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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 marke

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.
- Hasu 4y ago
  He won't, because 1) there was nothing in the contract about bot numbers and 2) Twitter probably isn't lying about mDAUs and bots.
  - 0xy 4y ago
    1) The contract states they are obligated to provide information, Elon alleges such information was withheld or curtailed - a contract violation. There doesn't need to be a specific clause about a particular metric because the obligation to provide information is broad. 2) Facebook lied about video watch time for years, including in SEC filings and to advertisers (essentially fraud). Is this an appeal to the sanctity of SEC filings? I don't think Facebook is significantly more reputable than Twitter, they're both pretty shady. Why should we just trust the company, as you imply? Companies routinely and regularly lie in SEC filings, including big tech -- and Twitter! They paid close to a billion in securities settlements for - wait for it - lying about user engagement! Twitter admitted to lying about user engagement in 2015 and paid a hefty fine for it. [1] Is your argument really "the company that has been proven to lie about user engagement wouldn't lie this time"? Seems flimsy. [1] https://www.wsj.com/articles/twitter-to-pay-809-5-million-to-settle-securities-suit-11632147834 https://www.wsj.com/articles/twitter-to-pay-809-5-million-to...
    - elil17 4y ago
      Contract violations are more complex than that. You can’t simply void a contract over a little technicality. Even if they had given him the data, he wouldn’t have been able to get out of the contract. So a judge is not going to look at that and say, “oh yeah, Musk was paying $44B for the company and the right to review its data, so unless he gets both he pays nothing.” The judge is going to go, “okay the company is worth nominally $44B and reviewing data is worth zilch in light of the rest of the contract, so these aren’t equal parts.”
    - Hasu 4y ago
      1) They provided access to their firehose API, how is that not enough? The crap about rate limiting doesn't apply to the firehose, and decent engineers can get around rate limiting, so either way this doesn't hold up. 2) Twitter's CEO gave a pretty good explanation of how they combat bots and how they calculate their mDAUs, Elon Musk responded with a poop emoji. I get that his personal experience on Twitter is heavily bot-infested, a significant proportion of bots on Twitter engage with his account and use his image as a user profile. Twitter doesn't claim that the bots in Musk's feed are under 5% of users, or that the number of bots overall are under 5% of users, they claim that the number of monetizable daily active users is under 5%. Given the definition of a "daily active user", reduce to "monetizable", and consider the number of users who never post anything but read tweets and click on ads and promoted tweets, and this isn't hard to believe. On the other side we have Elon Musk, notorious liar, claiming that he doesn't want to buy Twitter because Twitter is lying about the number of bots, despite the fact that before tech stocks crashed, he said he wanted to buy Twitter to solve the bot problem. This isn't hard. He has buyer's remorse and the bots thing is the best excuse he has to get out of a contract he signed. It's a shitty excuse and no one other than Musk fanboys have any reason to believe him, and it's not even an excuse in court.
      - 0xy 4y ago
        >Twitter's CEO gave a pretty good explanation of how they combat bots and how they calculate their mDAUs Company that previously lied to investors about engagement and settled a massive billion-dollar lawsuit makes further unproven claims about engagement. You believe them why? Should corporations which deliberately lie to investors be immediately trusted again, especially on the same topic they got caught lying about previously? Your argument is an appeal to authority where no authority exists. They're liars. Not just liars in general, but liars about this exact topic. Do you trust BP's offshore drilling because the CEO now insists it's totally safe this time? >Twitter doesn't claim that the bots in Musk's feed are under 5% of users He never claimed this, this seems like a strawman. Did you read the complaint? >this isn't hard to believe Choosing to believe a company that has admitted to lying to investors is your prerogative, it doesn't make them trustworthy or correct -- and it absolutely doesn't make your argument based in any kind of reality (why should we take the liars at their word?). Why go to bat for a company with a billion in fines for misleading investors? Under what basis do you believe they've reformed and can be trusted? I don't understand why you believe Elon can't be believed because of his history of lying while you ignore Twitter's sordid past of securities violations and lying to investors. >Elon Musk, notorious liar Why don't you label Twitter as notorious liars, given their billion in settlements for lying to investors?
  - meatsauce 4y ago
- stale2002 4y ago
  No. You are claiming that the numbers that Twitter has been putting in their official government stock filings have been false for years. Thats ridiculous.
  - 0xy 4y ago
    Twitter admitted to lying about user engagement in 2015 and paid a hefty price for it. [1] Your argument is absolutely ridiculous. They've done it before, and settled. Seems you have absolutely no idea who you're defending, which is a company that has routinely misled investors on user engagement and paid settlements for that very fact. "The company with a history of lying to investors about user engagement would never lie about user engagement!" [1] https://www.wsj.com/articles/twitter-to-pay-809-5-million-to-settle-securities-suit-11632147834 https://www.wsj.com/articles/twitter-to-pay-809-5-million-to...
