Elon’s Out

Reality doesn't care if Musk doesn't care. For certain purchases, there's a probability that Musk will simply find that his money is no good. Not for sale to Elon Musk at any price.

danaris4• 4 years ago

Nah, he's done that by inheriting a bunch of rather blood-soaked wealth and then being fairly effective at predicting which companies he could buy that would then make him a lot of money.

loufe• 4 years ago

Let's not forget that this is a take, not an indisputable fact. Whether ostensible or true, he has cited potentially valid reasons for both cases (he DID have investors lined up to take it private and there WAS a lack of openness to investigate Twitter). I'm not saying he did or he didn't, I just find this kind of assertion (indeed the whole tone of the article) to be a bit flippant and more of a channeling for dislike of someone then for honest unbiased speculation of what is going on.

wolverine8765• 4 years ago

The NY Times had an article recently about how all burnt Wall Street financiers, in places like Goldman Sachs, say they will finance Musk again.

nabla93• 4 years ago

Goldman Sachs & other banks are not burned in this. They collect commissions and fees from loans. They deal with increasing risk by increasing fees, collateral and interest rate. That will restrict the deals Musk can afford.

niklasbuschmann• 4 years ago

Could Musk buy Twitter shares on the open market before the deal closes?

alphabetting• 4 years ago

I found this part most interesting. Public awareness of the Delaware Court of Chancery is about to skyrocket during this court battle.

The fact that Musk is working in such bad faith here — that he seems so unconcerned with law and the contract he signed — cuts both ways. On the one hand, it will certainly annoy a Delaware chancellor; Delaware likes to think of itself as a stable place for corporate deals, with predictable law and binding contracts, and Musk’s antics undermine that. On the other hand it might intimidate a Delaware chancellor: What if the court orders Musk to close the deal and he says no? They’re not gonna put him in Chancery jail. The guy is pretty contemptuous of legal authority; he thinks he is above the law and he might be right. A showdown between Musk and a judge might undermine Delaware corporate law more than letting him weasel out of the deal would.

tyleo3• 4 years ago

Or they could put him in Chancery jail? The law is already undermined if no attempt is even made at upholding it.

xxpor• 4 years ago

But that's not how it works when you simply owe money (usually, modulo things like probation violations and child support, but lets ignore that for now). We don't have debtors prisons). They can seize his money though, garnish his wages (lol in this specific case though), etc.

jollybean8• 4 years ago

Could ask him to pay the $1B fine in the deal for walking away?

eftychis3• 4 years ago

No. The $1B clause does not involved the two contractual parties pulling out of the deal.

russdill2• 4 years ago

The $1B is it he walks away and Twitter is ok with it. Another clause allows Twitter to force the deal to close so long as they are operating in good faith.

The purchase price of 54.20 per share would net a lot more than a billion given the current share price.

moomin3• 4 years ago

This is one of those things that could genuinely cause problem for the entire US (corporate) legal system. There’s a genuine danger that the result of this case will be “some people are too powerful to be regulated by the US system, and this is now obvious”.

arcanus• 4 years ago

This is a cyberpunk future.

I'm overall a fan of Musk, but this is too far. There simply must be rule of law for the United States to remain a dynamic society.

KerrAvon• 4 years ago

If this court doesn't have real power against clever C-suite types, maybe it's better that we find that out. In terms of compensation and personal money management, Musk isn't doing anything that other wealthy execs haven't done. (For example, Steve Jobs famously took a $1.00 per year salary for a long time.) Either there's an enforcement mechanism that works or there isn't.

dopidopHN2• 4 years ago

I have no insight into this but it looks that it will happen eventually. ( the degradation of the US gov authorities on the conduction of large financial arrangements)

haliskerbas2• 4 years ago

There’s a genuine danger that the result of this case will be “some people are too powerful to be regulated by the US system, and this is now obvious”.

This should have been obvious by now. Cash rules everything around me.

typon• 4 years ago

It's wild to me that people think that Elon might actually face legal consequences for this.

The Delaware court isn't some magical place run by elves. It's a court in the US. You know what's a lot cheaper than $34 billion dollars, or heck even $1 billion dollars? $200k for 3-4 judges.

The Supreme Court just changed the law of the land based on a right-wing political campaign. You think a billionare, let alone the richest billionare is going to be subject to any serious consequences? It's absurd to even entertain this.

BiteCode_dev• 4 years ago

That would be a good thing. Put some light on one of the biggest failure of our democracies.

phatfish• 4 years ago

US law obviously works in favor of billionaires. I doubt even Musk would want to expose it further, and the other parties involved in this deal surely don't.

They will set their lawyers at it and come to a settlement. The super rich know better than to be at each others throats, that sort of behavior is for the poor...

rurp4• 4 years ago

Agreed, this situation is uncomfortably similar to a number Trump crises. Much of our legal system is based on norms and good faith, which a sufficiently motivated and powerful psychopath can pervert to their advantage.

I have no idea what will happen here. Musk is clearly in the wrong both legally and ethically, but I suspect he will weasel out of resbonsibility for the damage he's caused. That alone will be bad enough, but the much larger risk is that it opens the floodgates for slightly less powerful scumbags to flout the law.

US law and democracy are shakier than I've seen in my lifetime, and Musk is actively taking a sledgehammer to a piece of that foundation for his own greed and whim.

np-• 4 years ago

Assuming that is the appropriate penalty (I know nothing about Chancery law), why exactly can’t they just issue a warrant for his arrest and put him in jail? He doesn’t have a private militia or anything like that

hollasch• 4 years ago

And who do you imagine would do the arresting bit on behalf of the Delaware court?

lkxijlewlf• 4 years ago

Maybe this is a good reason a single human being shouldn't be so fucking rich.

If enough money makes you untouchable by the law, then our system is simply broken.

bmitc10• 4 years ago

I continue to be super concerned about this. I do not understand how the U.S. government does not view these billionaires as serious ideological threats to democracy, the court system, national security, etc. Makes one realize just how bought out Congress is.

Once a person has wealth over, say, $500 million, then there should be a 100% tax.

BobbyJo5• 4 years ago

In very direct, real terms, assets are power. They represent resources to do things.

The problem here isn't that wealth is power, it will always be power. The issue is that a single person has been allowed to accumulate too much.

kolinko2• 4 years ago

As someone who grew up in a communist country with literally zero rich prople - it’s not about wealth, it’s about power and influence. We’ve had just as many, if not way more, people above law as in capitalist countries.

serf2• 4 years ago

Maybe this is a good reason a single human being shouldn't be so fucking rich.

if you look at this as a problem with the rich, you're not being creative enough.

Speaking as if we're assuming Musk gets away with this, this is a justice enforcement problem -- when all the mega-rich are gone the justice system that displays this level of corruption will just skim the highest payers available to them; they won't just give up these corrupt practices because there isn't a local billionaire to tap.

throwaway0922315• 4 years ago

What if the court orders Musk to close the deal and he says no?

I can't believe people are taking this very silly statement seriously. This is utter nonsense. There are remedies for people who disobey court orders. Having assets makes you more vulnerable to a court's authority because you have something to lose.

If a court orders specific performance and he doesn't do it then he's liable and the court will take his assets to compensate.

Is Levine seriously suggesting that US courts don't have the authority to impose financial penalties, find liability, and seize assets? This is such an absurd thing to say it's hard to find a way to charitably respond.

hotpotamus5• 4 years ago

Anytime the idea of a wealth tax is brought up, I see commenters coming out of the woodwork to say that it would be impossible to actually collect it from the wealthy. Though I will note that it seems like we are able to collect yachts and planes from Russian oligarchs now, so perhaps our techniques have advanced in the last few months.

heartbreak• 4 years ago

Levine’s take is based on how Musk’s previous encounters with court orders have gone.

daenz5• 4 years ago

the court will take his assets to compensate.

How do you seize billions of dollars of stock without affecting share prices?

dreamcompiler2• 4 years ago

Levine has addressed this in past columns. Of course the courts have such authority, but individual people have to enforce the court's decisions, and sometimes those people are reluctant to take on Musk.

Musk is a special case because he has done things like threatening to ruin the careers of SEC lawyers who have come after him, and he has the power to make that happen.

Is this illegal? Probably. Does Musk get away with it? Yes.

paulcole2• 4 years ago

Is Levine seriously suggesting that US courts don't have the authority to impose financial penalties, find liability, and seize assets

No. He’s suggesting that Musk’s wealth and power will make the people who work in US courts reluctant to impose financial penalties, find liability, and seize assets.

reverend_gonzo• 4 years ago

Levine is suggesting that they don’t have the balls to enforce those penalties.

And by history, he may very well be right.

phillipcarter• 4 years ago

Perhaps it's just a general sense of disillusionment, but I've come to see that "court orders X" and "X happens" are entirely orthogonal. I will be personally surprised if Musk pays a single cent.

082349872349872• 4 years ago

Note that in TFA, the continuation of this very silly statement is footnoted [6], which literally starts with "I made this joke before...", so none of us ought to be taking it seriously.

mise_en_place2• 4 years ago

Ok let’s say he has a bunch of stock as well as paintings, cars, etc. how do you divvy that up? Cut the painting in half and give it to Twitter? The rich are very wise at hiding money in assets that cannot be evenly divided nor distributed. That’s why the vast majority of taxes in the US comes from the middle class, they usually sit on piles of cash and have salaries from which to levy fines to.

kolbe3• 4 years ago

Well, throwaway09223, you certainly sound like as much an authority as a former Wachtell and Goldman Sachs associate. Strong arguments like "this is utter nonsense" and "this is so absurd [that I can't actually argue against it]" are sure to sway the educated crowd on HN.

If you would like to go see ways in which the government fails to penalize powerful entities, look no further than the financial crisis fines. What you were told were 10 figure fines ended up becoming a few million dollars in consumer relief headaches

jjav• 4 years ago

There are remedies for people who disobey court orders.

There are remedies for people like you and me and most people who disobey court orders.

You can observe time and again that for those who are well connected and have some billions, the concept of law is far more malleable.

zackees2• 4 years ago

Why would the court force Elon to buy the company when the remedy in the contract is a one billion payout?

codesections2• 4 years ago

This is such an absurd thing [for Matt Levine, a former 3rd Circuit clerk, Yale Law grad, and Wachtell M&A attorney] to say it's hard to find a way to charitably respond.

