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For anyone thinking he can pay the 1B$ termination fee and walk away, it's not that simple. The 1B$ is a "reverse breakup" fee, and applies when an outside for

For anyone thinking he can pay the 1B$ termination fee and walk away, it's not that simple. The 1B$ is a "reverse breakup" fee, and applies when an outside force (like SEC or financing) prevents the deal. That 1B$ has nothing to do with any choices on either side, and is unlikely to factor into this process. At this point they're clearly going to trial, and it's not unlikely that the cost to Elon will be somewhere in the neighborhood of the difference between the fair current market value (~20B$?) and the purchase price (~44B$). My guess is it'll end up being ~10-15B$.

dylan604 4y ago
~10-15B$ is not inbetween the 2 numbers you posited it would be between though.
- samatman 4y ago
  That's not what difference means.
  - dylan604 4y ago
    wow. total brain fart caused me to completely skip the word difference
    - zrobotics 4y ago
      Eh, math when written out instead of expressed numerically is sometimes hard. Props for admitting the brain fart though, as the sister comments show being wrong on the internet isn't always easy.
  - addandsubtract 4y ago
    44 - 20 = 22 != 10~15
    - bindle8932 4y ago
      44 - 20 = 24 != 22
      - renewiltord 4y ago
        Two plus two is four minus one that's three quick maths
    - FabHK 4y ago
      Username checks out, to an extent.
- jkrems 4y ago
  What they said was: > in the neighborhood of the difference between the fair current market value (~20B$?) and the purchase price (~44B$). The difference is 24B$ which is implied to be the upper bound. 10-15 is in the range 0..24.
beeboop 4y ago
When has there ever been a lawsuit of this sort that was anywhere near $15 billion? What do you base these numbers on?
- TheCoelacanth 4y ago
  When has a billionaire ever signed a contract for a $44 billion deal this recklessly?
  - selectodude 4y ago
    There aren’t many people stupider than Tesla investors so he’s almost certainly the dumbest self-made billionaire I can think of.
- pqdbr 4y ago
  On the agreement he signed, maybe?
- DelaneyM 4y ago
  As in my post, assuming this reaches a "negotiated" settlement there are going to be two important values: the original purchase price (OPP), and the fair market value (FMV). If Twitter "wins", they get Elon to pay the full market value. Now, they don't actually want Elon to be involved, so if Elon pays the difference between FMV and OPP (~$24B) that's essentially the same as buying then divesting with fewer steps. If Elon "wins", he gets out paying nothing. So the range is 0 to $24B. Elon has a terrible case here, so the best negotiating tactic he has is being a disruptive asshole so TWTR just wants it done with (this is playing to his strengths). I'm also making a big assumption about the FMV, which could easily rebound a bit by EOY. With those factors pulling it down from 24, I'm expecting in the 10-15 range, and if I had to guess I'd say $12.5B. Pick your own inputs for your own estimate, but this is the deal structure.
  - 0xy 4y ago
    If Elon wins his claim that they breached contract, he will be able to go after them for damages. It's pretty clear Twitter was lying and fudging fake user numbers, the question is how much and whether that was a breach of contract.
iLoveOncall 4y ago
> the difference between the fair current market value (~20B$?) and the purchase price (~44B$) Why would the current market price have anything to do here? Twitter want him to be forced to buy for $44B, not a penny less.
- TheCoelacanth 4y ago
