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> not be met due to an erroneous estimate in a SEC filing. I've seen this mentioned elsewhere also, but I really need help here. From my understanding, Twitter

by nomel 4y ago

> not be met due to an erroneous estimate in a SEC filing. I've seen this mentioned elsewhere also, but I really need help here. From my understanding, Twitter's entire business model, and existing revenue stream, is people paying them to show content/ads to other humans. If some unknown percent of users are not human, doesn't that have a pretty extreme, direct, influence on the possible revenue? If someone wants to buy Twitter, I assume their first question would not be, what percent of users that you're currently showing ads to are bots. Rather, it would be what percent of users are real, so I can show ads to all of them. Which bring up the question, why isn't Twitter showing ads to some users?

cmdli 4y ago
Material adverse effects have to be rather large; for instance, the company is actually worth 50% less than it was represented as. Even if the bot count is significantly higher (say, 20%) that wouldn't have an easily provable massive effect on revenue. Twitter still makes what it makes, and it still would be roughly the same in terms of profitability. Keep in mind that the onus is on Elon to prove to a court that the higher bot count has a large, material impact (on the order of 50% of Twitter's revenue). It's not something that is a matter of opinion, but rather based on his ability to argue his position to the court, for which he needs strong evidence.
- tptacek 4y ago
  Via Levine, more on the insanely high standard Delaware sets for MAEs (the rule of thumb Levine gives is "a 40% decrease in long-term profitability"): https://www.jonesday.com/en/insights/2018/10/delaware-chancery-court-finally-finds-an-mae https://www.jonesday.com/en/insights/2018/10/delaware-chance... This is about Delaware finding that an MAE occurred, for the first time ever, like literally ever, in 2018. What we have here is a case where Twitter's performance isn't even faltering (it's stock price is, but its 2022 revenues are actually up). There's not a chance in hell for the MAE argument.
- andresp 4y ago
  - hhmc 4y ago
    > The radical left is very predictable. They don't fool anyone anymore though. What a strange and unnecessary point.
- nomel 4y ago
  Thanks, I appreciate it! I didn't realize the bar was so high. With the bar being so high, does it create an incentive to intentionally overstate value, before a sale/acquisition? I would assume that everyone would safely coast around +30%.
peddamat 4y ago
My Twitter feed has the occasional ad. Fairly unobtrusive, but they are indeed there.
HWR_14 4y ago
> Twitter's entire business model, and existing revenue stream, is people paying them to show content/ads to other humans. That's the biggest part of twitters business, but they do have additional revenue streams. However, the other revenue streams are also highly dependent on their status as "a place where people say things and people look at things"
wikfwikf 4y ago
The % of bot users is not critical to revenue, no. Advertising buyers determine how much ad views are worth to them in their own way. This demand essentially sets the price since there is no marginal cost of providing advertising views. For example, suppose that you show 1,000 ads and get 2 people buying something from your store. It doesn't really matter whether 1,000 people saw your ad, or 500 humans and 500 bots saw it. The important statistic is what revenue you got from it.

by nomel 4y ago

cmdli 4y ago

Material adverse effects have to be rather large; for instance, the company is actually worth 50% less than it was represented as. Even if the bot count is significantly higher (say, 20%) that wouldn't have an easily provable massive effect on revenue. Twitter still makes what it makes, and it still would be roughly the same in terms of profitability. Keep in mind that the onus is on Elon to prove to a court that the higher bot count has a large, material impact (on the order of 50% of Twitter's revenue). It's not something that is a matter of opinion, but rather based on his ability to argue his position to the court, for which he needs strong evidence.

tptacek 4y ago
Via Levine, more on the insanely high standard Delaware sets for MAEs (the rule of thumb Levine gives is "a 40% decrease in long-term profitability"): https://www.jonesday.com/en/insights/2018/10/delaware-chancery-court-finally-finds-an-mae https://www.jonesday.com/en/insights/2018/10/delaware-chance... This is about Delaware finding that an MAE occurred, for the first time ever, like literally ever, in 2018. What we have here is a case where Twitter's performance isn't even faltering (it's stock price is, but its 2022 revenues are actually up). There's not a chance in hell for the MAE argument.
andresp 4y ago
- hhmc 4y ago
  > The radical left is very predictable. They don't fool anyone anymore though. What a strange and unnecessary point.
nomel 4y ago
Thanks, I appreciate it! I didn't realize the bar was so high. With the bar being so high, does it create an incentive to intentionally overstate value, before a sale/acquisition? I would assume that everyone would safely coast around +30%.

peddamat 4y ago

My Twitter feed has the occasional ad. Fairly unobtrusive, but they are indeed there.

HWR_14 4y ago

> Twitter's entire business model, and existing revenue stream, is people paying them to show content/ads to other humans. That's the biggest part of twitters business, but they do have additional revenue streams. However, the other revenue streams are also highly dependent on their status as "a place where people say things and people look at things"

wikfwikf 4y ago

The % of bot users is not critical to revenue, no. Advertising buyers determine how much ad views are worth to them in their own way. This demand essentially sets the price since there is no marginal cost of providing advertising views. For example, suppose that you show 1,000 ads and get 2 people buying something from your store. It doesn't really matter whether 1,000 people saw your ad, or 500 humans and 500 bots saw it. The important statistic is what revenue you got from it.