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There's another belief floated by Josh Wolfe (an investor with Lux Capital) who claimed it was a ruse to liquidate Tesla stock en masse without Tesla hodlers ge
by atlasunshrugged 4y ago
There's another belief floated by Josh Wolfe (an investor with Lux Capital) who claimed it was a ruse to liquidate Tesla stock en masse without Tesla hodlers getting suspicious and tanking the inflated stock price.
https://twitter.com/wolfejosh/status/1545387947578597376 https://twitter.com/wolfejosh/status/1545387947578597376
- marricks 4y agoThat’s immensely believable, I wonder how he got someone people onboard to be help him fund it though. It’s even more of a stretch but maybe the rest of them wanted more liquidity too?
- napier 4y agoNeither of these hypotheses precludes the other.
- caminante 4y agoNo? "Cold feet" is impulsive. Whereas a disguised liquidation is calculated. Regardless, the fall in share price likely drove the outcome.
- qaq 4y agoWolfe has being on anti Musk crusade for a long time.
- jacquesm 4y agoBut is it true?
- qaq 4y agoI would imagine there are cheaper ways to accomplish the same goal
- jacquesm 4y agoThat still does not answer the question.
- qaq 4y agoHow would you find a definitive answer?
- jacquesm 4y agoThat is a very good question, monitor the SEC for clues, if they bring some kind of action (which should either happen soon now that he has made it official he wants to back out or not at all).
- ImPostingOnHN 4y agogiven the SEC's regular lack of enforcement, their inaction would not be evidence of lack of wrongdoing
- jacquesm 4y agoWith counterparties like Musk it doesn't pay to try to go for some minor infraction, they will just lawyer their way out of it or stretch it forever, but if it is solid enough (and $44B might just do it) then it may well wake up the dragon. To be fair, someone would likely have to ask them nicely to do so because they feel that they have lost a lot of money due to Musk's actions.
- Sebb767 4y agoWhich ones? Basically any way of him dumping billions of Tesla stock would've immediately popped the price. With this action, not only did he get plausible deniability, he also got a massive distraction on top.
- qaq 4y ago
- throwaway29812 4y agoThat's a strange way of saying he was right.
- qaq 4y agoI have no clue if he is right or not
- ChildOfChaos 4y agoThere is zero evidence that he is right. All we know are the facts, he agreed to buy twitter and now he is trying to walk away from the deal. There could be multiple reasons for that, including what he is saying on face value or a dozen other scenarios. He could still be wanting to buy twitter and use this as a bargaining tool to lower the price. You can say he was right, once we know the full facts which will be once this plays out and since it doesn't really affect any of us, speculating right now is simply taking part in silly gossip.
- throwaway29812 4y agoOccam razor is Musk made an offer at the height of the market, now he doesn't want to honor the legally binding contract he entered into because he'd lose 20b right away. Not that complicated really.
- ShamelessC 4y ago
- majormajor 4y agoIt's incredibly implausible that it's what he's saying on face value because a million other people seem to understand what Twitter was referring to around monetized monthly users or whatnot, and the idea that he didn't at first and then realized this other number was actually make-or-break is ludicrous. Like, you can sign up for free. What's gonna prevent fake accounts in that case?
- kmonsen 4y agoYeah and everyone knew for months this day would come. After the stocks started falling in the spring there was no way he would not try to weasel out. In my mind this is an insane conspiracy theory that fails occam razor, he was high and said we wanted to buy Twitter. People made fun of him so he dug in to prove all those stupid people. There is no complex deal needed here.
- Mo3 4y agoI mean, it didn't necessarily take Josh Wolfe to see this as a viable possibility.
- slg 4y agoBut Tesla stock did drop after the announcement of the deal. I think that is the real reasoning behind him quickly getting cold feet. He probably thought Twitter would be a fun side project, but the backlash from people in regards to Tesla, SpaceX, and just the general public meant it would be more costly both to his reputation and financially beyond just the sticker price. That took the fun out of it so he has been looking for ways to escape the deal ever since.
- jacquesm 4y agoThe question isn't really whether it dropped or not but whether the perception was that it would have dropped more without that fig leaf.
- slg 4y agoThis isn’t the first time he has sold Tesla shares. He sold billions of dollars worth last year too. I’m not sure the exact dates to do the math, but did those sales cause a immediate drop of over 10% like the Twitter announcement?
- jacquesm 4y agoThat's not the right question, the question is the perception of the difference between selling $44B of stock outright or selling it with the goal of buying Twitter. What actually happened isn't relevant. What is relevant is whether he may have thought it would work better. Tricky to prove.