If your interpretation of the post suggests that a highly qualified attorney is getting the basics of US law absurdly incorrect, you might want to reconsider whether you're understanding the intended meaning.

(Here, Levine is making a specific claim about the remedies that the Delaware chancellory court typically employs, not about the authority of US courts)

avalys4• 4 years ago

From the Wall Street Journal this afternoon:

"“What are they going to do if there is a judgment and he says, ‘Well, I’m still not going to buy it’?” said Zohar Goshen, professor of transactional law at Columbia Law School. “They don’t really have tools to force him to go through with it. You don’t put people in jail because they don’t buy something.”"

https://www.wsj.com/articles/twitter-elon-musk-set-for-unpre...

gnicholas• 4 years ago

If he had the cash to buy it, they could force him to. But if he lined up financing and those people bail, what then? Would the court make him liquidate all his Tesla stock, without regard to how that would injure other Tesla shareholders? Having assets does make one more vulnerable to court judgments, but savvy birch people will set themselves up to remain in the driver’s seat when possible.

kortilla4• 4 years ago

There are remedies for people who disobey court orders.

A Delaware court doesn’t have as much reach as you might think if most of Musk’s assets are not there.

benreesman• 4 years ago

To the extent that Elon Musk might represent a corner case w.r.t. the legal system even more than you’re average billionaire it would most likely be because of the national security tie-ins around SpaceX.

This is pure speculation on my part, but I don’t think it’s insane.

phendrenad22• 4 years ago

I can't believe people are looking at this from such a silly angle. It's obvious that no court can order you to buy something. That goes against the personal freedom we have in this country, and if a court tried it, it would be an easy appeal. But that misses the point, because nobody is going to order Elon to buy Twitter. What MIGHT happen is, a court declares "Congratulations! You already bought Twitter! It has nothing to do with us, we just interpreted the contract. Again, congrats on your purchase, don't go getting buyer's remorse now winky face"

wronglyprepaid• 4 years ago

The guy is pretty contemptuous of legal authority; he thinks he is above the law and he might be right

Of all the funny things I have read this week this takes the cake, Biden will not allow him to get away with it, not a joke.

Waterluvian• 4 years ago

Reminds me of the impotence of the American system to deal with Trump over the years. And he opened the flood gates for scofflaws.

If they don’t make an example of Musk (if he so deserves it), the same thing will happen and Delaware will become less useful for corporations.

akimball2• 4 years ago

Amusingly, I first read that as "the Delaware Court of Chicanery".

matt3210• 4 years ago

The laws are enforced with fines, and there for Elon And other rich over lords are above the law.

pbreit• 4 years ago

"There is not a whisper of evidence for this claim, no hint that there might be evidence, no acknowledgement that a reasonable reader of this letter might want to see evidence."

This is completely wrong, right? The evidence might not be terrific but it's definitely more than a whisper.

sklargh2• 4 years ago

This is the thing. I feel like the Delaware Chancery Court is going to compel specific performance and the incentives for all other parties here are tilted deeply towards compliance.

On a practical level, every large financial institution with dollar assets (I mean this literally) has a far greater vested interest in maintaining a productive relationship with the Chancery than they do with Musk.

On a political level, could easily see the Delaware governor getting a kick out of sending the state police to arrest Musk for contempt, impound his assets.

Then again, Musk is a pretty good gambler.

la64710• 4 years ago

I was thinking this was a case of white privilege that we consider the conduct of Musk as “rich people just wanna have fun” and not a criminal conspiracy. But the more I think the more I realize the privilege is not that , the privilege is that a white successful immigrant is loved by so many people in this country , a brown or black successful immigrant is not loved in the same way in this country. And that my friends is indeed a privilege.

tailrecursion• 4 years ago

I'd like to learn how to read billionaires' minds. Anyone know a good book I can read so that I can have the skills of this opinion writer?

aaaaaaaaata2• 4 years ago

Internet comment threads.

No, seriously. Just keep finding better ones.

hotpotamus5• 4 years ago

“I want more”

You’re welcome.

ThalesX2• 4 years ago

I met an almost billionaire once; I mentioned how a million dollars would cover me for the rest of my life and she followed with a 10 minute speech on how money is horrible and she can't sleep at night for their concern. I was moved but I confessed I'd still want that million dollars to fall out of the sky. It didn't feel like she "wanted more".

dredmorbius• 4 years ago

Johnny Rocco knows what he wants.

https://yewtu.be/watch?v=ITs-YX1yQ7o

jollybean8• 4 years ago

They are of the same mind as any other person with a bit of arrogance and hubris they just have more money.

Imagine some lowly millionaire putting a bid in for a piece of land / cottage he wants, and the karma that can come from that. Same thing, different scale.

jacquesm9• 4 years ago

They are of the same mind as any other person with a bit of arrogance and hubris they just have more money.

Not necessarily, but those are the ones that you will hear the most about.

TillE2• 4 years ago

There's reams of Musk's direct thoughts about this topic and many many others, coincidentally available on twitter dot com. It's not overly difficult to get a sense of who he is and how he thinks about things.

anonu4• 4 years ago

Matt Levine is a lawyer. Nothing to do with understanding a billionaires mind. A solid legal understanding, especially of corporate finance, M&A, etc is what you're looking for here ...

tveita2• 4 years ago

https://en.wikipedia.org/wiki/DSM-5

wolverine8765• 4 years ago

Just look at yourself and people you know. You want to know how to read humans' minds; humans with a billion dollars are no different.

By imaginging them as different, you are giving them great power and throwing away your own. You are as smart as they are.

metadat3• 4 years ago

Un-paywalled: https://archive.ph/5nLiC

ReaLNero• 4 years ago

BTW, to those who don't know -- Money stuff is free if you subscribe to it as an email newsletter.

Link: https://www.bloomberg.com/account/newsletters/money-stuff

vitorsr• 4 years ago

Plus, as prominently displayed in a Pinned Tweet on Levine’s Twitter:

https://twitter.com/matt_levine

dang3• 4 years ago

(We detached this subthread from https://news.ycombinator.com/item?id=32036815.)

slotrans2• 4 years ago

and you absolutely should subscribe because it is fantastic and hilarious

xiphias23• 4 years ago

I don’t understand why we need to make things personal: a multibillionaire with practically unlimited resources is negotiating with a multibillion dollar corporation with practically unlimited resources.

It’s clear that the offer Elon got stuck with has an unrealistic price at this point (and Elon just want a reason to get out of the deal), just like it’s clear that Twitter’s management is incompetent in the last few years.

I just hope that there will be a lawsuit with juicy details so that I can get my popcorn, but I believe the 2 parties will settle.

addicted• 4 years ago

Elon only got stuck with it because he explicitly waived the right to due diligence which would have protected him from all this.

He tried to act badass but came out looking like a dumbass.

Everything since is his effort to get out of this (which he will…one of the nice things about having a lot of money is that it’s very hard to lose, no matter how illegal whatever you’re doing is), but is also trying to pretend he didn’t do something really really dumb.

I see absolutely no reason to help Elon rewrite history especially when he could very well paid the penalty and walked away like he contractually agreed to, which would have ended the matter right there.

jollybean8• 4 years ago

Twitter management is not incompetent, Musk set his own price.

He should definitely pay a fine.

You can't walk into a situation and cause major chaos - literally executive turnover, stock going crazy, all sorts of turmoil - and then walk away on bad faith and excuses.

Also - he does not have unlimited resources. He literally cannot afford this deal right now.

eftychis3• 4 years ago

He practically bought it; it's unlikely an agency or third party to intervene / object; only thing to "save" him is stating he doesn't have the monwy/funding was pulled due to lack of information. Even then, I doubt he would avoid it.

Of course they can drag each other to the bottom until one gives up. I doubt Musk will and Twitter might have existential issues if it doesn't get bought with rumors related to their user base quality.

kzrdude• 4 years ago

He can afford it, but not without causing further chaos to himself and his companies.

refurb7• 4 years ago

Pretty much.

It’s like selling a house and buyer makes an offer with no contingencies.

Sure, you can sue them to close the deal but the juice isn’t worth the squeeze. Does Twitter want to be locked into some multi-year court battle?

They’ll settle and the news will move onto something else.

jcranmer• 4 years ago

Does Twitter want to be locked into some multi-year court battle?

Delaware courts are pretty fast. The court case could conceivably be finished before the end of this year.

TillE2• 4 years ago

It's not like there's another buyer out there offering $44 billion. Twitter has no reason to settle, unless maybe the stock price goes way up.

mupuff1234• 4 years ago

Suing to close the deal can be a way to get leverage for the eventual settlement.

edgyquant4• 4 years ago

The answer is almost certainly yes. It isn’t Twitter sitting in a court room for nothing they’re getting higher than the stock price was when the deal was announced.

It’s a profitable venture for twitter

moralestapia3• 4 years ago

Sure, you can sue them to close the deal but the juice isn’t worth the squeeze.

LOL, I'm sure the juice will be worth the squeeze on a $44 billion dollar house.

MrMan4• 4 years ago

Analogies don't work with corporate law

jogjayr2• 4 years ago

you can sue them to close the deal but the juice isn’t worth the squeeze

That really depends on the offer you accepted (A), the current value of the house (B), the cost of litigation (C), and the price you put on your time and mental energy (D). If A > B + C + D, it makes sense to force the buyer to close. And in most cases, you're relying on the buyer to close in order to be able to close on the house you're moving to so you may have no choice.

hey2022• 4 years ago

Twitter is a public company. We can not ignore the effect this situation has on the investors (regardless of whether someone thinks "they deserve it", or something equally irrelevant).

shalmanese• 4 years ago

Contracts matter. The ability for two parties to create a contract and to have reasonably secure knowledge that the state will still in and enforce the terms of the contract, using violence if necessary, is a massive foundational element to free market capitalism.

We see in states where such an expectation is not present, that it becomes an enormous invisible drag on all business activity and degrades the civic functioning of society.

