Flipping The Bird: Elon Vs Twitter

[MoeFOH]

Interesting podcast I've just cottoned on to. Only 6 episodes (5 out so far). Whatever you think of him, the guy's nothing if not intriguing...

https://wondery.com/shows/flipping-the-bird-elon-vs-twitter/

[Wookie]

I can’t believe he was dumb enough to pay 44B to buy a woke platform. He lost 70 percent revenue because of his political views. I know he got cornered into the deal, but still crazy to throw money away like that. He should have have been more perceptive about the sensitivity of that platform. 

[bates40]

I am not sure how much of a hit it takes for a multi-billionaire to feel the pain, but I think this must be very close. 

[99call]

15 hours ago, MoeFOH said:

Whatever you think of him, the guy's nothing if not intriguing

I have to disagree, for someone who gets thrown in your face on every news outlet, in the few snippets i've actually clicked on I feel like he's got 'magician' energy.   By that I mean I find him completely uninteresting, boring, awkward and creepy.     I feel this way about all magicians 

 

[BrightonCorgi]

For everything Elon Musk has accomplished to date could be just the beginning.  Getting in the automotive game was a poor choice at the time.  The verdict is hardly out whether Twitter was a good buy or not.

[MrBirdman]

On 5/17/2023 at 8:47 PM, Wookie said:

I know he got cornered into the deal,

He cornered himself into the deal. 

[NSXCIGAR]

On 5/18/2023 at 7:51 PM, MrBirdman said:

He cornered himself into the deal. 

It appears that's the case but I'm still confused as to why once the data on the user base came out he wasn't able to extricate himself from the deal or at least revise his offer. That's like submitting an offer to buy a house and the home inspection finds a cracked foundation. 

From what I understand worst case he would have had to pay a $1B fine for backing out which seems like a no-brainer. Take the $1B hit to revise the  offer to $20B less.

On 5/17/2023 at 5:47 PM, Wookie said:

I can’t believe he was dumb enough to pay 44B to buy a woke platform. He lost 70 percent revenue because of his political views. I know he got cornered into the deal, but still crazy to throw money away like that.

He certainly got screwed on the final deal but as I said above I'm confused as to why he was forced to stay with his original offer after material facts that impacted the share price came to light. 

Obviously his stated goal is to make the platform less woke. What 70% drop in revenue are you referring to? I'm pretty sure he's made Twitter close to profitable just by cutting 80% of the staff so at least he can pay the interest on the money he borrowed to buy it. I think it's reasonable to think he can take it from $20B up to $44B by 2030 and then he can refinance his debt and break even on revenue.

On 5/18/2023 at 6:50 PM, BrightonCorgi said:

For everything Elon Musk has accomplished to date could be just the beginning.

I think it's pretty clear he wants to make Twitter into something giant, like Facebook giant. He sees massive potential in it. He'll probably hold on to it forever so he doesn't care what the value is. In 10 years it'll almost certainly be worth more than what he paid.

On 5/18/2023 at 7:05 AM, 99call said:

By that I mean I find him completely uninteresting, boring, awkward and creepy.     I feel this way about all magicians 

He definitely comes off as a bit odd at times and a little aloof. What I find concerning is I've seen several times where he seems to act and speak without thinking or state opinions without really thinking them through which is surprising for someone like him.

The statement he made about "funding secured" for a Tesla deal got him in big legal trouble and was totally unnecessary and pointless and cost him millions. 

Most recently his opinion that working from home is "morally wrong" seems quite peculiar. I don't think morality enters into it. Whatever increases productivity is what should be done.

[Arabian]

1 hour ago, NSXCIGAR said:

 

I think it's pretty clear he wants to make Twitter into something giant, like Facebook giant. He sees massive potential in it. He'll probably hold on to it forever so he doesn't care what the value is. In 10 years it'll almost certainly be worth more than what he paid.

 

WAY bigger than Facebook/Meta, a super platform-app, something like the Chinese model, one app that does everything where you can order food, shop, send/receive money and watch videos, text.....etc

a must daily life tool. I think that's his goal.

[gustavehenne]

Government legislation, in most (but not all) countries, is always behind on 'tech' and takes a lot of consensus and time to get things meaningfully done. Whilst I loathe TikTok and do agree with comments above that it adds nothing of positive value (except social conformity, ironically), the same could be said of Instagram, Facebook, Snapchat etc.