- slg 4y agoWe agree that he didn’t suspect the backlash from buying Twitter. I think our disagreement is just that you think he expected a large backlash from selling Tesla shares and I’m not sure history really suggests that was something to be concerned about.
- robbiep 4y agohe wasn't (or isn't) aiming to sell the stock, he was/is aiming to finance the purchase using his Tesla stock as security. So this line of argument... Doesn't really make sense? This is all publicly available. Due to leverage, he faced ruin if Tesla fell below X (whatever X is) if he funded it all himself. So he opened his side of the deal up to other people, and allowed other large shareholders to come inside his tent - which reduced his exposure. Then the market dropped 15%. Matt Levine has an excellent series of newsletters covering it.
- pryce 4y agoIf someone's stock is as incredibly overinflated as Tesla has been for so long, choosing the most effective way to liquidate stock without triggering a run becomes a social engineering problem with the incentive of a multi-billion dollar payoff. Honestly I think other people trying to read this situation in some way that ignores a multi billion dollar incentive just sitting there is utterly naive.
- mzs 4y agoYou say social engineering, I say criminal fraud.
- FerociousTimes 4y agoMore precisely, securities fraud.
- behnamoh 4y agoIs there any hope that this time he will pay for his shenanigans?
- dylan604 4y agoWe've had the Teflon Don, now we have the Teflon Elon. I'm sure he'll be able to weasel his way out of this. He'll spend a crap ton of money to lawyers just to be able to say he doesn't have to pay for it, but he's still paying for it on a smaller scale and not in public. Anything to put up another W on the scoresheet.
- MichaelCollins 4y ago> a ruse to liquidate Tesla stock en masse without Tesla hodlers getting suspicious and tanking the inflated stock price. Couldn't he just have said "SpaceX needs more cash" or something like that?
- pclmulqdq 4y agoThat would be implying that a Musk company was in trouble. They constantly are in trouble, but he can never say it or else it breaks the fiction that Musk companies are predestined to be amazingly successful.
- FeepingCreature 4y agoDidn't he famously say it about SpaceX last year?
- pclmulqdq 4y agoIt was leaked from an internal memo. He admitted it about tesla a few years ago now that tesla is in okay financial shape.
- entropicgravity 4y agoThe Go masters insist that every stone must have at least two reasons for its placement.
- deleted 4y ago[deleted]
- avalys 4y agoThe deal includes a "specific performance" clause, which allows Twitter to force Musk to carry out the deal. He can't simply pay $1 billion and walk away, he's in for a very messy legal fight. This pretext about bots is incredibly weak and he's in no way guaranteed to win. If this really were part of some grand master plan, I think he would have left himself an easier out.
- deleted 4y ago[deleted]
- at-fates-hands 4y agoHis legal team maintains Twitter is in material breach of multiple provisions of the Agreement and appears to have made false and misleading representations. https://www.sec.gov/Archives/edgar/data/1418091/000110465922078413/tm2220599d1_ex99-p.htm https://www.sec.gov/Archives/edgar/data/1418091/000110465922...
- eropple 4y agoHis legal team can maintain that the sky is a vibrant chartreuse, but that doesn't mean it's true.
- no_butterscotch 4y agoSo what though? Is Twitter going to spend the next few years litigating this just to force someone to buy the company that doesn't want to? Elon's team can drag this on and on. What will happen to the value of Twitter's stock in the meantime? What will happen to the value of working at Twitter? It'll become a zombie company.
- lightsandaounds 4y agoWhat will happen to the price of the stock is that it will be inflated over the "true price" by risk adjusted premium of the buyout. Stock price = "stock price without Elon owning it" + "Elons premium" * "likelihood of Elon losing the lawsuit and being forced to buy the company" That likelihood should never be less than 0, so I think this legal fight would only help the twitter stock price. I guess I am assuming that the "true price" is actually lower than what Elon offered for it.
- mikkergp 4y agoCouldn't he have sold Tesla as part of an offer that still had due diligence and was in negotiations rather than waiving due diligence and committing to a deal?
- openthc 4y agoMore than one financial analysit/money manager has floated this idea in our circle. It seems reasonalble; an pointing to the last time he sold a bunch (11B?) and told everyone it was to pay his taxes. They seem to think it was to just convert some high-risk (TSLA) to low risk (Cash, etc).
- the_biot 4y agoThat sounds reasonably logical, but by what measure of logic is overpaying for Twitter, of all assets, a good deal? There are surely better companies to do this sort of thing with, and end up with an actually valuable asset at the end of it.
- spfzero 4y agoI agree with you. If the object was to convert overvalued stock, you would not just convert it to another overvalued stock, right?