One of the crowning achievements of Western Liberalism was the concept of "rule of law" and that there would exist an impartial, powerful judiciary independent of political power that could bring massive resources to bear to enforce contracts.

mlyle6• 4 years ago

Yup. Else you have oligarchs and corruption and insider abuses. It hurts to see the way our institutions are rotting.

(Not that they've ever been perfect, but I feel like we're on the decline and they need tending).

xiphias23• 4 years ago

You are right, and Twitter has the upper hand here.

But there are always exceptions written in the contracts and Elon would be foolish not to spend a few million to try to trigger an exception to renegotiate the contract. It just makes business sense.

bambax2• 4 years ago

It’s clear that the offer Elon got stuck with has an unrealistic price at this point

But that's not how it works. That's why we have contracts, and covenants, etc.: it's so that, if conditions change, one party cannot say "oops, sorry, changed my mind" and walk.

(Also, the offer "Elon got stuck with" is his own, and even bears his childish signature of a weed joke.)

whiplash4512• 4 years ago

Can you please elaborate on what makes it clear that Twitter management was incompetent in the last few years?

roca3• 4 years ago

Twitter management probably didn't have much choice but to accept the deal. Turning down an offer significantly above the stock price sounds like a trigger for a shareholder lawsuit.

theptip3• 4 years ago

There's been a lot of speculating around here on exactly what it would take for Musk to get out of this deal; here's the TLDR of the analysis from Levine:

Musk cannot get out of the deal just because one of Twitter’s representations is false. He still has to close the deal unless the representation is false and it would have a “material adverse effect” on Twitter. This is a famously under-defined term but it generally needs to be a pretty catastrophic effect. If the bots are 6% of mDAUs, whatever. If the bots are 75% of mDAUs and Twitter has been knowingly misleading its advertisers, and Musk can expose that scam and advertisers flee and Twitter faces legal trouble for its fraud, then, sure, material adverse effect.

As to whether there is any evidence of a false representation (not even addressing material adverse effect due to that false representation):

The only basis for the claim is that “preliminary analysis by Mr. Musk’s advisors of the information provided by Twitter to date causes Mr. Musk to strongly believe that the proportion of false and spam accounts included in the reported mDAU count is wildly higher than 5%.” Notice that Ringler does not say that the analysis shows that the bots are “wildly higher than 5%” of mDAUs: That would be a factual claim that, I suspect, Musk’s advisers know is false. They make only the subjective claim that Musk “strongly believes” it.

And then, perhaps the better grounds for Musk to prevail:

The second pretext is: Twitter is not giving Musk enough information about the bot problem. This is a better pretext, for technical legal reasons, which we have also discussed previously. In the closing conditions to the merger, representations are qualified by “material adverse effect”; just finding that a representation is false would not give Musk the right to terminate the deal unless it caused an MAE. But covenants are qualified by “all material respects”: In the merger agreement, Twitter promised to do certain things between signing and closing, and it has to do those things, whether or not there would be a material adverse effect from not doing them. So if Musk can prove that Twitter hasn’t complied with its obligations, he can get out of the deal.

russdill2• 4 years ago

Do public statements before he signed the deal that imply that he was aware that Twitter has a bot problem and already suspected that the number we much higher than reported by Twitter have any effect?

theptip3• 4 years ago

Levine certainly thinks this is true.

tptacek4• 4 years ago

It's kind of a moot point; Levine is reading tea leaves about what a judge will think hearing all of this, but the fact is that Musk waived the right to condition the acquisition on Twitter's bot statistics, pretty much in black and white.

Barrin92• 4 years ago

wasn't that literally the reason he claimed he wanted to buy it for in the first place? I remember him going on about verifying every human on twitter and improving our discourse

the thing he's pretending to ditch the deal for was the thing he allegedly wanted to fix

Turing_Machine• 4 years ago

If the bots are 6% of mDAUs, whatever.

It seems like the purchase price should be of the order of 6% less in that case.

6% of $44 billion is not a trivial amount of money.

govg• 4 years ago

These are figured that Twitter has been filing with the SEC for ages. How does it make sense if the purchase was agreed upon when all this was public information?

theptip3• 4 years ago

This isn’t how “material adverse event” works, which is the term that was written into the contract that Musk signed.

Normally “is the mDAU figure correct” is the kind of thing you answer before you sign the merger agreement and lock in your purchase price.

Also note that the baseline in SEC filings was 5% bots, so 6% is only 1pp higher. The claim was never that it was zero.

KKdU9EXbBhmLznR5• 4 years ago

Except that he knew that it was at least 5%. So you'd actually have to figure out how much the discount already included in the value is for that 5% (which is highly subjective, but the discount is almost certainly not also 5%), and then multiply it by six-fifths (maybe, because the discount is also almost certainly not linear).

Of course, this is all a moot point, because what an actual businessman (as opposed to a con artist) would do, if they were concerned the bot stats might be inaccurate, is make sure the agreement had specific terms in it as to what would happen if it was found to be inaccurate.

danaris4• 4 years ago

It seems like the purchase price should be of the order of 6% less in that case.

That's not what his contract says.

Either the bots are pretty close to the 5% figure Twitter says (and 6% is definitely pretty close), and Elon has to buy at the figure he specified, or they're enough higher to have a significant impact on ad revenue, and Elon doesn't have to buy at all.

hartator2• 4 years ago

that it has knowingly been massively understating the number of bot accounts in order to trick companies into buying Twitter ads and shareholders into buying Twitter stock

Wasn’t Google Ads 80% fake clicks on some studies? It won’t be surprising Twitter Ads is actually worse. There is so zero incentive to clean it up and so many shady reasons to do it.

anonu4• 4 years ago

Fake clicks and bot accounts are two distinct things in my opinion. Bot accounts are bad, fake clicks are much much worse.

hedora2• 4 years ago

It depends on your perspective. As far as I'm concerned the whole target advertising industry is a blight on society. The more click fraud undermines it, the better.

On then other hand, bot accounts help get bozos elected, encourage mass shootings, etc.

Come to think of it, I don't think it depends on your perspective. Bot accounts are a much bigger issue than click fraud.

bmitc10• 4 years ago

Tesla bots are some of the most active on Twitter, or at least some of the most efficient in achieving their goal of manipulating Tesla interest, sentiment, and ultimately stock price. Musk knows this. I wouldn't be surprised if he knows who controls these bots.

kreetx2• 4 years ago

Can you point to more information on this?

tptacek4• 4 years ago

That might actually hurt Musk's argument, because Google is incredibly lucrative despite the belief that ad clicks are overwhelmingly fake. The rule of thumb Levine (an attorney) gave a few posts ago for MAE's in Delaware courts is "sufficient to cause a 40% drop in profitability". Not stock price, not mDAU numbers, but income statements.

digianarchist2• 4 years ago

That might actually hurt Musk's argument, because Google is incredibly lucrative despite the belief that ad clicks are overwhelmingly fake.

They're still charging advertisers for those clicks.

hartator2• 4 years ago

If “serious” business led us to wars like in Ukraine, I’ll take Elon Musk’s expensive jokes any day.

anonu4• 4 years ago

Twitter feeds are pretty public, albeit expensive to buy the firehose. Nonetheless, shouldn't a handful of motivated hackers be able to answer the bot question??

erk__2• 4 years ago

The issue here is that only twitter knows who they count as a mDAU. So there could be a lot of bots that are simply not included in their counts.

vehementi5• 4 years ago

Well, it depends on what is in the firehose. What twitter really knows that you can't just see, is how (with what client) users are logging in and whether their ad tracker URLs are being triggered (i.e. the user really did result in an ad impression). If Musk can determine that directly or indirectly from the firehose then he could say "here's how I calculated it and it's 9%" or something, I guess.

csours2• 4 years ago

The way I see it, the bot question isn't about "bots on Twitter", it's about "bots, spam, and insincere people on Twitter that annoy Elon Musk". That is, Elon does not enjoy the flood of spam that he has to interact with. His experience as a user of Twitter is poor.

frankohn• 4 years ago

My idea is that Elon Musk is just leveraging it's wealth and public visibility to gain a lot of money easily tricking the markets. Especially those market where people are more easily gullible.

I think he did it with bitcoins when it declared Tesla will accept Bitcoin payments on the same basis of ordinary payments. Just later he abruptly dismissed the whole thing because the operation was terminated. In the meantime I guess he just acquired a lot of bitcoins before the public announcement and just sold them when the price was much higher.

I think that stock market and Bitcoin market are easily gullible by wealthy people because a lot of people investing are inexperienced and are easily influenced by press communication without ground truth basis.

petilon2• 4 years ago

This article says Musk agreed to buy Twitter mostly as a joke. I think there's a far better explanation. This wasn't a joke for Musk because after agreeing to buy Twitter he proceeded to sell billions of dollars' worth of TSLA stock, supposedly to finance the purchase. Even for the richest man in the world that's not a joke.

I think a better explanation is that Musk offered to buy Twitter as a cover for selling billions of dollars' worth of TSLA.

Look at this story: https://www.wsj.com/articles/elon-musk-sells-billions-of-dol... The headline is: "Elon Musk Sells $8.5 Billion of Tesla Shares After Deal to Buy Twitter"

Why does he need a cover? Because TSLA is way too overvalued. He has to know that it is overvalued. Tesla's market cap is double of Toyota, VW, Mercedes, BMW, GM, Honda, Ferrari and Volvo all combined! [1]. If you sell stock while knowing your company's stock is way too overvalued, you're fleecing unsophisticated investors. Pretending to buy Twitter provides a convenient cover.

Musk pretended that TSLA valuation is reasonable. Musk even called out Gates for shorting TSLA stock [2]. If he didn't have a cover then Musk would look like a hypocrite for selling TSLA.

In reality, both Musk and Gates sold TSLA, the only difference is that Musk sold stocks he owned, but Gates sold borrowed stocks. But Musk used buying Twitter as a cover, so he gets to pretend to be morally superior. Even though both men sold TSLA, according to Musk, Gates' sales means that he isn't serious about climate change [3].

[1] https://companiesmarketcap.com/automakers/largest-automakers...

[2] https://nypost.com/2022/05/31/elon-musk-calls-out-bill-gates...

