95 ms·

Elon’s Out

498 points by jaxonrice 4y ago

dang 4y ago
Recent and related: Notice of termination of Twitter merger agreement - https://news.ycombinator.com/item?id=32027341 https://news.ycombinator.com/item?id=32027341 - July 2022 (1361 comments)
- mlindner 4y ago
  Not just related, this thread should be merged with that one. There is nothing new in this opinion piece article.
  - dang 4y ago
    That's probably true, but the other thread has over 1300 comments, so a merge would be a monster.
  - panphora 4y ago
    I disagree. As a non-lawyer, non-financier, I found the deep & well-thought-out explanation fascinating. This is one of the best articles I've read this year.
    - ncann 4y ago
      You should subscribe to Matt Levine's newsletter if you enjoy his writing. It's fantastic, plus it's free and you don't have to visit Bloomberg's site.
georgeburdell 4y ago
Musk holds a key piece of America’s future in space in SpaceX. I wonder if it’s only a matter of time before he starts dangling that to get what he wants in cases like this. I still am generally favorable toward Elon, but I think we’re seeing him transform into a villain
- ta8645 4y ago
  I don't know about a villain, but he definitely isn't a saviour. Was hoping he'd follow through in reforming Twitter. But it turns out, even with all his resources, he's actually pretty weak in comparison to the forces set against him.
  - sroussey 4y ago
    Elon is the force against himself. No conspiracy required.
    - ta8645 4y ago
      To pretend he doesn't have powerful enemies is just silly. It's not some kooky conspiracy theory. The only question is if you think his enemies are justified or not.
      - svachalek 4y ago
        How did powerful enemies force him to make a public bid to buy Twitter, and then force him to back out of it? I'd like to hear the non kooky conspiracy explanation for that.
        ta8645 4y ago
        Who said anything about him being forced to do such a thing? People make bad decisions all the time, including Musk. But given human nature and frailty, people under a great deal of pressure and opposition like musk is, are likely to make worse decisions than they otherwise would.
        spaced-out 4y ago
        The only people I see "opposing" Musk are randos on Twitter he gets into arguments with. I wouldn't exactly call that a "great deal of pressure".
      - 4y ago
adventured 4y ago
Musk wasn't pretending to buy Twitter, the article is using a sort of simpleton interpretation of Musk's behavior. That's the interpretation someone would take if they dislike Musk and get overly emotional about his behavior. Musk is x y z. Oh my god, did you see the tweet he sent out!?! I just hate Musk, blah blah blah. He's such a terrible human. This one time he called a person a really bad name. - That's the type of person that reads Musk's Twitter acquisition attempt the way the article is. I don't care much about Musk one way or another, but this is not a complicated context and the author is plain wrong. What happened is the market for hyper overvalued stocks has crashed. He was faced with the scenario of paying double for Twitter vs what it was really worth. Remove the Musk prop and the stock collapses. Next up, the stock is heading south of $30 / share. It might be worth taking over for $20-$25 / share at most. Musk didn't want to pay $20 billion more for Twitter than he had to, even for him that was a bridge too far. Particularly while his own paper bubble fortune is just as at risk of implosion as the rest. It was really, really, really dumb timing. That was Musk's actual issue.
- kcplate 4y ago
  This to me seems the most reasonable explanation and explains most of the behaviors involved on both sides. I don’t buy into “it was just a joke that went too far” theory. Musk doesn’t want a turd. Twitter, essentially made a deal with the devil (from their perspective). Despite being initially opposed to this deal, they now has to sue to try and make it happen, because I suspect if it doesn’t “south of $30” is going to be more like “around $20” and there are a whole bunch of folks that might get interested in a takeover at that level with far more villain potential than Musk.
  - dodobirdlord 4y ago
    The possibility of other takeovers doesn’t need to factor into this. If Twitter’s share price is significantly below the price they can force Musk to buy the company at, then the board has an obligation to shareholders to force the sale, and will be sued by the shareholders if they don’t.
    - 4y ago
georgia_peach 4y ago
This is politics masquerading as legal analysis. Twitter, by its own admission, lied about their user count for years. Elon will either go without penalty, or take a slap on the wrist. Levine spends a lot of time shilling on bots because he knows that's a weak spot for the Elon haterz club. https://nairametrics.com/2022/04/28/twitter-says-it-inflated-user-numbers-by-1-9-million-for-3-years/ https://nairametrics.com/2022/04/28/twitter-says-it-inflated... edit: Not an Elon fan BTW. Just don't appreciate this Levine's axe-grinding masquerading as impartial legal analysis.
- georgia_peach 4y ago
- VerminOctopus1 4y ago
  You saying that Twitter’s SEC filings over the last several years included knowingly falsified information?