If we ban TikTok, a TikTok2 will immediately rise or be capitalised upon by Meta, X (Twitter), etc. so the real key is trying to boost current legislation, which will take time and no doubt be impeded by the wokerati and other interest groups. If I had kids, I would let them use some of these apps but monitor it very carefully. The more one tries to restrict ones access to something, it becomes exciting and forbidden fruit territory.

Social media is dangerous but I certainly wouldn't leave it to the heads of these organisations to regulate. But then, I wouldn't trust most governments either. Sorry, not feeling very positive today about anything to do with politics or greedy megalomaniac companies 

[MrBirdman]

On 5/21/2023 at 5:01 PM, NSXCIGAR said:

It appears that's the case but I'm still confused as to why once the data on the user base came out he wasn't able to extricate himself from the deal or at least revise his offer. That's like submitting an offer to buy a house and the home inspection finds a cracked foundation. 

It was a function of the initial agreement, which only allowed him to back out in the event of material misrepresentation by Twitter or a material adverse event. Both are very high bars in Delaware. Having talked off the record with an attorney advising Twitter during the sale, they were not worried about any of Musk’s claims for getting out. They sucked. That’s why he didn’t even bother taking a shot at trial. 

The deal was bad because Musk overpaid and didn’t cover his ass in the preliminary agreement. 

 

On 5/21/2023 at 5:01 PM, NSXCIGAR said:

From what I understand worst case he would have had to pay a $1B fine for backing out which seems like a no-brainer. Take the $1B hit to revise the  offer to $20B less.

The initial deal also gave Twitter the option to compel completion, which was their intention. The $1B breakup fee was just an alternative they could select without going to court. But it should have been pretty clear to Musk from the outset that they would seek to compel the deal.

 

On 5/21/2023 at 5:01 PM, NSXCIGAR said:

Most recently his opinion that working from home is "morally wrong" seems quite peculiar. I don't think morality enters into it. Whatever increases productivity is what should be done.

He’s just a jerk, I think. Also, he owns a car company and has a vested interest in people commuting (but I think the real reason he said that is he’s a jerk).

To me, long commutes are about as unproductive a use of time as you can get, especially if you’re driving and can’t work. 

[Bijan]

My read on why Elon Musk backed himself into the deal, is the same reason he backs himself into any other case where he needs to sell Tesla stock. If he sells the stock of his own accord it sends a bad signal, if he's "forced" to do it against his will, there isn't the same sense of him cashing out.

(Financials are bad, banks won't lend on favourable terms for the purchase, he'll have to sell more stock).

Why he actually wanted twitter is probably about his narcissism and him wanting to leverage some of his wealth into more fame/infamy.

https://www.forbes.com/sites/qai/2022/12/29/elon-musk-sells-another-36-billion-in-tesla-stock-to-prop-up-twitter/

[NSXCIGAR]

12 hours ago, MrBirdman said:

The deal was bad because Musk overpaid and didn’t cover his ass in the preliminary agreement. 

So the data on bots wouldn't meet the bar for material misrepresentation in Delaware? Since that's one of the most important variables in determining value it's shocking that Musk would have entered into a deal without an escape clause in that circumstance. That's just shocking to me. 

What would have been the worst case scenario for him if say his funders pulled out forcing him to abandon the deal? It couldn't have been worse than losing $20B. 

[MrBirdman]

9 hours ago, NSXCIGAR said:

So the data on bots wouldn't meet the bar for material misrepresentation in Delaware?

No. They didn’t misrepresent anything to Musk. That he said they did after realizing his mistake does not make it so. That is why he eventually pivoted to claiming the discovery was a material adverse event. Which it wasn’t. 

Look, it’s contract law. Most Supreme Court justices don’t understand it. But to put it briefly, courts are generally quite averse to invalidating deals, meaning the bar is very high. He has no one to blame but himself. 

[NSXCIGAR]

On 5/22/2023 at 9:37 PM, MrBirdman said:

He has no one to blame but himself. 

Is it your opinion that Twitter actually did not give him bad data and that Musk was using that solely as a made up excuse to back out? Or that the data might have been bad but he just didn't cover himself so it didn't matter and he was just trying to get sympathy? 

 

On 5/22/2023 at 12:17 AM, Bijan said:

is the same reason he backs himself into any other case where he needs to sell Tesla stock. If he sells the stock of his own accord it sends a bad signal, if he's "forced" to do it against his will, there isn't the same sense of him cashing out.

I agree he was keen to liquidate Tesla stock without causing a stir but that doesn't explain why he would flush $20B down the toilet. I'm just at a loss understanding how he could have signed a deal that wouldn't have allowed him to back out if user data differed from what had been disclosed by Twitter. If the deal had to be a "sight unseen" deal it's an automatic walk-away. I can't imagine how his financers would have accepted that either. 