[3] https://www.businessinsider.com/bill-gates-shorting-tesla-wo...

bambax2• 4 years ago

This is alluded to at the end of the article:

Is it fun for him? If he manages to walk away having spent only millions in financing fees, millions in legal fees and say $1 billion in termination fees, was it worth it? What did he get out of this? The guy really seems to like being on Twitter, and he did make himself the main character in Twitter's drama for months on end. That’s nice for him I guess. Also he made the lives of Twitter’s executives and employees pretty miserable; as a fellow Twitter addict I can kind of see the appeal of that? I always assume that “everyone who works at Twitter hates the product and its users,” and I suppose this is a case of the richest and weirdest user getting some revenge on the employees. He also gave himself an excuse to sell a bunch of Tesla stock near the highs. He maybe got an edit button too? Maybe that’s worth a billion dollars to him?

But for that to be the sole reason of the whole circus is conspiracy theory.

Musk has buying Twitter as a cover

It's a very, very annoying/distracting cover, not to mention an expensive one.

nicce• 4 years ago

It's a very, very annoying/distracting cover, not to mention an expensive one.

It is hard to say how expensive it actually is… if he had sold overpriced Tesla stock without cover, could that lose be much more than - one billion termination fee?

tarsinge2• 4 years ago

How can it be expensive if it save you billions of dollars?

orestarod3• 4 years ago

You do admit it is a circus, and no official explanation holds its ground. Why do you belittle the real reason, whatever it is, by negatively branding it a conspiracy theory? The real reason for this by definition falls in the category of a "conspiracy theory", since it is not included in any official explanation.

akelly• 4 years ago

If that was his plan, why didn't he put an out in the contract?

perlgeek• 4 years ago

Because then the Twitter board wouldn't have signed it.

tptacek4• 4 years ago

That seems like an enormous amount of risk to take on just to sell stock that he actually owns and avoiding "looking like a hypocrite". It's not just plausible but somewhat likely that he'll be forced into an 11-figure settlement with Twitter to avoid the actual worst case outcome of being forced to take custody of and actually operate Twitter until he can unload it on someone else.

ratww3• 4 years ago

It's not about avoiding looking like a hypocrite, the major theory is that it's about being able to sell 8.5bi without causing the value to go down too much.

Strom• 4 years ago

Because TSLA is way too overvalued. He has to know that it is overvalued.

Indeed he does. He has talked about this publicly in various interviews over the years. [1]

Musk pretended that TSLA valuation is reasonable. Musk even called out Gates for shorting TSLA stock

Musk definitely really dislikes short sellers, no doubt about that. However that is different from pretending that TSLA valuation is reasonable.

[1] A decent example is the 2021 Kara Swisher interview, where he states I have literally gone on record and said that our stock price is too high. https://youtu.be/O1bZg7frOmI?t=2450

swyx• 4 years ago

musk said that in May 2020, when the stock was at $140. it is 437% higher now even with the market pullback.

grecy• 4 years ago

If that was his plan, what's he doing with the billions he now has in cash?

202206241203• 4 years ago

Trust funds for the next dozen of his babies?

loceng2• 4 years ago

I think there's an even better explanation, and liquidating $8.5 billion of Tesla stock may just be the icing on the cake:

Elon despises the SEC and he's now has exposed that the "less than 5%" of accounts are bots, that the SEC should have verified and accepted their methods for determining that number - and it should be adequate and reasonable to give a grounded-in-reality output, and it seems like it's a total bullshit statement.

I'd be surprised if Twitter stockholders don't sue the SEC.

tsimionescu4• 4 years ago

he's now has exposed that the "less than 5%" of accounts are bots

He did the opposite of that. The Twitter CEO's explanations are quite believable, and Musk has not presented a single tiny shred of evidence against them. He hasn't even presented any methodology he used to arrive at the belief that the 5% is wrong - and note that his lawyers were careful to call it a belief only, since they know full well that claiming it as a fact would be indefensible in court.

treis4• 4 years ago

He's sold plenty of Tesla stock over the years. No real need for him to make up a story.

dodobirdlord6• 4 years ago

There is certainly some limit to how much of his stake he could sell out of at once without spooking the market and destroying retail investor confidence, though it’s hard to say what that limit is. Without some cover story I suspect an $8.5 billion sale would be newsworthy and significantly impact the share price.

neither_color• 4 years ago

Tesla's market cap is double of Toyota, VW, Mercedes, BMW, GM, Honda, Ferrari and Volvo all combined!

This phrase gets thrown around a lot with dunning-kreuger confidence so I'd like to add context that it's not unusual for a market disruptor to be worth more than the sum of its legacy competitors - you are on a tech website related to startup incubator you should know this already.

croes• 4 years ago

Tesla doesn't scale like some internet startups.

tsimionescu4• 4 years ago

That would be the case if they had disrupted some market, but Tesla has only succeeded in creating a new niche vehicle, and cornering that market to some extent. They are still bit players in the overall car market (and they are losing market dominance even in BEVs, mostly to Chinese companies).

teleforce• 4 years ago

Thank you for the explanations. How this is not one of the top comments is beyond me. This comment most logically explains all the drama started several months when Musk offered to buy Twitter. The stories generated several of the highest rated posts and several of the most commented posts at HN, just adding to the drama. Now it seems that it's quite a possibility that the Twitter drama is just a red herring for Musk to sell the much overpriced TSLA stocks.

nosianu• 4 years ago

How this is not one of the top comments is beyond me.

Uhm... Exactly this is mentioned in the article:

He also gave himself an excuse to sell a bunch of Tesla stock near the highs.

So Levine already mentioned this.

LMYahooTFY• 4 years ago

How is it so obvious given the state of the market?

Bezos has also sold off a massive chunk of assets?

There's nothing odd at all about shorting the market during this time.

Rapzid• 4 years ago

I think the whole thing started as a lark because Twitter is personal to him and he knows better than everyone.

Maybe he sold more shares than he needed while he was at it; like you'd withdraw a bit more cash than you really need at the ATM.

Then the market down turn sobered him up.

Simple.

mlindner10• 4 years ago

Musk pretended that TSLA valuation is reasonable. Musk even called out Gates for shorting TSLA stock [2]. If he didn't have a cover then Musk would look like a hypocrite for selling TSLA.

This is outright false and goes directly against his multiple stated instances of saying that the Tesla stock price is overvalued. Don't make things up to suit your biases.

petilon2• 4 years ago

If you believe your company's stock is overvalued, how can you fault someone for selling the stock? Bill Gates sold TSLA stock that he borrowed. If you truly believe that TSLA is overvalued, then it makes no sense to fault someone for selling it.

jlarocco• 4 years ago

Okay, so Musk didn't even pretend TSLA's price was reasonable, but surely you agree that "buying Twitter" is a good excuse for him to dump some TSLA while it's incredibly overvalued?

qudat• 4 years ago

I think a better explanation is that Musk offered to buy Twitter as a cover for selling billions of dollars' worth of TSLA.

Why waive due diligence then? What’s that saying don’t assume malice when it can be explained by ignorance.

pclmulqdq2• 4 years ago

You can't announce that you are purchasing a public company until after due diligence, and the sale is in its final closing process. There is no "waiver" of due diligence per se, but the initial offer says "I did enough due diligence and I intend to purchase."

Most people would do their due diligence under NDA for a while while negotiating prices before making an announcement, and before lining up funding.

pseudoramble• 4 years ago

I think this makes a lot of sense. A question I have about it though - why not say it's for something else then? If the goal is to get value out of Tesla and put it elsewhere, it seems like cash for another company he's running seems reasonable enough? Perhaps that's illegal for some reason I'm naive about?

JaceLightning• 4 years ago

Twitter is overvalued at its current valuation. Musk realized that after making an offer. Now he has buyer's remorse.

choppaface• 4 years ago

Do we really need to assign a financial motive to Elon Musk?! Musk is in it for his own entertainment. Period. And that greed changes as often as the phases of the moon. It's a good story to his following to come out financially ahead. It's also a good story to the libertarian crowd to drag the issues of bot accounts and free speech into court. And if the deal were to have gone through, I'm sure Musk would have made a great story forming an Alphabet/Berkshire-like holding company across Tesla, SpaceX, and his other amusements. And of course daily amusement of adding a Twitter edit button, an irony mode, etc.

But what will the legacy of all this mess be? It's looking a lot like Howard Hughes, except that Hughes successfully monetized his stage presence. Elon has officially thrown in the towel, and spit in the face of his wider audience in the process.

MichaelMoser123• 4 years ago

Are you sure that TSLA is overvalued? Right now they are performing pretty well, for their niche.

I mean it will be overvalued if Toyota gets its act together - if the competition can produce reliable electric cars for the mass market. I suspect that this is not quite happening due to some real technical problems. A mass market electric car would need to handle some real problems with battery depreciation/range loss. I am not sure if that is happening, right now.

I found quite a range of opinions on battery depreciation, not quite sure who is right (never owned one):

https://www.carwow.co.uk/blog/do-electric-cars-depreciate#gr...

https://www.cars.com/articles/your-guide-to-ev-batteries-pre...

https://www.motorbiscuit.com/how-long-will-an-ev-battery-las...

tsimionescu4• 4 years ago

It would be perhaps plausible for Tesla to be worth more than any other single car company.

But it is patently absurd for them to be higher than all other car companies combined. By any possible measure, they are far far smaller, and have far smaller prospects for growth, than the rest of the card industry put together.

The only place where Tesla has a lead is in sales of BEVs, where indeed they are selling more than the rest of the industry combined, except for some Chinese companies. However, BEVs are still a tiny part of the car market, and are likely to remain so for the next ten years at least.

thesumofall2• 4 years ago

Several of the mentioned brands already have class leading or at least competitive electric cars on the market. The Mercedes EQS might be the best electric car on the market. VW’s MEB platform (ID3, …) clearly has mass market appeal even though it still has some weaknesses. Car companies have copied most of what made Tesla unique (OTA, …) and looking at any dimension, you’ll find a competing car that is better than a Tesla. Tesla still sells a good overall package but the times where they were without competition are clearly over

fbn79• 4 years ago

Too much conspiracy theory. I think simply that Musk do not see the imminent market crash. Now he is going in tribunal to negotiate a lower price. The think will end with Musk owning Twitter in a way or another.

godmode2019• 4 years ago

This is the obvious answer for any rational observer.

