate why did they run this the exact day of the announcement.

3) And this is my conspiracy theory, 0% verified, 0% reasonable. I'm just going all out here: People like Elon have believed for a long time that the twitter feed is manipulated to push certain things while hiding others. One could think that this is done on purpose in twitter's algorithm... but what if it is not? What if Twitter's algorithm is perfectly normal: it just recommends peole what is popular. But also what if there was someone else (outside or inside of twitter) who took advantage of this popularity algorithm. If you were to create millions of bot accounts and slowly make them follow the 'right' people (the people you want to promote) then the twitter algorithm would be tricked into promoting that content. I think that whoever was doing this got scared and immediately pulled the plug - deleted all acounts, deleted everything. 

If it is 3) or even 2) then I believe there will be huge lawsuits headed towards twitter. Because even #2 suggests some kind of manipulation - how come follower count drop/increase by millions in a single second when the trend before was the complete opposite?  And this information was not in any public filing - it came out the same day Elon made his deal. And I think it is reasonable for him to get worried about this - worried enough to pull the plug if it turns out to be malicious. 

 

See below from Matt Levine, IB and Wall St media legend, on why everything you've said in this thread is wrong.

  1. “Temporarily on hold” is not a thing. Elon Musk has signed a binding contract requiring him to buy Twitter. Legions of bankers and lawyers and Twitter employees and special-purpose-vehicle promoters are working to fulfill his legal obligation to get the deal closed. “The parties hereto will use their respective reasonable best efforts to consummate and make effective the transactions contemplated by this Agreement,” says the merger agreement. (Section 6.3(a).) He can’t just put that “on hold.”
  2. That contract does not allow Musk to walk away if it turns out that “spam/fake accounts” represent more than 5% of Twitter users. We discussed this last month, when Twitter admitted in a securities filing that it had (slightly) overestimated its daily active users for years. The merger agreement contains a provision that allows Musk to walk away if Twitter’s securities filings are wrong — and this 5% number is in its securities filings — but only if the inaccuracy would have a “Material Adverse Effect” on the company. (See Sections 4.6(a) and 7.2(b).) That is an incredibly high standard: Delaware courts have almost never found an MAE. An MAE has to be something that would “substantially threaten the overall earnings potential of the target in a durationally-significant manner,” the courts have said; there is a rule of thumb that an MAE requires a 40% decrease in long-term profitability. If it turned out that 6% or 20% or 50% of Twitter accounts are bots, that will be embarrassing and might even reduce Twitter’s future advertising revenue, but will it be an MAE? No.
  3. “Pending details supporting calculation” is not how this works. This disclosure — that “the average of false or spam accounts ... represented fewer than 5% of” Twitter’s monetizable daily active users — has been in Twitter’s securities filings for many years, always with a caveat that “in making this determination, we applied significant judgment, so our estimation of false or spam accounts may not accurately represent the actual number of such accounts, and the actual number of false or spam accounts could be higher than we have estimated.” Musk had the opportunity to read these filings before offering to buy Twitter, and he had the opportunity to do due diligence on these numbers before signing the deal. (He declined.) He can’t now go to Twitter and say “actually now you need to prove that your user numbers are right.” If he wants to walk, he has to prove that they’re wrong, and also that they’re wrong in a way that has a material adverse effect on the business. Which he obviously can’t do.

https://www.bloomberg.com/opinion/articles/2022-05-13/elon-musk-trolls-…;

PS - you're a disgrace to this community.

 

I congratulate you on knowing how to read. I had never heard of this obscure website called 'bloomberg' - I'll check it out when I have the time. However I must remind you that we are quite literally in a forum meant for us to post our own opinions/thoughts/etc. What I was talking about was not some kind of legal advice on the matter. I was talking about my opinion and my opinion is that what has been happening within twitter since the announcement is shady at the very best and I don't personally judge Musk for feeling worried about the deal. If that will hold up in court is another thing and I honestly don't care how it goes either way since I don't personally benefit from this deal at all - it is just an interesting curiosity in a sea of monotony. 

That said, you must have a painful Elon Musk sized stick up your ass to call me a 'disgrace to this community' just for posting my opinion about what is a literal meme deal. I hope one day your ass stops stinging this much and we can go back to talking shit in WSO instead of insulting and citing fucking bloomberg articles to each other. 

 

Due dilly folks. Trust, but verify.

This is part of every deal. This deal just has more media coverage.

 
  1. The Twitter shareholders/employees with hard-earned RSUs, stock and options who were doing fine enough before Elon decided to buy the company on a whim, but are now bagholders in light of Musk's equally whimsical decision to pause the deal.

Twitter stock is still higher than before he started buying up the company. And that is in face of a massive sell off in the markets. How are those people left holding the bag??

 

Still irrelevant considering Twitter stock was trading at around $39/share before it was public knowledge he had been buying shares. The lowest it got over the last 48 hours was $40/share. So, again, what employees are left holding the bag? Previously they owned equity that was struggling to rise above 40. Now, in the face of a massive sell off in equities across the tech space, they are holding shares that have $40 as the floor.

