5 ms·

This is standard operating procedure for takeovers, but I think you're massively overestimating the amount of pressure someone selling 9% of the company places

This is standard operating procedure for takeovers, but I think you're massively overestimating the amount of pressure someone selling 9% of the company places on the stock price. Someone buying 9% (with an expecation that they would buy more) moved the stock $10. The same person selling 9% stock (with no possibility that can sell more) is unlikely to move the stock more than that.

sanedigital 5y ago
Twitter is selling at $45, a $10 move is 22%. That's insane pressure.
- williamsmj 5y ago
  I think you should look at the historical volatility of TWTR before calling a 22% move "insane pressure". It's also worth noting that the stock price is almost unchanged today as of this writing, which tells you that the market thinks he's not serious, or his lowball offer is going to be laughed out by the board, which significantly reduces the amount of "insane pressure" he's exerting.
  - llbeansandrice 5y ago
    What does historical volatility have to do with it? If Elon can basically manipulate his investment into a 22% return why on earth wouldn't he do that? A single person able to pressure a single commodity to the tune of 22% is bonkers. I'm not debating whether that will happen, just contending your first statement.
    - infofarmer 5y ago
      It's not just any single person.
    - williamsmj 5y ago
      I agree it's bonkers that this is possible. I agree, in an environment where the SEC seems unable to stop him, Elon Musk might well consider 22% return worth doing. None of that is relevant to the point I'm making. I'm contending the claim that the implicit (and completely pro forma!) threat in his SEC filing places "insane pressure" on the Twitter board. The the possibility of a 20+% stock price change will not play a large part in their calculations. It's just not a big deal in the context of such a volatile stock.
      - cambaceres 5y ago
        Don't you think he would lose a lot of reputation in future deals like this? I wouldn't trust him.
        edmundsauto 5y ago
        He hasn't needed any trust to go this far, his MO here is more of a hostile takeover, and he doesn't need any permission from Twitter to do it.
        cambaceres 5y ago
        Good point.
    - aiisjustanif 5y ago
      Because the existing volatility sets the tone for the underlying risk tolerance that shareholders already deal with. It sucks, it’s not insignificant, but I do agree it’s not immensely significant as you are making it seem. It’s just the exposure a public company on the market can have have these days.
    - darawk 5y ago
      He can't manipulate it into a 22% profit, for exactly the reason you articulated. His buying pushed the price up - his selling will push the price down. He might might make a small profit from the increase his buying news generated if he were to sell now, but his VWAP would be well below 22%.
flavius29663 5y ago
ketzo 5y ago
Okay, but it's Elon Musk selling 9% of a company's stock. The dude makes stocks move when he tweets memes. I think it's fair to say he's got some... extra pull.
- williamsmj 5y ago
  He demonstrated precisely how much pull he had when he bought 9%. It's about $10.
  - zepolen 5y ago
    No, that is not how that works.
    - tmalsburg2 5y ago
      How does it work?
      - zepolen 5y ago
        Whoever knew that stands to make a lot of money. What we do know is that it's not a 1 to 1 mathematical if one buys 9% it moves 10$ if one then sells 9% if falls $10. This has historically proven over and over.
  - dkokelley 5y ago
    The price moved from $33 to $40 as he bought the shares[1]. THEN it moved from $40 to $50 when he announced that he bought the shares on April 4th. Hard to say what the stock would have done without the purchase, but Musk has both the threat of dumping his shares on the market AND the threat of him announcing that he's dropping his shares. A case could be made that he has at least $17 of influence on share price, but my guess is that the market frenzy will drag it lower if Musk backs out. 1. Purchase began March 14th 2022 https://www.sec.gov/Archives/edgar/data/1418091/000110465922041911/tm2211482d1_sc13g.htm https://www.sec.gov/Archives/edgar/data/1418091/000110465922... Note: Please correct me if I misunderstand the meaning of the filing. I read it as Musk began buying up shares March 14th, and finished near the end of March, then reported Friday/Monday April 1/4. I don't think he bought and announced the same day. Musk owns ~73M shares, and trading volume was ~15M on the 13th, then jumps to ~35M/day over the next few days before settling down at ~15M/day again. https://finance.yahoo.com/chart/TWTR#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 https://finance.yahoo.com/chart/TWTR#eyJpbnRlcnZhbCI6ImRheSI...
osrec 5y ago
I disagree. The fact that someone is willing to buy a stake in a company suggests the company has some potential. The fact that someone having bought a company is willing to dump their entire ownership so quickly suggests the company may be rotten from the inside. The latter would exert a much stronger downward pressure on the stock, in my opinion.
- williamsmj 5y ago
  That makes sense if you assume Musk has learned something shocking about Twitter from the inside in the past couple of weeks. How likely is that? It seems spectacularly unlikely to me that a demonstrably impatient person with a pre-existing thesis about Twitter would take the time to investigate and learn new things about its product/financials/culture/governance. It also seems unlikely that a person with a known strong stomach for legal and ethical "flexibility" would be especially bothered by anything they did learn, assuming they took the trouble. But YMMV.
  - cambaceres 5y ago
    His point is that it will look like Elon didn't like what he saw and changed his mind, it doesn't matter what he truly saw.
    - moffkalast 5y ago
      "Musk, what do your Elon eyes see?" "They're taking Twitter to Isengard!"
  - MadSudaca 5y ago
    As a hypothetical investor on Twitter, would you be willing to take that chance?
  - supramouse 5y ago
    I do think something like twitter longterm could a big play at something like authenticity verification in the world of deep fakes, similar to what keybase was trying to do but they already have traction with public figures
xyst 5y ago
It’s a cascading effect though. 9% sell off. Ticker drops by some value. This then triggers stop losses, and another set of sell offs. It goes down the line until retail is left holding the bag.