  The original purchase price minus the current market value is how much they lose if he backs out of the deal, so that's the ballpark of what they would want to get paid to let him not buy Twitter.
  - iLoveOncall 4y ago
    That’s not true, they lose more. If it is acquired they sell all their shares instantly without any negative effect on the price of the shares. If they did that not as part of an acquisition, the share price would tank.
devoutsalsa 4y ago
Having to spend $15B as the cost for making an impulsive decision (when you can afford it) is a first world problem.
- Ekaros 4y ago
  When does a decisions stop being impulsive? Probably at point when enough lawyers are hired to write a contract...
  - devoutsalsa 4y ago
    It probably depends on how much you need to think about it. If you have a minion to whom you can say "I'd like to buy Twitter, go figure it out, then let me know where to sign", there's a lot of room for being impulsive.
- hef19898 4y ago
  Tesla and SpaceX success is depending on the public opinion of Musk. If he ends up paying 15 billion (or whatever the number is) over a botched take over, one that had a negative impact on Tesla shares, this opinion might just change. In which case Teslas future preception as a tech company might be at risk.
  - sekai 4y ago
    > Tesla and SpaceX success is depending on the public opinion of Musk No it does not, SpaceX results speak for themselves, they have no competition. Same with Tesla, just check their vehicles sold charts.
    - hef19898 4y ago
      SpaceX competition: Arianne space and a bunch of upstarts, plus every other commercial launch service excluding the Russians at the moment. Tesla's competition: every other car marker.
      - 4y ago
mikewarot 4y ago
So my hunch that this could lead to him going broke isn't completely off base? I figure he ends up having to pay $10E+10, and everyone knows it, so he gets short-squeezed in Tesla stock, then margin called on any loans against his stock... then POOF
- freemint 4y ago
  You can't short squeeze a seller. Sorry you just can't.
- imdsm 4y ago
  $10 bn out of $200+ bn won't make him go broke though. Don't see the logic in that, Mike.
  - unityByFreedom 4y ago
    It could if your $200 billion valuation is based on the stock of over-valued companies which you used to over-leverage-borrow, and you need every free penny to continue paying back debt and keep that stock price high.
  - mikewarot 4y ago
    He doesn't have $200,000,000,000 in cash.. he has stock, the value of which is exclusively depended on buyers exchanging their $ for it. There's nothing stopping any publicly traded stock from collapsing in value to the physical assets of the company minus any debts or liabilities. According to this thing I found on the internet[1], if I read it correctly, Tesla is worth $31B if it were stripped and sold. Most of Elon's wealth is Tesla stock... far more than the actual value of the company, by a factor of more than 5. If he has any debts against his stock, those could be his downfall. [1] - https://www.marketwatch.com/investing/stock/tsla/financials/balance-sheet https://www.marketwatch.com/investing/stock/tsla/financials/...
  - parkingrift 4y ago
    Elon owns 16% of Tesla and Tesla stock is the vast majority of his wealth. If the market cap of Tesla were to crash below $150 billion it would be in the territory where his penalty to Twitter could be multiple billions more than the value of his Tesla stock. I personally don’t think Tesla is worth even $100 billion. However, the markets disagree, and it is difficult to imagine a scenario where Tesla loses 80% of its value. …but it’s not totally inconceivable.