 
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why does it have to be one or the other? Why can't you say the fact that slavery exists is awful, and yea I feel bad for the software engineer that lost their job due to this (or due to something else). It doesn't have to be the worst thing in the world for it to suck. Maybe the firm you work for gets caught in some sort of fraud and you lose your job. That obviously isn't the "worst thing ever," but I'm sure you would still feel shitty about it, and that's okay

 

You have to priotitize in life, I don't care about some high-skilled software engineer making 6 figures starting. He'll be fine no matter what happens, the indentured workers making our clothes won't be. The day I cry for soft, absurdly-paid software engineers is the day I'll eat my shoe

 

So many people would literally suck this dude’s dick if they were given the chance. Elon is out because he was worried about his margin loan and couldn’t line up financing that made any sense for his “socially driven” valuation of twitter. Man was considering 14% pref 20 year stock…wtf? Is there any company on earth where that would be accretive to the capital structure? He is an attention whore liar. He will retrade the price after this substantially which will give the board an out to reject. 

 

Facts. WSO really trying to pretend like Elon's fake user cover story is the real reason why he wants to now back out the deal lol. Everyone knows Twitter has tons of fake users, that isn't new. Elon shows why you shouldn't just buy companies for vanity reasons.

 

Or maybe in addition to everything else, he realized that the reason Twitter "censors" (LMFAO) conservative trolls is because a much larger user base actually wants some accountability and looks to the platform to enforce a bare minimal amount of it, and that when he promises to come in and remove that accountability, it risks a much larger number of people de-platforming and driving down valuation.

Also, given that his net worth is mostly on paper, you'd think that the huge losses he's about to experience in TSLA are going to make it a little tougher to pledge tens of billions of dollars for no real purpose.

 
[Comment removed by mod team]
 
Arroz con Pollo

Ozymandia

Or maybe in addition to everything else, he realized that the reason Twitter "censors" (LMFAO) conservative trolls is because a much larger user base actually wants some accountability and looks to the platform to enforce a bare minimal amount of it, and that when he promises to come in and remove that accountability, it risks a much larger number of people de-platforming and driving down valuation.

Also, given that his net worth is mostly on paper, you'd think that the huge losses he's about to experience in TSLA are going to make it a little tougher to pledge tens of billions of dollars for no real purpose.

I bet you still wear a mask

I'll take that as tacit agreement with my point.  Glad you agree.

 

This is a bit odd. I never once believed “freedom of speech” to be the main reason he got into this deal but that he was trying to monetize on the market that Trump was trying to capture through Truth Social.

Array
 
IncomingIBDreject

This is a bit odd. I never once believed "freedom of speech" to be the main reason he got into this deal but that he was trying to monetize on the market that Trump was trying to capture through Truth Social.

I don't think it's unreasonable to take him at least partly at his word, and he has said that one of his main reasons for wanting to buy Twitter is because he believes, or claims to believe, that Twitter is a town center-like platform which shouldn't be regulating any speech at all.

I also don't see why anyone who thinks Twitter is liberal-leaning would want to buy that particular platform and reorient it to a conservative-leaning crowd.  Sort of defeats the purpose.

 

It's a shame.  I thought he could improve the place despite all the culture wars nonsense about the purchase.  But it would have been an uphill battle to fix Twitter for sure.  People only go on twitter for shitty hot takes not actual conversation or community.  Allowing right-wing hot takes might help a bit but the root problem is deeper than censorship/moderation.

 

I think what he's doing is perfectly rational, even if he backs out of the deal.

I mean if you signed a contract to buy let's say a car and then before the "delivery date" you found out that the price of the car dropped by 30% wouldn't you want to renegotiate? Plus, they even had a clause in the contract for it, so it's not like it's anything illegal.

It's just capitalism. I don't think there's anything particularly nice or malicious about it. He's just trying to optimize using the least amount of money to get what he wants, like anyone else does.

P.S. With complete transparency, I am an Elon Musk fan. I think our planet/humanity is better off having him than not having him (as of right now lol, who knows what the crazy things he's working on will lead to, but that future is sure as hell more exciting than anything without him even if it leads to a cyborg apocalypse haha)

 

I mean you can't just "put a deal on hold", doesn't work like that. It's what he's saying, and what financial journalists (besides Matt Levine) are parroting, but not the reality. He's gotta close or pay the break fee or neither and get sued and most likely lose because material adverse change is insanely hard to prove AND he waived due diligence to get the deal thru. 

He's retrading the deal. I actually don't think it's because of the TSLA stock price because he's already sold off  a fair chunk of the financing which the stock was guaranteeing. He's seeing FB and the other networks fall off a cliff and wants to get it for cheaper. I would be floored if that happens - hugely embarrassing for Twitter BoD if it does. 

I am pretty certain the deal will close - if I could buy single names, I might think about trying some merger arb given the spread has widened so much. 

Array
 

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