    - FabHK 4y ago
      Be that as it may, it’s not relevant to Musk getting out of his merger agreement now, which is unconditional except for 1) material adverse effect (which is a way higher bar than the well known bot issue) and 2) Twitter fulfilling the covenants in the agreement, such as continuing to run their business and providing requested information within reason. Since there is no way he is getting out under 1, MAE, he is trying 2.
      - 0xy 4y ago
        You claim that lying about user engagement could never qualify as a "material adverse effect". On what basis do you make this claim? As a thought experiment, if 50% of Twitter's claimed MAUs were bots, it would absolutely be material. Given Twitter has a history of lying about this exact metric, under what basis do you believe that the bot issue isn't material? Blind trust in the same company that lied about it before? I'm trying to understand why people trust the company that was caught lying to investors about the very subject they were lying about. Where do you get this trust?
        4y ago
- jussij 4y ago
  So what damage has been done to Elon by him not buying Twitter? Now if Elon wins might be able to claim costs, but they would be minimal by comparison to the original $44B deal.
- roflyear 4y ago
  You're basing this on what exactly?
  - 0xy 4y ago
    Twitter has previously lied to investors about user engagement and paid close to a billion in settlements for it. [1] Seems to me that the company with a history of lying about engagement shouldn't immediately be trusted about engagement figures. Would you disagree? [1] https://www.wsj.com/articles/twitter-to-pay-809-5-million-to-settle-securities-suit-11632147834 https://www.wsj.com/articles/twitter-to-pay-809-5-million-to...
    - beowulfey 4y ago
      You should have sent that to Musk back when he was talking about buying Twitter, I bet it would have helped his decision making process.
    - roflyear 4y ago
      No I wouldn't agree. Most of the time if you do something dumb at a company you make strong rules to make sure it doesn't happen again.
      - 0xy 4y ago
        I guess that's why Boeing's MAX aircraft has had numerous safety issues after the two fatal incidents. Tell me, do you trust BP's offshore drilling operations today? In any case, I addressed your question. Twitter are proven liars on this exact metric.
notyourwork 4y ago
> so the best negotiating tactic he has is being a disruptive asshole so TWTR Been successful at that.
- hef19898 4y ago
  And so far this behaviour earned him a law suite.
astrange 4y ago
> 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). Twitter isn't trying to stop him, probably because they don't use their product and may have forgotten they can just ban him.
- zrobotics 4y ago
  Banning him at this stage would almost certainly expose Twitter to massive liability, especially as they have shown they will ignore rules for public figures. Twitter could only get away with banning Elon if he egregiously violated their policies, and Elon is too good of a troll to do anything that severe.
  - blueboo 4y ago
    That doesn’t follow. The exceptionality of Elon is obvious to everyone. He’s the richest man on earth (by some measures), not an Everyman voicing a contrarian opinion. You couldn’t convince anyone you honestly thought “if they banned him, they could ban me” After all your latte art tweets aren’t significantly, materially damaging Twitter’s financial outlook
    - zrobotics 4y ago
      I'm saying that the formerly most famous tweeter (trump) fluted rules that would have gotten my account banned. Twitter didn't ban trump until after Jan 6th; so Twitter doesn't have any way to legally justify banning Elon unless he does something equally egregious. That's why Elon didn't get banned for the pedo claims or the multiple SEC violations. He is such a notable figure that Twitter can't ban him (without violating the terms of the acquisition) without stupendously egregious evidence that Elon violated their terms. If Twitter banned Elon's account for a minor TOC violation now, they would likely expose themselves to legal retaliation. Sucks, but it seems we both agree that there are separate rules for the ultra-wealthy. Edit: I can't swing any stocks with my tweets; whereas Musk can. That is the difference, is who has the platform.
Scarbutt 4y ago
which could easily rebound a bit by EOY. By EOY we could be in recession.
- zrobotics 4y ago
  Which actually makes Elon's position worse, since theoretically that reduces Twitter's stock price and increases the spread between the fixed offer and the current valuation. Plus, his financing tanks since it is predicated on Tespa's stock value.
- sokoloff 4y ago
  We are very likely in a recession right now. Q1 real GDP growth was negative. Q2 advance estimate comes out in 3 weeks.
rot13xor 4y ago
I'm curious what would happen if Twitter stock price goes above Musk's offer price of $54.20 during this legal battle.
- tsimionescu 4y ago
  For that to happen, the market would have to (1) believe there is a very very high probability that the deal won't happen, and (2) believe Twitter is suddenly going to grow significantly. Neither of these seem very likely, especially in combination.
  - daemin 4y ago
    There's also a third irrational option, with another gamestop style buying spree lifting the share price up.