- macintux 4y agoNotice that he is not, in fact, converting it.
- openthc 4y agoTo over simplify: it's the trick of a illusionist; look over there! Something interesting (now switch the rabbit for the dove or whatever). So while GenPop is looking at this noisy deal; he's able to shuffle around money in three(?) ways -- where the net result is to reduce the TSLA holdings w/o too much penalty (or somethign). I'm not smart or rich enough to fully understand. The logic is distraction to execute a big dollar amount shift in equity positions.
- Sebb767 4y agoAccording to this theory, he never intended to buy Twitter. He just used the offer to liquidate stock without raising too many eyebrows and now he's backing out, with a few billion extra in cash and, if everything works out for him, not even a termination fee.
- deleted 4y ago[deleted]
- fisherjeff 4y agoSure but then why skip diligence? That would be the ideal time to sell lots of Tesla stock and eventually say “You know what? Nah” without any sticky legal issues.
- pclmulqdq 4y agoMost people do not liquidate billions of assets while waiting for due diligence to go through. They wait for diligence, then liquidate the assets.
- deleted 4y ago[deleted]
- fisherjeff 4y agoWell yes, but most people also intend to actually go through with an acquisition
- bandyaboot 4y agoMusk wanted to be warrior king of the internet edge lords. He was not playing chess.
- thesausageking 4y agoNote that Josh has been a huge Tesla (and Musk) critic for years, starting as far back as this 2010 tweet: https://twitter.com/wolfejosh/status/19430106783023104 https://twitter.com/wolfejosh/status/19430106783023104 He's called Tesla a "fraud" and that it would collapse many, many times while it's just kept going up and up and up over the last decade. For example: https://twitter.com/wolfejosh/status/1178486986790854658 https://twitter.com/wolfejosh/status/1178486986790854658 https://twitter.com/wolfejosh/status/1074055027021369344 https://twitter.com/wolfejosh/status/1074055027021369344
- FireBeyond 4y agoAnd? Is it Josh's fault that the market has listened to Musk when he's said, every year since 2016, that FSD is "coming, this year, for real"?
- Mvandenbergh 4y agoAKA the Lou Pai option, which is an extremely funny (and almost certainly untrue) theory that Pai deliberately got caught by his wife with a stripper so that he would be "forced" to liquidate his Enron stock which he allegedly already knew would soon be worthless without having to explain the timing of that to a court later.
- hertzrat 4y agoI don’t buy it. Musk compulsively creates huge and innovative companies. To liquidate stock, he could just as easily have just waited until his next big thing and sold off his stock then, once again, in order to pay for a non-Tesla venture; and then either used the money for the company, or bailed on the new company. Involving Twitter doesn’t make sense and is unnecessary
- waynesonfire 4y agowhy do people assume that all aspects of this transaction and negotiation have been happening in the public and thus qualify for all these folks here to make claims like they know what's going on. People here don't know what claims in entirety were made by either party, and thus, it's impossible to speculate. This is what courts are for and Elon, and his team, are not idiots.
- sulam 4y agoThis is such a strange take. There's any number of more effective ways for Musk to justify selling some Tesla stock that aren't especially likely to tank it. On top of that, announcing his intent to buy Twitter did in fact get factored into the stock quite rapidly, in the negative direction as you'd assume, because Twitter is not seen as an especially good investment while Tesla has been.
- divbzero 4y agoHe’s not the only one to float this possibility. It’s one of the more plausible explanations if you take the assumption that Musk was acting rationally with forethought.
- 01100011 4y agoNot just Elon but his brother as well.
- BenoitEssiambre 4y agoI also read somewhere that if Elon ran Twitter into the ground in the next decade, using it just to advertise Tesla cars, he would have paid an amount in line with what GM pays for advertising their cars (at least what they paid pre-pandemic) https://www.statista.com/statistics/286522/general-motors-advertising-spending-worldwide/ https://www.statista.com/statistics/286522/general-motors-ad.... It blows my mind how much (non Tesla) car companies spend just on advertising.
- freemint 4y agoWell he pays for advertising. Tesla flame throwers, Tesla whistles and so on are campaigns.
- IAmGraydon 4y agoI tend to believe it's something along these lines. The real question is why is he going to such great lengths to liquidate stock? He is not the only high profile billionaire who has recently come up with sudden circumstances to justify the liquidation of massive amounts of stock.
- imranhou 4y agoI doubt that is the case, because of such a flimsy reason chosen to back out of the twitter deal, if the plan was all along to create a ruse deal, I think the exit would have been better planned