[MrBirdman]

36 minutes ago, NSXCIGAR said:

Is it your opinion that Twitter actually did not give him bad data and that Musk was using that solely as a made up excuse to back out? Or that the data might have been bad but he just didn't cover himself so it didn't matter and he was just trying to get sympathy? 

I don’t know what exactly Twitter gave him, but the preliminary agreement he signed narrowly defined both the representations Twitter was making and what would qualify as a material adverse event. This is a common strategy for sellers, and nobody forces the buyer sign on the dotted line. Twitter wrote the agreement knowing full well that Musk might try something like this, and Musk signed it. If he wanted the flexibility to walk away should the user data not be what he expected, he should have insisted on those terms in the purchase agreement.

His public statements were probably part desperate legal strategy and partly his natural impulsiveness (which is basically what got him into overpaying for Twitter in the first place). He also no doubt wanted public sympathy given his megalomania. 

[NSXCIGAR]

4 hours ago, MrBirdman said:

If he wanted the flexibility to walk away should the user data not be what he expected, he should have insisted on those terms in the purchase agreement.

That's just incredible to me. I mean what was he thinking? Is there any reasonable explanation as to why he would fail to address it? He was on record publicly questioning the user base and the issue of bots well before the deal. Everyone would know user base and number of bots is critical to valuation. I'm just at a loss to understand why and how he did this. Or as I said above how his financers would have allowed it. 

As far as overpaying I don't believe the original offer was off base. It only became off base after the user data was revealed. Do you know where that data came from? Was it Musk's own investigation? If so is it possible he was making the whole thing up to try and get the price down? I don't see how that could even have worked as if it did go to court his data would have to be presented and Twitter could challenge it. 

This thing is a lot weirder than I thought...

[99call]

7 hours ago, NSXCIGAR said:

I mean what was he thinking?

A great deal is made of certain characters' intelligence days, putting them up on a pedestal like they are some sort of infallible god.  He maybe a very clever man is some as aspects of his life, but he also comes across as being very childlike in others.  He comes across as quite impetuous and vulnerable to me, it seems modern day society is very easily seduced by this notion of a technical genius, and forget that social intelligence and understanding normal people is actually very valuable in business. 

It's a bit like the Rainman dynamic,   people are impressed by the toothpick counting.......but forget he needs help putting on his own underpants. 

[NSXCIGAR]

27 minutes ago, 99call said:

A great deal is made of certain characters intelligence days, putting them up on a pedestal like they are some sort of infallible god.

I understand that and it does appear he's held up as an unmitigated genius by many. But the guy's clearly not an idiot yet this is something only an idiot could do. If there's a rational explanation I'd love to hear it. 

Whether he's a genius or not what's been described, if accurate, is nothing less than a misstep of historic proportion. A basic error that would make me call into question everything he's involved in. It's like a grown adult putting their arm in a wood chipper. Like a potential mental problem type error.

Losing $20B on an "oopsie" is extremely disturbing. I don't know--am I overstating this? How could anyone do business with him or give the guy a dollar after that kind of error? I mean if the guy is a technical genius fine but I wouldn't want him making any business decisions after that. As you said, Rain Man should be in the basement counting beans--not negotiating contracts or making billion-dollar company decisions. 

[MrBirdman]

10 hours ago, NSXCIGAR said:

That's just incredible to me. I mean what was he thinking? Is there any reasonable explanation as to why he would fail to address it? He was on record publicly questioning the user base and the issue of bots well before the deal.

Your guess is as good as mine. Musk has repeatedly made or amplified outlandish claims on a variety of issues, so it seems likely he was at least exaggerating about the extent of Twitter's bot issues. After all, it was no secret that Twitter had bots and that verifying which accounts were real humans is difficult to do with accuracy. His legal team’s estimates about the problem were just that - estimates. 

We don’t know what his attorneys advised him about the deal, or how the negotiations over the purchase agreement played out. But if he had doubts about the user data and put a high value on it, he and his legal team did not cover themselves in the terms. 

As for the financial backers, I suspect the lenders planned to offload the unsecured debt long before a risk of default emerged. I don’t think they expected Musk to fire half the workforce and probably underestimated the immediate public backlash to Twitter Blue and Musk in general. This was around the time that hagiography came out on Netflix. They drank the Musk Kool Aid, in other words. Instead of making a quick buck they quickly found that the debt could only be sold at a heavy discount. It’s another reminder that people on Wall Street aren’t really any smarter than other people in business, whatever they might want us to think. 