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.

Hasu 4y ago
He won't, because 1) there was nothing in the contract about bot numbers and 2) Twitter probably isn't lying about mDAUs and bots.
- 0xy 4y ago
  1) The contract states they are obligated to provide information, Elon alleges such information was withheld or curtailed - a contract violation. There doesn't need to be a specific clause about a particular metric because the obligation to provide information is broad. 2) Facebook lied about video watch time for years, including in SEC filings and to advertisers (essentially fraud). Is this an appeal to the sanctity of SEC filings? I don't think Facebook is significantly more reputable than Twitter, they're both pretty shady. Why should we just trust the company, as you imply? Companies routinely and regularly lie in SEC filings, including big tech -- and Twitter! They paid close to a billion in securities settlements for - wait for it - lying about user engagement! Twitter admitted to lying about user engagement in 2015 and paid a hefty fine for it. [1] Is your argument really "the company that has been proven to lie about user engagement wouldn't lie this time"? Seems flimsy. [1] https://www.wsj.com/articles/twitter-to-pay-809-5-million-to-settle-securities-suit-11632147834 https://www.wsj.com/articles/twitter-to-pay-809-5-million-to...
  - elil17 4y ago
    Contract violations are more complex than that. You can’t simply void a contract over a little technicality. Even if they had given him the data, he wouldn’t have been able to get out of the contract. So a judge is not going to look at that and say, “oh yeah, Musk was paying $44B for the company and the right to review its data, so unless he gets both he pays nothing.” The judge is going to go, “okay the company is worth nominally $44B and reviewing data is worth zilch in light of the rest of the contract, so these aren’t equal parts.”
  - Hasu 4y ago
    1) They provided access to their firehose API, how is that not enough? The crap about rate limiting doesn't apply to the firehose, and decent engineers can get around rate limiting, so either way this doesn't hold up. 2) Twitter's CEO gave a pretty good explanation of how they combat bots and how they calculate their mDAUs, Elon Musk responded with a poop emoji. I get that his personal experience on Twitter is heavily bot-infested, a significant proportion of bots on Twitter engage with his account and use his image as a user profile. Twitter doesn't claim that the bots in Musk's feed are under 5% of users, or that the number of bots overall are under 5% of users, they claim that the number of monetizable daily active users is under 5%. Given the definition of a "daily active user", reduce to "monetizable", and consider the number of users who never post anything but read tweets and click on ads and promoted tweets, and this isn't hard to believe. On the other side we have Elon Musk, notorious liar, claiming that he doesn't want to buy Twitter because Twitter is lying about the number of bots, despite the fact that before tech stocks crashed, he said he wanted to buy Twitter to solve the bot problem. This isn't hard. He has buyer's remorse and the bots thing is the best excuse he has to get out of a contract he signed. It's a shitty excuse and no one other than Musk fanboys have any reason to believe him, and it's not even an excuse in court.
    - 0xy 4y ago
      >Twitter's CEO gave a pretty good explanation of how they combat bots and how they calculate their mDAUs Company that previously lied to investors about engagement and settled a massive billion-dollar lawsuit makes further unproven claims about engagement. You believe them why? Should corporations which deliberately lie to investors be immediately trusted again, especially on the same topic they got caught lying about previously? Your argument is an appeal to authority where no authority exists. They're liars. Not just liars in general, but liars about this exact topic. Do you trust BP's offshore drilling because the CEO now insists it's totally safe this time? >Twitter doesn't claim that the bots in Musk's feed are under 5% of users He never claimed this, this seems like a strawman. Did you read the complaint? >this isn't hard to believe Choosing to believe a company that has admitted to lying to investors is your prerogative, it doesn't make them trustworthy or correct -- and it absolutely doesn't make your argument based in any kind of reality (why should we take the liars at their word?). Why go to bat for a company with a billion in fines for misleading investors? Under what basis do you believe they've reformed and can be trusted? I don't understand why you believe Elon can't be believed because of his history of lying while you ignore Twitter's sordid past of securities violations and lying to investors. >Elon Musk, notorious liar Why don't you label Twitter as notorious liars, given their billion in settlements for lying to investors?
- meatsauce 4y ago
stale2002 4y ago
No. You are claiming that the numbers that Twitter has been putting in their official government stock filings have been false for years. Thats ridiculous.
- 0xy 4y ago
  Twitter admitted to lying about user engagement in 2015 and paid a hefty price for it. [1] Your argument is absolutely ridiculous. They've done it before, and settled. Seems you have absolutely no idea who you're defending, which is a company that has routinely misled investors on user engagement and paid settlements for that very fact. "The company with a history of lying to investors about user engagement would never lie about user engagement!" [1] https://www.wsj.com/articles/twitter-to-pay-809-5-million-to-settle-securities-suit-11632147834 https://www.wsj.com/articles/twitter-to-pay-809-5-million-to...
  - FabHK 4y ago
    Be that as it may, it’s not relevant to Musk getting out of his merger agreement now, which is unconditional except for 1) material adverse effect (which is a way higher bar than the well known bot issue) and 2) Twitter fulfilling the covenants in the agreement, such as continuing to run their business and providing requested information within reason. Since there is no way he is getting out under 1, MAE, he is trying 2.
    - 0xy 4y ago
      You claim that lying about user engagement could never qualify as a "material adverse effect". On what basis do you make this claim? As a thought experiment, if 50% of Twitter's claimed MAUs were bots, it would absolutely be material. Given Twitter has a history of lying about this exact metric, under what basis do you believe that the bot issue isn't material? Blind trust in the same company that lied about it before? I'm trying to understand why people trust the company that was caught lying to investors about the very subject they were lying about. Where do you get this trust?
      - 4y ago
jussij 4y ago
So what damage has been done to Elon by him not buying Twitter? Now if Elon wins might be able to claim costs, but they would be minimal by comparison to the original $44B deal.
roflyear 4y ago
You're basing this on what exactly?
- 0xy 4y ago
  Twitter has previously lied to investors about user engagement and paid close to a billion in settlements for it. [1] Seems to me that the company with a history of lying about engagement shouldn't immediately be trusted about engagement figures. Would you disagree? [1] https://www.wsj.com/articles/twitter-to-pay-809-5-million-to-settle-securities-suit-11632147834 https://www.wsj.com/articles/twitter-to-pay-809-5-million-to...
  - beowulfey 4y ago
    You should have sent that to Musk back when he was talking about buying Twitter, I bet it would have helped his decision making process.
  - roflyear 4y ago
    No I wouldn't agree. Most of the time if you do something dumb at a company you make strong rules to make sure it doesn't happen again.
    - 0xy 4y ago
      I guess that's why Boeing's MAX aircraft has had numerous safety issues after the two fatal incidents. Tell me, do you trust BP's offshore drilling operations today? In any case, I addressed your question. Twitter are proven liars on this exact metric.