Everyone seems to want to attribute it to some projected character fault in Musk, a chance to elevate their morality or intelligence higher than a famous rich guy.

Musks offer was strategically made before yearly earnings, when everyone posted bad earnings the market tanked.

tarsinge2• 4 years ago

OTOH let's not underestimate what kind of scheme smart people can come up with for billions of dollars. Maybe what he didn't see wasn't the market crash but that he could not back away as easily as he tough.

ordu2• 4 years ago

I think simply that Musk do not see the imminent market crash

It is possible of course, but unlikely. Musk doesn't seem to me as a person who might be surprised by this market crash, I heard him talking about the coming crash and how it will influence his plans before he started talking about buying twitter. My memory may be faulty but I think he mentioned it for example in December when justifying himself pushing SpaceX engineers to work harder to bring Raptor 2.

It seems more plausible for me that he tried to sell Tesla shares before the crash hit them.

Tepix• 4 years ago

Musk pretended that TSLA valuation is reasonable.

He did? I thought he said more than once that he believes the stock price to be too high.

datatrashfire• 4 years ago

This such an elaborate conspiracy, even if true, he's set himself up legally to all but have to acquire the company after Twitter beats him in court. This seems much less plausible than Elon is an impulsive person who likes attention.

rmk2• 4 years ago

Elon Musk has probably taken a big haircut on his current stake in Twitter and is also risking being forced to buy Twitter anyway or losing 1 billion plus legal fees. That sounds like an awful lot of work to sell 8.5 billion worth of Tesla shares.

shswkna• 4 years ago

That sounds like an awful lot of work to sell 8.5 billion worth of Tesla shares.

IDK. Most people work their entire life not even getting to 1 million.

davidguetta• 4 years ago

"Musk pretended that TSLA valuation is reasonable."

Excuse me what ? He alwways said it was overvalued. I dont think anyone would have bat an eye if he had sold for no reason

t_mann• 4 years ago

Can we also take a moment to appreciate the tongue-in-cheek writing style of this (fairly thorough, by my impression) analysis of rather dry things like SEC filings, merger covenants,...?

dan-robertson• 4 years ago

(Note that he writes a newsletter like this roughly daily, though not ordinarily on weekends. It’s is free to subscribe to)

tyleo3• 4 years ago

Money Stuff is really good. Some of my favorites are right around when GameStop started to spike.

calmoo• 4 years ago

Matt Levine is fantastic, highly recommend subscribing to his newsletter.

dreamcompiler2• 4 years ago

This is why Levine's is one of a very few newsletters I subscribe to, and I read it immediately when it arrives. He's both entertaining and educational. I know a great deal more about finance now than I did a year ago, and that's because of Matt Levine.

dang3• 4 years ago

Recent and related:

Notice of termination of Twitter merger agreement - https://news.ycombinator.com/item?id=32027341 - July 2022 (1361 comments)

mlindner10• 4 years ago

Not just related, this thread should be merged with that one. There is nothing new in this opinion piece article.

dang3• 4 years ago

That's probably true, but the other thread has over 1300 comments, so a merge would be a monster.

panphora• 4 years ago

I disagree. As a non-lawyer, non-financier, I found the deep & well-thought-out explanation fascinating. This is one of the best articles I've read this year.

georgeburdell• 4 years ago

Musk holds a key piece of America’s future in space in SpaceX. I wonder if it’s only a matter of time before he starts dangling that to get what he wants in cases like this. I still am generally favorable toward Elon, but I think we’re seeing him transform into a villain

ta86453• 4 years ago

I don't know about a villain, but he definitely isn't a saviour. Was hoping he'd follow through in reforming Twitter. But it turns out, even with all his resources, he's actually pretty weak in comparison to the forces set against him.

sroussey4• 4 years ago

Elon is the force against himself. No conspiracy required.

dehrmann3• 4 years ago

Imagine a five-year-old with billions of dollars. He'd build electric cars (aren't they s3xy?), tunnels, trains, rockets, and flamethrowers, all while having playground spats.

almost_usual2• 4 years ago

I see a similar trajectory as OJ Simpson..

roca3• 4 years ago

The "cave diver paedophile" incident made it abundantly clear to everyone willing to see that whatever else he may be, Musk is a malicious clown. It was always only a matter of time before that had greater consequences.

RF_Savage• 4 years ago

Exactly this. The mask slipped for a moment.

dehrmann3• 4 years ago

At least a court decided Elon can say anything he wants because he's full of shit so often, he has no credibility.

phendrenad22• 4 years ago

Everyone has said something they don't mean out of spite. Politicians and billionaires are held to a higher standard by their fans/haters, but I really think they shouldn't be.

ALittleLight• 4 years ago

I see in Elon a trait I also have, which is to pick up random things, get interested in them for a while, and start to do things, and then realize you're not interested in it at all and drop it. I'm thinking of tunnels, neuralink, AI, taking Tesla private, child saving cave submarine, things like that. I can easily imagine he thought one day that he wanted to get into social media, went full steam ahead, and then realized he wasn't all that interested.

It's bad, clearly, when this has negative externalities. A better Elon would stop himself from hurting people with these adventures - but, I also think it's possible that without this trait, whatever you call it, Elon wouldn't have made the progress in the areas he has. On net I think he's still done a tremendous amount.

pwillia7• 4 years ago

Sounds like ADHD hyperfixation

sroussey4• 4 years ago

I think it’s called the shiny ball syndrome, common to many startup founders.

mjfl• 4 years ago

does it really have that many negative externalities? Net negative? electric cars and rockets are pretty cool.

wolverine8765• 4 years ago

Stop making excuses for the behavior; there is nothing necessary about it.

Swenrekcah• 4 years ago

The day he starts threatening US homeland security with SpaceX might be the day he finally understands his place.

scoopertrooper• 4 years ago

I wonder if it’s only a matter of time before he starts dangling that to get what he wants in cases like this.

https://en.wikipedia.org/wiki/Defense_Production_Act_of_1950

mlindner10• 4 years ago

Can we stop making up conspiracy theories please?

There is zero indication that he would do such a thing as he has no history of doing so. Elon spares no breath praising NASA any time he is asked about NASA.

wolverine8765• 4 years ago

Musk holds a key piece of America’s future in space in SpaceX.

Let's stop glorifying the personality - when has that ever worked out well? The US will get along fine without Musk (maybe better without this cult of personality).

adventured• 4 years ago

Musk wasn't pretending to buy Twitter, the article is using a sort of simpleton interpretation of Musk's behavior. That's the interpretation someone would take if they dislike Musk and get overly emotional about his behavior.

Musk is x y z. Oh my god, did you see the tweet he sent out!?! I just hate Musk, blah blah blah. He's such a terrible human. This one time he called a person a really bad name. - That's the type of person that reads Musk's Twitter acquisition attempt the way the article is.

I don't care much about Musk one way or another, but this is not a complicated context and the author is plain wrong.

What happened is the market for hyper overvalued stocks has crashed. He was faced with the scenario of paying double for Twitter vs what it was really worth. Remove the Musk prop and the stock collapses. Next up, the stock is heading south of $30 / share. It might be worth taking over for $20-$25 / share at most.

Musk didn't want to pay $20 billion more for Twitter than he had to, even for him that was a bridge too far. Particularly while his own paper bubble fortune is just as at risk of implosion as the rest.

It was really, really, really dumb timing. That was Musk's actual issue.

kcplate3• 4 years ago

This to me seems the most reasonable explanation and explains most of the behaviors involved on both sides. I don’t buy into “it was just a joke that went too far” theory.

Musk doesn’t want a turd.

Twitter, essentially made a deal with the devil (from their perspective). Despite being initially opposed to this deal, they now has to sue to try and make it happen, because I suspect if it doesn’t “south of $30” is going to be more like “around $20” and there are a whole bunch of folks that might get interested in a takeover at that level with far more villain potential than Musk.

dodobirdlord6• 4 years ago

The possibility of other takeovers doesn’t need to factor into this. If Twitter’s share price is significantly below the price they can force Musk to buy the company at, then the board has an obligation to shareholders to force the sale, and will be sued by the shareholders if they don’t.

raziel2701• 4 years ago

Musk decided to pay $54.20/share (because weed joke) for twitter under the guise that he was going to fix the bot problem. Now he wants to back out of the deal because of the bot problem.

He makes no sense.

vehementi5• 4 years ago

I guess you didn't read the article because Levine explains that scenario in this and previous articles lol?

georgia_peach6• 4 years ago

This is politics masquerading as legal analysis. Twitter, by its own admission, lied about their user count for years. Elon will either go without penalty, or take a slap on the wrist. Levine spends a lot of time shilling on bots because he knows that's a weak spot for the Elon haterz club.

https://nairametrics.com/2022/04/28/twitter-says-it-inflated...

edit: Not an Elon fan BTW. Just don't appreciate this Levine's axe-grinding masquerading as impartial legal analysis.

VerminOctopus12• 4 years ago

You saying that Twitter’s SEC filings over the last several years included knowingly falsified information?

georgia_peach6• 4 years ago

The social media company, Twitter, has admitted to overstating the figure of the platform’s users by 1.9 million in the last three years. The company disclosed this in its Q1 2022 financial report released today. The revelation comes days after the board of the company accepted a $44 billion offer by Elon Musk to take over Twitter.
Twitter says an “error” introduced in Q1 2019, resulted in the overstatement of its monetizable daily active usage or users (mDAU). According to the company, this went on undiscovered for three years.

Three years, and they figured this out mere days after being strong-armed into accepting the Musk offer they wanted to evade? I have a bridge to sell to anyone who believes Twitter didn't already know.

jp57• 4 years ago

Another hypothesis: Triggering a legal battle in the courts is a delaying technique to push out the acquisition until the economy rebounds (and Tesla and Twitter valuations with it), or until after the 2024 election, because Elon realized that he doesn't actually want to let Trump back onto the platform. (Perhaps because he perfers DeSantis)

treis4• 4 years ago

IMHO this is the key point. Twitter has a strong case in court but courts usually take a long time. Probably at least a couple years for all the appeals to run their course. And at any time during that process Elon can decide that he actually wants Twitter and complete the transaction.