dylan604 4y ago

~10-15B$ is not inbetween the 2 numbers you posited it would be between though.

samatman 4y ago
That's not what difference means.
- dylan604 4y ago
  wow. total brain fart caused me to completely skip the word difference
  - zrobotics 4y ago
    Eh, math when written out instead of expressed numerically is sometimes hard. Props for admitting the brain fart though, as the sister comments show being wrong on the internet isn't always easy.
- addandsubtract 4y ago
  44 - 20 = 22 != 10~15
  - bindle8932 4y ago
    44 - 20 = 24 != 22
    - renewiltord 4y ago
      Two plus two is four minus one that's three quick maths
  - FabHK 4y ago
    Username checks out, to an extent.
jkrems 4y ago
What they said was: > in the neighborhood of the difference between the fair current market value (~20B$?) and the purchase price (~44B$). The difference is 24B$ which is implied to be the upper bound. 10-15 is in the range 0..24.

beeboop 4y ago

When has there ever been a lawsuit of this sort that was anywhere near $15 billion? What do you base these numbers on?

TheCoelacanth 4y ago
When has a billionaire ever signed a contract for a $44 billion deal this recklessly?
- selectodude 4y ago
  There aren’t many people stupider than Tesla investors so he’s almost certainly the dumbest self-made billionaire I can think of.
pqdbr 4y ago
On the agreement he signed, maybe?
DelaneyM 4y ago
As in my post, assuming this reaches a "negotiated" settlement there are going to be two important values: the original purchase price (OPP), and the fair market value (FMV). If Twitter "wins", they get Elon to pay the full market value. Now, they don't actually want Elon to be involved, so if Elon pays the difference between FMV and OPP (~$24B) that's essentially the same as buying then divesting with fewer steps. If Elon "wins", he gets out paying nothing. So the range is 0 to $24B. Elon has a terrible case here, so the best negotiating tactic he has is being a disruptive asshole so TWTR just wants it done with (this is playing to his strengths). I'm also making a big assumption about the FMV, which could easily rebound a bit by EOY. With those factors pulling it down from 24, I'm expecting in the 10-15 range, and if I had to guess I'd say $12.5B. Pick your own inputs for your own estimate, but this is the deal structure.
- 0xy 4y ago
  If Elon wins his claim that they breached contract, he will be able to go after them for damages. It's pretty clear Twitter was lying and fudging fake user numbers, the question is how much and whether that was a breach of contract.

iLoveOncall 4y ago

> the difference between the fair current market value (~20B$?) and the purchase price (~44B$) Why would the current market price have anything to do here? Twitter want him to be forced to buy for $44B, not a penny less.

TheCoelacanth 4y ago
The original purchase price minus the current market value is how much they lose if he backs out of the deal, so that's the ballpark of what they would want to get paid to let him not buy Twitter.
- iLoveOncall 4y ago
  That’s not true, they lose more. If it is acquired they sell all their shares instantly without any negative effect on the price of the shares. If they did that not as part of an acquisition, the share price would tank.

devoutsalsa 4y ago

Having to spend $15B as the cost for making an impulsive decision (when you can afford it) is a first world problem.

Ekaros 4y ago
When does a decisions stop being impulsive? Probably at point when enough lawyers are hired to write a contract...
- devoutsalsa 4y ago
  It probably depends on how much you need to think about it. If you have a minion to whom you can say "I'd like to buy Twitter, go figure it out, then let me know where to sign", there's a lot of room for being impulsive.
hef19898 4y ago
Tesla and SpaceX success is depending on the public opinion of Musk. If he ends up paying 15 billion (or whatever the number is) over a botched take over, one that had a negative impact on Tesla shares, this opinion might just change. In which case Teslas future preception as a tech company might be at risk.
- sekai 4y ago
  > Tesla and SpaceX success is depending on the public opinion of Musk No it does not, SpaceX results speak for themselves, they have no competition. Same with Tesla, just check their vehicles sold charts.
  - hef19898 4y ago
    SpaceX competition: Arianne space and a bunch of upstarts, plus every other commercial launch service excluding the Russians at the moment. Tesla's competition: every other car marker.
    - 4y ago

mikewarot 4y ago

So my hunch that this could lead to him going broke isn't completely off base? I figure he ends up having to pay $10E+10, and everyone knows it, so he gets short-squeezed in Tesla stock, then margin called on any loans against his stock... then POOF

freemint 4y ago
You can't short squeeze a seller. Sorry you just can't.
imdsm 4y ago
$10 bn out of $200+ bn won't make him go broke though. Don't see the logic in that, Mike.
- unityByFreedom 4y ago
  It could if your $200 billion valuation is based on the stock of over-valued companies which you used to over-leverage-borrow, and you need every free penny to continue paying back debt and keep that stock price high.
- mikewarot 4y ago
  He doesn't have $200,000,000,000 in cash.. he has stock, the value of which is exclusively depended on buyers exchanging their $ for it. There's nothing stopping any publicly traded stock from collapsing in value to the physical assets of the company minus any debts or liabilities. According to this thing I found on the internet[1], if I read it correctly, Tesla is worth $31B if it were stripped and sold. Most of Elon's wealth is Tesla stock... far more than the actual value of the company, by a factor of more than 5. If he has any debts against his stock, those could be his downfall. [1] - https://www.marketwatch.com/investing/stock/tsla/financials/balance-sheet https://www.marketwatch.com/investing/stock/tsla/financials/...
- parkingrift 4y ago
  Elon owns 16% of Tesla and Tesla stock is the vast majority of his wealth. If the market cap of Tesla were to crash below $150 billion it would be in the territory where his penalty to Twitter could be multiple billions more than the value of his Tesla stock. I personally don’t think Tesla is worth even $100 billion. However, the markets disagree, and it is difficult to imagine a scenario where Tesla loses 80% of its value. …but it’s not totally inconceivable.