notyourwork 4y ago

> so the best negotiating tactic he has is being a disruptive asshole so TWTR Been successful at that.

hef19898 4y ago
And so far this behaviour earned him a law suite.

astrange 4y ago

> 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). Twitter isn't trying to stop him, probably because they don't use their product and may have forgotten they can just ban him.

zrobotics 4y ago
Banning him at this stage would almost certainly expose Twitter to massive liability, especially as they have shown they will ignore rules for public figures. Twitter could only get away with banning Elon if he egregiously violated their policies, and Elon is too good of a troll to do anything that severe.
- blueboo 4y ago
  That doesn’t follow. The exceptionality of Elon is obvious to everyone. He’s the richest man on earth (by some measures), not an Everyman voicing a contrarian opinion. You couldn’t convince anyone you honestly thought “if they banned him, they could ban me” After all your latte art tweets aren’t significantly, materially damaging Twitter’s financial outlook
  - zrobotics 4y ago
    I'm saying that the formerly most famous tweeter (trump) fluted rules that would have gotten my account banned. Twitter didn't ban trump until after Jan 6th; so Twitter doesn't have any way to legally justify banning Elon unless he does something equally egregious. That's why Elon didn't get banned for the pedo claims or the multiple SEC violations. He is such a notable figure that Twitter can't ban him (without violating the terms of the acquisition) without stupendously egregious evidence that Elon violated their terms. If Twitter banned Elon's account for a minor TOC violation now, they would likely expose themselves to legal retaliation. Sucks, but it seems we both agree that there are separate rules for the ultra-wealthy. Edit: I can't swing any stocks with my tweets; whereas Musk can. That is the difference, is who has the platform.

Scarbutt 4y ago

which could easily rebound a bit by EOY. By EOY we could be in recession.

zrobotics 4y ago
Which actually makes Elon's position worse, since theoretically that reduces Twitter's stock price and increases the spread between the fixed offer and the current valuation. Plus, his financing tanks since it is predicated on Tespa's stock value.
sokoloff 4y ago
We are very likely in a recession right now. Q1 real GDP growth was negative. Q2 advance estimate comes out in 3 weeks.

rot13xor 4y ago

I'm curious what would happen if Twitter stock price goes above Musk's offer price of $54.20 during this legal battle.

tsimionescu 4y ago
For that to happen, the market would have to (1) believe there is a very very high probability that the deal won't happen, and (2) believe Twitter is suddenly going to grow significantly. Neither of these seem very likely, especially in combination.
- daemin 4y ago
  There's also a third irrational option, with another gamestop style buying spree lifting the share price up.