It's a huge distraction for Twitter and probably won't be worth it in the long run. I expect a settlement with Elon paying some cash as a breakup fee.

walnutclosefarm• 4 years ago

Or, it's a feint to bring Twitter back to the bargaining table to lower the price outright. I'd lay odds that Musk is betting Twitter needs a buyer enough to prefer a better deal (for Musk) to a cash settlement that left them still looking for a buyer.

usefulcat• 4 years ago

Elon realized that he doesn't actually want to let Trump back onto the platform

I'm not buying that; it's not like he couldn't just change his position on a whim. It certainly wouldn't be the first time.

inglor_cz• 4 years ago

What about interim inflation? The US isn't used to high inflation, so inflation is often not baked into contracts. But we are possibly facing a period of high inflation.

Those 44 billion USD may be worth a lot less in 2024 or 2025.

victor106• 4 years ago

Elon’s going to get away with this. Even though he shouldn’t.

The rich play by different rules and the law lets them.

If the rest of us did the same we would have to pay ridiculous fines and/or spent time behind bars.

VerminOctopus12• 4 years ago

Normally I would agree with you, but you have to consider that he’s up against people who are also extremely rich. The legal system might actually need to maintain legitimacy through the proceedings and not just crumple under Elon’s never-ending tantrum.

KKdU9EXbBhmLznR5• 4 years ago

He most likely will have to pay a ridiculous fine (or, more likely, settlement). Of course, the ridiculousness of it will be that it doesn't consider his incredible means, and therefore he'll never miss it and it will have absolutely no impact on his behavior.

f6v• 4 years ago

It’s not that he’s just rich. He’s involved in double-purpose tech that USA government uses.

labrador3• 4 years ago

I believe he was sincere, but found out quickly that a lot of people had strong feelings about his plans for the platform. It's possible he was in danger of losing people he really needs for his other businesses. I don't blame him for bailing out on a lose/lose situation.

checkurprivlege• 4 years ago

Correct

a tide of hatred turned against him

Musk correctly reacted by withdrawing and not wanting any of this

you can keep the social media and deal with your hatred yourselves or your therapist

KKdU9EXbBhmLznR5• 4 years ago

... how is that an excuse? He knew that full well before he ever started thinking about buying it, much less making public statements about it. (Just like he knew about the bots)

labrador3• 4 years ago

He is self-described as having autism to some degree, so reading the emotional landscape is probably not his strength.

wolverine8765• 4 years ago

Musk is arguably the biggest troll in the world. Musk was surprised and dissuaded by people's strong feelings? Strong feelings are what trolls seek.

KKdU9EXbBhmLznR5• 4 years ago

Would he line up billions of dollars of financing and sign a binding merger agreement with a specific-performance clause and a $1 billion breakup fee as a joke? I mean! Nobody else would! But he might!

What a silly thing to say. Of course he would; I'd also risk $20 (~1/200th of my assets, like $1b is for Musk) on a joke, especially if I knew I'd almost certainly never lose that much.

TedShiller• 4 years ago

It’s good he exposed Twitter as biased

kukx• 4 years ago

So now there is a widespread support for Musk buying Twitter? Okay, he may end up owning Twitter whether he likes it or not. It is so funny and ironic. Whatever the outcome I agree.

jacquesm9• 4 years ago

It's not so much 'support' as that it is more or less inevitable, whether he likes it or not, and that has mostly to do with the price than with anything else. Worst case he will have to sell it immediately after forcibly buying it at a lower price just to make sure the rest of his empire doesn't collapse.

Twitter is at best a distraction for Musk, at worst it could be his downfall.

lizardactivist• 4 years ago

Did anyone think he would actually be allowed to buy it? Twitter, as a weapon for propaganda and a tool for information collection, is too important and powerful to just let someone like Musk do what he wants with it.

fwip• 4 years ago

What? Elon is trying to back out of the deal, not Twitter.

resoluteteeth• 4 years ago

Nobody is trying to stop Elon Musk from buying Twitter except for Elon Musk himself.

Twitter, the banks lending him money, and the other investors Elon lined up are all trying to make the transaction go forward.

So the answer is clearly that yes, Elon musk is "allowed" to buy Twitter if he actually wants to. He may even have to buy it based on the agreement he signed even if he no longer wants to.

mabbo• 4 years ago

A fun side effect of all of this: if you believe in the court's ability to force Musk to buy Twitter, you should continue to buy up stock until it reaches the price Musk agreed to pay for it.

If you don't believe he'll be forced to pay, you should sell and/or short until it's at whatever you think the right market value for a stock of Twitter ought to be.

And wherever the price is between those two is a direct function of what experts believe the probability of each outcome is. It's like a massive betting market on a legal case.

saurik• 4 years ago

Well, minus a discount for however long you think it will take before that actually happens, taking into account such things as inflation, interest rates, and market performance (due to the opportunity costs of holding this stock until then).

KVFinn• 4 years ago

A fun side effect of all of this: if you believe in the court's ability to force Musk to buy Twitter, you should continue to buy up stock until it reaches the price Musk agreed to pay for it.

How do I bet on no outcome one way or another for many many years? If there's one thing I know about the US legal system it is giant corporations battling each other takes years and years to resolve.

vehementi5• 4 years ago

Yes, this is how it has been the entire time since Musk's offer. You'll see that the stock price was pegged at $54, and then when he started talking shit, the price went to some weighted average of the true FMV and Musk's offer, depending on confidence levels

mcguire2• 4 years ago

"...if you believe in the court's ability to force Musk to buy Twitter, you should continue to buy up stock..."

"If you don't believe he'll be forced to pay..."

Those are two very different statements.

I absolutely believe the court can compel Elon to satisfy the contract he's gotten himself into. I don't necessarily believe the court will do so. Specific performance isn't a popular result in those courts, apparently. That being said,...

"...you should sell and/or short until it's at whatever you think the right market value for a stock of Twitter ought to be."

Yeah, no. If I thought like that, I'd have shorted Tesla long ago. I also know that "the market can remain irrational longer than you can remain solvent."

sangnoir• 4 years ago

And wherever the price is between those two is a direct function of what experts believe[...]

I wouldn't call the hordes on Robinhood "experts": they are the marks that Elon plays like a fiddle on Twitter.

henry_bone2• 4 years ago

I see the author's scepticism of the bots argument, but I don't think it's one that should be dismissed so easily. I don't know anything, but isn't the value of these big tech properties largely in the number of actual human daily active users?

When Facebook acquired whatsapp, I remember reading that it wasn't the tech per se that facebook really wanted. It was the daily active users. Whatsapp had (still has? dunno) a pretty big userbase. That was the where a lot of the value lay for facebook, or so I understand.

So, if daily active users are important to the value of the property, do we believe twitter's SEC filing estimates of <5% bots? Musk doesn't, or hasn't been convinced by what he has seen.

That really does seem like a legit reason to abort the deal. Twitter is representing <5% bots. Musk thinks that's a wildly optimistic estimate & is prepared to call bullshit. Seems fair to me.

A more cynical view might be that Musk is simply looking to lower the price. Exposure of Twitter's bot problems in a court might not be very good for the share price. Just having Musk pull out (9 kids, he never pulls out) probably dips the share price. So, isn't it all good leverage to bring the price down?

Pulcinella• 4 years ago

That’s not how any of this works. E.g. the contract he signed already has the price he agreed to buy Twitter for.

henry_bone2• 4 years ago

Could it be (& I am asking) that he can invalidate the current contract on the grounds that daily active users aren't what twitter said.

Then could they draft a new contract, complete with a new price and daily active users estimates?

I don't know anything, so I'm asking. If someone out there is a M&A lawyer and can shed light, that would be great.

bradleyjg• 4 years ago

We’re to believe that before buying 11% of the company, before making a bid to buy all of it, Elon or his advisers never considered the possibility of bots but all of a sudden in the due diligence it occurred to them?

The timing makes no sense for bots to be a legit explanation. Elon is just a troll.

ethagknight4• 4 years ago

I find it amazing that not one of the top comments gives Elon ANY consideration that maybe, just maybe, he has a legitimate case against Twitter. We don’t know what he’s found, what he was told, what he was promised, what changed on Twitter’s side. Some very top level people bailed or were fired shortly after Elon’s acquisition proposal was announced.

It sure appears that Elons is just balking, but what is far more likely is that he has uncovered some deep Twitter bullshit and he plans to unveil it in court. Forced to air the dirty laundry by the court, he avoids defamation suits.

Elon is extremely intelligent. Not perfect, not omniscient, maybe he screwed up? Or maybe he has a lot more info than any of us internet loons at the moment?

webkike• 4 years ago

It sure appears that Elons is just balking, but what is far more likely is that he has uncovered some deep Twitter bullshit and he plans to unveil it in court. Forced to air the dirty laundry by the court, he avoids defamation suits.

I have no idea how you can claim that that is far more likely. You think it is more likely that Elon is going to expose the numbers Twitter reports to the SEC as off by an order of magnitude than Elon just not wanting to follow through with this deal?

EVEN IF the numbers reported were off by a factor of 10, this would also have to cause advertisers to pull out! The revelations you claim Elon might make have to have material effect on the value of Twitter for them to make a difference in this impending court case. Yeah, it’s possible, I guess? But it’s definitely not more likely!

Think about it this way: what could Elon possibly reveal that would make advertisers pull out? They advertise on Twitter and make money already! Why stop now??

ethagknight4• 4 years ago

From the actual SEC filing: As further described below, Mr. Musk is terminating the Merger Agreement because Twitter is in material breach of multiple provisions of that Agreement, appears to have made false and misleading representations upon which Mr. Musk relied when entering into the Merger Agreement, and is likely to suffer a Company Material Adverse Effect (as that term is defined in the Merger Agreement).

I’d say that’s a pretty strong accusation that probably has something to back it up. Maybe it’s a lie, but I sure wouldn’t bet on it.

My businesses have spent millions on advertising across all channels, from newspapers, magazines, billboards to social media, AdWords and influencers. I strongly believe all ad dollars yield far less than platforms want us to believe. After all, they are selling us on their platform. Much of my revenue that gets attributed to some platform would have otherwise occurred without that specific ad spend. However, I’d rather be wrong and waste some ad spend versus be wrong, lose a million in revenue.