sanedigital 5y ago

Twitter is selling at $45, a $10 move is 22%. That's insane pressure.

williamsmj 5y ago
I think you should look at the historical volatility of TWTR before calling a 22% move "insane pressure". It's also worth noting that the stock price is almost unchanged today as of this writing, which tells you that the market thinks he's not serious, or his lowball offer is going to be laughed out by the board, which significantly reduces the amount of "insane pressure" he's exerting.
- llbeansandrice 5y ago
  What does historical volatility have to do with it? If Elon can basically manipulate his investment into a 22% return why on earth wouldn't he do that? A single person able to pressure a single commodity to the tune of 22% is bonkers. I'm not debating whether that will happen, just contending your first statement.
  - infofarmer 5y ago
    It's not just any single person.
  - williamsmj 5y ago
    I agree it's bonkers that this is possible. I agree, in an environment where the SEC seems unable to stop him, Elon Musk might well consider 22% return worth doing. None of that is relevant to the point I'm making. I'm contending the claim that the implicit (and completely pro forma!) threat in his SEC filing places "insane pressure" on the Twitter board. The the possibility of a 20+% stock price change will not play a large part in their calculations. It's just not a big deal in the context of such a volatile stock.
    - cambaceres 5y ago
      Don't you think he would lose a lot of reputation in future deals like this? I wouldn't trust him.
      - edmundsauto 5y ago
        He hasn't needed any trust to go this far, his MO here is more of a hostile takeover, and he doesn't need any permission from Twitter to do it.
        cambaceres 5y ago
        Good point.
  - aiisjustanif 5y ago
    Because the existing volatility sets the tone for the underlying risk tolerance that shareholders already deal with. It sucks, it’s not insignificant, but I do agree it’s not immensely significant as you are making it seem. It’s just the exposure a public company on the market can have have these days.
  - darawk 5y ago
    He can't manipulate it into a 22% profit, for exactly the reason you articulated. His buying pushed the price up - his selling will push the price down. He might might make a small profit from the increase his buying news generated if he were to sell now, but his VWAP would be well below 22%.

flavius29663 5y ago

ketzo 5y ago

Okay, but it's Elon Musk selling 9% of a company's stock. The dude makes stocks move when he tweets memes. I think it's fair to say he's got some... extra pull.

williamsmj 5y ago
He demonstrated precisely how much pull he had when he bought 9%. It's about $10.
- zepolen 5y ago
  No, that is not how that works.
  - tmalsburg2 5y ago
    How does it work?
    - zepolen 5y ago
      Whoever knew that stands to make a lot of money. What we do know is that it's not a 1 to 1 mathematical if one buys 9% it moves 10$ if one then sells 9% if falls $10. This has historically proven over and over.
- dkokelley 5y ago
  The price moved from $33 to $40 as he bought the shares[1]. THEN it moved from $40 to $50 when he announced that he bought the shares on April 4th. Hard to say what the stock would have done without the purchase, but Musk has both the threat of dumping his shares on the market AND the threat of him announcing that he's dropping his shares. A case could be made that he has at least $17 of influence on share price, but my guess is that the market frenzy will drag it lower if Musk backs out. 1. Purchase began March 14th 2022 https://www.sec.gov/Archives/edgar/data/1418091/000110465922041911/tm2211482d1_sc13g.htm https://www.sec.gov/Archives/edgar/data/1418091/000110465922... Note: Please correct me if I misunderstand the meaning of the filing. I read it as Musk began buying up shares March 14th, and finished near the end of March, then reported Friday/Monday April 1/4. I don't think he bought and announced the same day. Musk owns ~73M shares, and trading volume was ~15M on the 13th, then jumps to ~35M/day over the next few days before settling down at ~15M/day again. https://finance.yahoo.com/chart/TWTR#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 https://finance.yahoo.com/chart/TWTR#eyJpbnRlcnZhbCI6ImRheSI...

osrec 5y ago

I disagree. The fact that someone is willing to buy a stake in a company suggests the company has some potential. The fact that someone having bought a company is willing to dump their entire ownership so quickly suggests the company may be rotten from the inside. The latter would exert a much stronger downward pressure on the stock, in my opinion.

williamsmj 5y ago
That makes sense if you assume Musk has learned something shocking about Twitter from the inside in the past couple of weeks. How likely is that? It seems spectacularly unlikely to me that a demonstrably impatient person with a pre-existing thesis about Twitter would take the time to investigate and learn new things about its product/financials/culture/governance. It also seems unlikely that a person with a known strong stomach for legal and ethical "flexibility" would be especially bothered by anything they did learn, assuming they took the trouble. But YMMV.
- cambaceres 5y ago
  His point is that it will look like Elon didn't like what he saw and changed his mind, it doesn't matter what he truly saw.
  - moffkalast 5y ago
    "Musk, what do your Elon eyes see?" "They're taking Twitter to Isengard!"
- MadSudaca 5y ago
  As a hypothetical investor on Twitter, would you be willing to take that chance?
- supramouse 5y ago
  I do think something like twitter longterm could a big play at something like authenticity verification in the world of deep fakes, similar to what keybase was trying to do but they already have traction with public figures

xyst 5y ago

It’s a cascading effect though. 9% sell off. Ticker drops by some value. This then triggers stop losses, and another set of sell offs. It goes down the line until retail is left holding the bag.