[Bijan]

12 hours ago, NSXCIGAR said:

I agree he was keen to liquidate Tesla stock without causing a stir but that doesn't explain why he would flush $20B down the toilet. I'm just at a loss understanding how he could have signed a deal that wouldn't have allowed him to back out if user data differed from what had been disclosed by Twitter. If the deal had to be a "sight unseen" deal it's an automatic walk-away. I can't imagine how his financers would have accepted that either. 

That's assuming Twitter is worth $0. If it's worth less than $20 billion, the he gets to use his shares in Tesla to finance the purchase, even it's not a "fair" deal.

Usually he'd leverage his stock and borrow against it, but that made more sense when interest rates were low and Tesla stock kept increasing in price exponentially. Now it makes more sense to sell it directly.

This is like a guy who pays for a huge renovation (OK'd by the wife) in order to put in a smoking room.

[Chibearsv]

9 hours ago, Bijan said:

This is like a guy who pays for a huge renovation (OK'd by the wife) in order to put in a smoking room.

Or an outdoor pavilion 😁

[NSXCIGAR]

21 hours ago, Bijan said:

That's assuming Twitter is worth $0. If it's worth less than $20 billion, the he gets to use his shares in Tesla to finance the purchase, even it's not a "fair" deal.

Usually he'd leverage his stock and borrow against it, but that made more sense when interest rates were low and Tesla stock kept increasing in price exponentially. Now it makes more sense to sell it directly.

This is like a guy who pays for a huge renovation (OK'd by the wife) in order to put in a smoking room.

I'm not sure I follow. I'm making these numbers up but if he sells $20B in Tesla stock and financed the other $20B for a company worth $20B what's the strategy there?

I understand the renovation analogy but you're still getting something for the 90% of the money that doesn't go to the smoking room. It seems like he's just getting the smoking room for all that money. 

21 hours ago, MrBirdman said:

We don’t know what his attorneys advised him about the deal, or how the negotiations over the purchase agreement played out. But if he had doubts about the user data and put a high value on it, he and his legal team did not cover themselves in the terms

I was thinking about that and of course his lawyers wouldn't have brought it up if Musk never asked about it. They just craft the deal in accordance with law. So I'm assuming he never brought this concern up to them as they certainly would have explained this to him during the crafting of the deal. 

So we know he 1) expressed concern about the user data publicly, 2) proceeded to sign a deal that did not address this issue and 3) complained about it after the deal was signed which by itself cut the company's value by $20B. 

The only thing I can think of is he was making the user data "revelation" up for some inane reason just to shake the box. We know the company was probably overpriced at $44B but do we really know it's only worth $20B? 

I don't think I can really understand it any more than this. 

 

21 hours ago, MrBirdman said:

As for the financial backers, I suspect the lenders planned to offload the unsecured debt long before a risk of default emerged. I don’t think they expected Musk to fire half the workforce and probably underestimated the immediate public backlash to Twitter Blue and Musk in general.

That's interesting, but I don't know how they could think they could unload that debt quickly when he was already overpaying for the company. Maybe the whole thing is a ploy to force the investors to hold the debt by making them think they're over leveraged? Now they're forced to stick around for the long term. 

[cigcars]

On 5/17/2023 at 9:10 PM, bates40 said:

I am not sure how much of a hit it takes for a multi-billionaire to feel the pain, but I think this must be very close. 

       *He'll borrow billions from the government and/or other factions and never have to pay it back.

 

[Bijan]

On 5/24/2023 at 12:46 PM, NSXCIGAR said:

I understand the renovation analogy but you're still getting something for the 90% of the money that doesn't go to the smoking room. It seems like he's just getting the smoking room for all that money. 

Except it's a $5 billion smoking room.

How would it have gone down if he had said even though this company is worthless, I'm still going to spend $5 billion to spam memes?

Also to keep in mind that Facebook bought WhatsApp for $19 billion (in 2014) when it was a tiny company but with hundreds of millions of users.

[NSXCIGAR]

3 hours ago, Bijan said:

Also to keep in mind that Facebook bought WhatsApp for $19 billion (in 2014) when it was a tiny company but with hundreds of millions of users.

I'm not suggesting Twitter is or isn't worth any given value. All I know is the experts called it overvalued at $40B and when he made his claim of high bot counts the value was estimated to be $20B. 

If he made the whole thing up then it's moot.