Personally, having spent money with Twitter, I suspect Twitter has no real evidence that their value proposition to customers is worth anything close to what they claim (i.e. making fraudulent claims), but that Twitter has lots of data on the unpublicized falsities of their platform (bots, click farms, otherwise fake accounts).

dehrmann3• 4 years ago

He has no credibility, though.

pclmulqdq2• 4 years ago

If he had a case, he would have said that he had a case in this letter.

Everything I've seen about Musk suggests that he is not particularly smart, but he is audacious. The hyperloop, the claims about autonomous driving, the boring company nonsense, and all sorts of other Tesla-related claims have all come out to be massive disappointments.

If 64,000 people bet on a coin flipping heads 16 times in a row, one of them is going to make it. That one is Elon Musk.

jenny91• 4 years ago

For Musk to get out of it he has to find a materially adverse effect (MAE), which is incredibly difficult and almost never happens. As Matt Levine explains in the article, it basically has to mean that Twitter is a complete fraud and has been covering up a fraud for a long time (think Enron), which is very unlikely given that users obviously use it, and advertisers obviously advertise on it quite happily.

betwixthewires2• 4 years ago

I'm tired of people parroting this line. It is factually incorrect. This line has been started by the author of the article we are discussing, and picked up by people who like the way it sounds, but if you'd read the article the author also clearly states (significantly less dramatically) that he has an out if Twitter lied because that would be breach of contract. He goes on to say there's no evidence that Twitter lied, which may be true, but it's a fact. If twitter lied about their numbers it is a breach of contract, MAE be damned.

dkjaudyeqooe• 4 years ago

Maybe, instead of the "Elon is a genius playing 4D chess" speculation, we can simply look at his actions and conclude than no reasonable person would seriously go about buying Twitter the way he did.

Given this and previous behaviour it seems pretty reasonable to assume that Musk was doing it for the lolz and to get attention as "the savior of free speech".

It's useful to note that after he signed the contract the market decided he wasn't serious about it. That's the closest we have to an objective judgement on Musk's intentions.

mr902102• 4 years ago

Some people are just delusional, at this point Elon could shoot a Panda just for fun and there would be people stating that it was self-defense.

betwixthewires2• 4 years ago

His character flaws aside, you don't become worth 275 billion dollars by throwing 45 billion away for the lulz. I think it's a safe bet that a man who has an entire top notch law firm working exclusively for him knows a thing or two more about what he's doing than we do. Even if it is a mistake, even if he's trying to back out of something and being disingenuous, it's still almost certain that our online speculation colored by our character sentiment is not what is actually going on here.

vehementi5• 4 years ago

what is far more likely is that he has uncovered some deep Twitter bullshit

What is your calculation/reasoning that that is far more likely? How did you come to that?

ethagknight4• 4 years ago

The calculation is simple, it’s what we know from his track record, that he has made numerous calculated, high risk moves over several decades and has generally prevailed in a substantial manner. It’s just in vogue right now to assume “Elon is a pompous fool,” full bore myopia. The same guy that has ramped up several massively successful companies.

I don’t have a dog in the hunt, I genuinely don’t care of the outcome, I don’t think Twitter is worth buying, I don’t care if Elon loses several billion or whatever. I just wouldn’t bet against him on something like this where he has much more information than any of us. That’s a pretty simple calculation.

jerbearito• 4 years ago

Let's not forget we're talking about a raging narcissist who said in 2018 that he may be bipolar (which, imo, checks out). Sometimes it feels like we're awkwardly dancing around this when discussing his "antics" -- but I think it's more likely that people forget those details and simply focus on his celebrity.

asveikau• 4 years ago

I think a lot of people don't understand what bipolar is. They hear it and think he is a moody guy whose actions are reasonable. They don't understand that manic episodes are characterized by unreasonable, illogical, destructive behavior. A grandiose vision of being Twitter's and free speech's savior, which turns out to be very poorly thought out, fits with that.

csours2• 4 years ago

what is far more likely is that he has uncovered some deep Twitter bullshit

Unfortunately, the time to do that was BEFORE he signed the contract. He didn't have to sign the contract without due diligence.

Or maybe he has a lot more info than any of us internet loons at the moment?

Let me know how that turns out. Maybe the horse will sing. http://www-personal.umich.edu/~jlawler/aue/sig.html

ethagknight4• 4 years ago

Have you actually read the latest SEC filing? “Waiving due diligence” does not waive breach of contract. Opening paragraphed snipped below. Maybe it’s a lie, or maybe there is more to the story.

>As further described below, Mr. Musk is terminating the Merger Agreement because Twitter is in material breach of multiple provisions of that Agreement, appears to have made false and misleading representations upon which Mr. Musk relied when entering into the Merger Agreement, and is likely to suffer a Company Material Adverse Effect (as that term is defined in the Merger Agreement).

Again, from the latest filing, these are pretty damning:

> In addition, during the June 30, 2022 call, Twitter’s representatives indicated for the first time that the workflow and processes for detecting spam and false accounts in the mDAU population is different and separate from the workflow and processes for identifying and suspending accounts in violation of Twitter’s policies. On that call, Twitter indicated that it would not be willing to provide information regarding the methodologies employed to identify and suspend such accounts.

Furthermore:

> Despite public speculation on this point, Mr. Musk did not waive his right to review Twitter’s data and information simply because he chose not to seek this data and information before entering into the Merger Agreement. In fact, he negotiated access and information rights within the Merger Agreement precisely so that he could review data and information that is important to Twitter’s business before financing and completing the transaction.

uxcolumbo2• 4 years ago

Do you have examples of Elon being extremely intelligent?

molticrystal• 4 years ago

One of his hobbies is that he sometimes likes to pretend that he will acquire public companies...He seems to find this fun....When Musk pretended in 2018 that he was going to take Tesla Inc. private, he had to pay the US Securities and Exchange Commission a $20 million fine and stop being the chairman of Tesla’s board.

One past example doesn't make a hobby, and I wonder if SEC interference had any impact small or large on the privatization failing. Not to add to the defense to Musk, but deals fall through all the time when scrutiny is applied to them, whether exterior or interior.

KKdU9EXbBhmLznR5• 4 years ago

You're right, they should've said that his hobby is just pretending things in general. He enjoys very much being Nelson [https://www.youtube.com/watch?v=rX7wtNOkuHo].

The "SEC interference", as you called it, came long after he had his Nelson moment in that case. (A more accurate name for it might be "SEC slap-on-the-wrist", because it was both completely ineffective and entirely deserved.)

SV_BubbleTime• 4 years ago

Does anyone else see the complete pointlessness in all the cock-sure but entirely speculative comments on this?

You don’t know Musk, or the backend, or anything at all besides what the media tells you and that isn’t 1/10th the whole story.

I get why people wanna talk about it, just not be absolute “well I know this for a fact” smugness that most of the comments here have.

The reality is NONE of you actually KNOW anything and won’t until history determines the victor and you learn some more of that side.

jacquesm9• 4 years ago

The SEC filings are a matter of public record, which is part of why we call 'public' companies public in the first place: Twitter is - and Musk is as well - bound to do a lot of this out in the open because it affects the price of a listed stock.

FabHK5• 4 years ago

Eh? The merger agreement is a legal contract between Twitter and Musk, and it is a matter of public record [1].

And some people are certainly qualified to opine on these issues, particularly Matt Levine, who has worked as an M&A lawyer and investment banker.

[1] https://www.sec.gov/Archives/edgar/data/1418091/000119312522...

jmpeax• 4 years ago

Twitter has said in its SEC filings that it estimates that fewer than 5% of its monetizable daily active users are “false or spam accounts”

Is this different to total percentage of false or spam accounts? The monetizable daily active users seems like a very specific subpopulation of total twitter accounts.

vehementi5• 4 years ago

Yes, it is crucially different. mDAU is defined in the SEC filings which you can easily check. Basically it boils down to, there's say a billion twitter accounts. A shitload are inactive, or obviously bots, or joke accounts, or actual alts (don't double-count), or API users, or people using Tweetdeck, or doing all sorts of other things that Twitter can easily detect are not resulting in eyeballs on ads. Twitter boils down the number of "users that use Twitter clients that display ads" down to "just" 230M/day. Twitter then claims that, of those users, who are mostly just every day people logging in, maybe liking a post, scrolling a bit, seeing an ad on a real Twitter client -- of those users, when they sample them, they find that <5% of them are bots (like headless browsers and whatnot). That is obviously a completely different measurement than just overall bot accounts, or how often you will personally see bots posting, or how many of your followers are bots. Totally unrelated numbers.

Musk knows this but still knowingly confuses them to try to trick people into thinking Twitter is lying about that 5% number (since it's pretty obvious there are many bots on twitter)

gfodor• 4 years ago

Will any of these people eat crow if the deal closes at a lower price? Probably as much every other time they’ve said Musk was done with Twitter and then escalated towards owning it.

mypastself• 4 years ago

Lower than what? What are Levine’s claims to that effect? He states that Musk’s lawyers are likely hoping he’d have to pay only the $1B breakup fee, and Twitter is looking for the full “specific performance” $33B. There is little certainty about the outcome at this point.

millerm• 4 years ago

Lordy. Elon is NOT the richest person in the world. Lost interest, as I do with all articles about Musk.

tiberriver256• 4 years ago

If the designer of Bloomberg.com is on HN... thank your for making a decent looking news site. Literally every other site I'm bombarded with sensory overload. This site just lets me read the article in sweet serenity.

pyronite• 4 years ago

Something tells me it's not the designers responsible for sensory overload on other news sites.

boruto• 4 years ago

It's always that product manager who wants more ad placements to meet revenue targets.

Consultant32452• 4 years ago

Court can't force Elon to buy Twitter. Worst case scenario is Musk pays Twitter $1 Billion "pull out" fee which is in the contract and the article mentions. More likely Musk is able to reasonably prove in court that Twitter isn't reporting bots/spam accounts correctly, he gets out of the contract, only pays millions in court cost, data scientist, and lawyer fees.

paulpauper• 4 years ago

The stock closed at $36.81 on Friday, and other social-media stocks are down significantly since April. (Snap Inc. is down about 57% since April 13; even Meta Platforms Inc. — Facebook — is down more than 20%.) Meanwhile Tesla Inc. stock, the main source of Musk’s wealth,

Or maybe that was because the overall stock market was down a lot. Meta being down 20$ is about the same as the S&P 500.

Also it is obviously untrue! Companies advertise on Twitter because it sells products!

lol Twitter ads are notoriously expensive. It's mostly big companies buying them to build awareness, not to move product.

w0mbat• 4 years ago

BIG_COMPANY will often start to buy MEDIUM_COMPANY and then find that the other company has looming problems, has been faking user numbers/reviews/accounts etc, and the deal falls through.

I cannot legally name names but this happens all the time.

pengaru• 4 years ago

Am I the only one who initially read the title as Elon came out of the closet?

cozos• 4 years ago

yes

ETH_start• 4 years ago

This is an absurd article. The idea that Musk was just "pretending" to want to buy Twitter, and went through the process of tendering a purchase offer for show, defies any kind of common sense.

elif• 4 years ago

Considering he owns 8% of shares and can't buy more than 15%, I doubt he went through all of this to shock down stock prices or for the luls, as the author assumes.

He is rich but doesn't usually like burning money.

stakkur• 4 years ago

The law on this is clear, and the remedies are also clear. Musk playing the contemptuous clown prince aside, the court isn’t going to be ‘intimidated’, and Musk can’t simply evade/ignore judgments/orders. What a weirdly amateurish article.

AceJohnny2• 4 years ago

I am reminded of Neal Stephenson's Cryptonomicon, in which a significant plot point was a hostile buyer using due diligence as a kind of DoS attack on the protagonist's company.

extheat4• 4 years ago

So much noise here and ill-informed comments fail to give a broader understanding of what's going on. Elon bought up Twitter shares early in the year for a reason, because he wanted more control over Twitter. He bought up so much Twitter shares that when it was announced via the SEC, Twitter offered a board seat under the clause that he wouldn't acquire too much % control over the company. He obliged, but then left when he realized he couldn't make the changes he desired at the company. Plus, people on the board at the time, specifically Dorsey, was nudging him to buy out the company as a whole. So he did, hastingly. That was an ill-informed decision and obviously a mistake made with respect to doing due-diligence. In hindsight, before the market crash that price may have made sense. But fast forward today with looming recession talk, it's pretty clear he realized it's overvalued (we know this from tweets about twitter deal being repriced). And so he needed an escape hatch, hence the issue with bots and the unverifiable mDAU was a great talking point. In fact, he may as well be right on the issue as Twitter doesn't want to reveal how they calculate it. What he's trying to do right now is pretty clearly force the board to give a better deal. He's not sold any stock and likely won't unless he's actually out for good. But given the amount of effort and thought he's put into it and making it clear that he should pay a lower price depending on the bot issue, I don't think there's much doubt he's not actually leaving Twitter. Whether the courts will force an acquisition at the current price however, is a looming question. My bet is they settle at a lower price.

nocoiner4• 4 years ago

Almost everything in this comment is wrong or misleading.

The point of an acquisition agreement isn’t to give the buyer optionality to acquire another company, it’s to ensure the buyer honors its commitment to acquire another company during the period between the time the buyer agrees to acquire it, and the time is it able to close on taking ownership.

Maybe EM developed buyer’s remorse because of the decline in equity markets, or a belated realization that the CCP will have significant leverage on how he runs twitter, or just woke up the day after signing with that feeling you get when you realize you’ve knocked up Grimes not once but twice.

Just because EM wants an escape hatch, doesn’t make it so. There’s a pretty tight contract that says he needs to buy twitter, at the agreed price, using the committed financing he arranged. EM can try to retrade the price all day long, but then there’s still that pesky matter of a binding contract… to buy Twitter… at the price he agreed with the board… that doesn’t have a diligence out or an “ehhh changed my mind” termination provision.

For a variety of reasons, the board doesn’t have a tremendous number of appealing options (like none) but they have a strong contract that explicitly contains EM’s affirmative obligation to, y’know, buy Twitter. That fact has very little to do with his feeling.

extheat4• 4 years ago

Almost everything in this comment is wrong or misleading.

Feel free to point out specific inaccuracies. I think it's pretty clear.

Just because EM wants an escape hatch, doesn’t make it so

Yes, never suggested it's legally permissible.

affirmative obligation

This is armchair speculation. Even if the text might seem to be clear in outsider interpretation, this is a matter solely for the courts to determine and both sides will have an opportunity to make their points across. I stand by prediction of the board ending up settling this case. It will get obviously challenged in court, but it's not "wrong" in the sense of predicting an outcome.

IgorPartola• 4 years ago

Technically Musk and Grimes’ second kid was born through a surrogate. But otherwise your characterization of waking up with that feeling is spot on.

ellyagg• 4 years ago

And yet somehow NFL and NBA players break their contracts all the time.

lovich• 4 years ago

I’m sorry, I need to ask a clarifying question here. Is it ok for us to seek escape hatches when we sign binding agreements with others?

This is very important for me as I need to find out if I can just walk away from all the student loans, car notes, and mortgages I may have entered into, as it’s no longer convenient for me, and I would really appreciate if I could make that my counter party’s problem

cloutchaser• 4 years ago

The sale will happen at a lower price. Even though Elon would probably be forced to do the deal in 3-4 years.

This whole thing actually creates a golden bridge eventually for the twitter board to retreat on.

The board now has an obligation to sue, otherwise they are breaching their fiduciary duty. However, almost all shareholders will realise that a 2-3 year litigation at the end of which Elon might be forced to buy, is a long way away. Better to settle for a lower price now. Both shareholders and Elon will see this. The board just needs to demonstrate they are fighting for shareholders.

I predict in 3-4 months the board will offer a shareholder vote with a lower price, and shareholders will realise that it's way better to take that deal than wait for litigation.

tzury• 4 years ago

Elon Musk apparently has bigger issues that should have been preventing him from playing with the idea of buying twitter, and yet, he went for it, following a tweet that simply went out of control...

  - Tesla plants challenges worldwide (From China to Berlin via Texas)
  - Cybertruck ever postponing release date?
  - SolarCity and the dissmissed promises
  - Neuralink: Simply read the Wikipedia's entry [1]
  - Hyperloop (or is it hyperflop)
  - Boring company (more and more video demos) nothing is done...

So, with so much to get in order (and I am avoiding personal matters which don't seemed any cheerful for the man), with so much, why don't we simply get ourselves a new toy, named twitter?

Recently USA has a president that was following his impoolsive, late night tweets, by pushing his staff to form them as a new policy...

[1] https://en.wikipedia.org/wiki/Neuralink

mattbrewsbytes• 4 years ago

I think the other thing is in the US he now has some competition and they may just overtake the % of EV’s sold in a few years. People will have choices for EV instead of pick Tesla so he potentially used this buying twitter to sell off a bunch of stock. I wouldn’t be surprised if he finds other reasons to sell off massive amounts of stock in the next 2 years.

My guess is cybertruck will be DOA. Anyone who wants an EV Truck is likely going to order an F-150 Lightning - looks like every other F-150, F-150 is the best selling automobile in the US.

Once other auto makers ramp up production, Tesla cars will continue to be a niche luxury product with some gimmicky features.

mathgenius• 4 years ago

I love how Matt Levine is alternately hilarious, and then dry as dust. It's like he wants everyone to suffer what lawyers go through on a daily basis, so he lures you in with some light hearted funny, and then before you know it, you're in the middle of reading some long sentence in a contract that's so convoluted you just want to pull your eyes out. Ha, good one Matt!

closedloop129• 4 years ago

How much is this beneficial to the Twitter brand?

Twitter gets free exposure from all the news and a boost in reputation if only 5% of users are bots. Is there room for growth? I have the impression that Twitter is for information junkies who all should already have heard of Twitter.

pavlov• 4 years ago

That seems to be the main growth problem for Twitter. It has extreme product-market fit for a certain type of information junkie, but 15 years of optimizing the product for them has made it impenetrable to other potential users.

As Matt Levine likes to complain, not even Twitter’s own board and executives seem to use or like the product. It is a hostile and unappealing environment to most people.

DarkmSparks2• 4 years ago

Why does it have to be that complicated?

Twitter says only 5% of its active users are bots.

Anyone who has paid attention to say Joe Bidens follower count[1] would put it closer to 50%

[1] https://www.dailymail.co.uk/news/article-10829675/Almost-hal...

Bloomberg says there is no evidence of this... yeah, personally I dont really see any evidence of twitter having more than 200 or 300 million real users, and only a small fraction of those will be active. "Maybe" if they werent completely blocked in China and Russia it would be possible to believe there is more.

philipwhiuk• 4 years ago

The problem is that Twitter distinguishes 'automated account' from 'mininimum wage-farm account'. The later are not bots even though they are not genuine engagement.

DarkmSparks2• 4 years ago

Surely the problem is the believability of twitter claiming they have about 50% the number of active users as instagram (250million vs 500million).

When a cursory glance of twitter accounts shows its only a small number of American celebrities and a few global politicians that still use twitter instead of telegram.

The onus is on twitter to prove that 250million number, and Musks lawyers are saying they fell well short of doing so.

A bloomberg hit piece on Musk claiming Musk didnt show it isnt true wont save twitter, and they've been in terminal decline even before they banned Trump.

FabHK5• 4 years ago

So? That doesn't absolve Musk from his obligation to buy Twitter, as agreed in the merger agreement.

jokoon• 4 years ago

The half-lying, half-dancing-around-legality, reminds me of Trump.

It's like American capitalism has a big vulnerability and Musk is hacking it.

Capitalism always needs to be properly regulated to work properly, but it quickly cracks when some people work hard to hack it and cause problems.

As always, don't hate the criminals, just hate the game.

mrlonglong• 4 years ago

Long winded way to say Elon's really an arsehole.

kreetx2• 4 years ago

"Oh Elon" - has journalism really sunken to this? They must really not like him at Bloomberg.

pipeline_peak• 4 years ago

I can’t read a thing in this snark infested Mickey Mouse tabloid

Elon’s Out

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