  - georgia_peach 4y ago
    > The social media company, Twitter, has admitted to overstating the figure of the platform’s users by 1.9 million in the last three years. The company disclosed this in its Q1 2022 financial report released today. The revelation comes days after the board of the company accepted a $44 billion offer by Elon Musk to take over Twitter. > Twitter says an “error” introduced in Q1 2019, resulted in the overstatement of its monetizable daily active usage or users (mDAU). According to the company, this went on undiscovered for three years. Three years, and they figured this out mere days after being strong-armed into accepting the Musk offer they wanted to evade? I have a bridge to sell to anyone who believes Twitter didn't already know.
    - thombat 4y ago
      From https://www.statista.com/statistics/970920/monetizable-daily-active-twitter-users-worldwide/ https://www.statista.com/statistics/970920/monetizable-daily... that figure of 1.9M is rather less than 2% of their MDAU figure, and less than the MDAU growth in almost any quarter. So more of a correction than a revolution.
jp57 4y ago
Another hypothesis: Triggering a legal battle in the courts is a delaying technique to push out the acquisition until the economy rebounds (and Tesla and Twitter valuations with it), or until after the 2024 election, because Elon realized that he doesn't actually want to let Trump back onto the platform. (Perhaps because he perfers DeSantis)
- treis 4y ago
  IMHO this is the key point. Twitter has a strong case in court but courts usually take a long time. Probably at least a couple years for all the appeals to run their course. And at any time during that process Elon can decide that he actually wants Twitter and complete the transaction. It's a huge distraction for Twitter and probably won't be worth it in the long run. I expect a settlement with Elon paying some cash as a breakup fee.
- walnutclosefarm 4y ago
  Or, it's a feint to bring Twitter back to the bargaining table to lower the price outright. I'd lay odds that Musk is betting Twitter needs a buyer enough to prefer a better deal (for Musk) to a cash settlement that left them still looking for a buyer.
- usefulcat 4y ago
  > Elon realized that he doesn't actually want to let Trump back onto the platform I'm not buying that; it's not like he couldn't just change his position on a whim. It certainly wouldn't be the first time.
- inglor_cz 4y ago
  What about interim inflation? The US isn't used to high inflation, so inflation is often not baked into contracts. But we are possibly facing a period of high inflation. Those 44 billion USD may be worth a lot less in 2024 or 2025.
victor106 4y ago
Elon’s going to get away with this. Even though he shouldn’t. The rich play by different rules and the law lets them. If the rest of us did the same we would have to pay ridiculous fines and/or spent time behind bars.
- VerminOctopus1 4y ago
  Normally I would agree with you, but you have to consider that he’s up against people who are also extremely rich. The legal system might actually need to maintain legitimacy through the proceedings and not just crumple under Elon’s never-ending tantrum.
- KKdU9EXbBhmLznR 4y ago
  He most likely will have to pay a ridiculous fine (or, more likely, settlement). Of course, the ridiculousness of it will be that it doesn't consider his incredible means, and therefore he'll never miss it and it will have absolutely no impact on his behavior.
- f6v 4y ago
  It’s not that he’s just rich. He’s involved in double-purpose tech that USA government uses.
labrador 4y ago
I believe he was sincere, but found out quickly that a lot of people had strong feelings about his plans for the platform. It's possible he was in danger of losing people he really needs for his other businesses. I don't blame him for bailing out on a lose/lose situation.
- checkurprivlege 4y ago
  Correct a tide of hatred turned against him Musk correctly reacted by withdrawing and not wanting any of this you can keep the social media and deal with your hatred yourselves or your therapist
- deleted 4y ago
  [deleted]
- KKdU9EXbBhmLznR 4y ago
  ... how is that an excuse? He knew that full well before he ever started thinking about buying it, much less making public statements about it. (Just like he knew about the bots)
  - labrador 4y ago
    He is self-described as having autism to some degree, so reading the emotional landscape is probably not his strength.
    - deleted 4y ago
      [deleted]
    - encryptluks2 4y ago
      Lol.. you should be his lawyer. Your honor, his affluezna made him do it. It isn't his fault.
      - labrador 4y ago
        Seems like people forget billionaires are human and "to err is human" somehow doesn't apply to them
KKdU9EXbBhmLznR 4y ago
> Would he line up billions of dollars of financing and sign a binding merger agreement with a specific-performance clause and a $1 billion breakup fee as a joke? I mean! Nobody else would! But he might! What a silly thing to say. Of course he would; I'd also risk $20 (~1/200th of my assets, like $1b is for Musk) on a joke, especially if I knew I'd almost certainly never lose that much.
TedShiller 4y ago
It’s good he exposed Twitter as biased
kukx 4y ago
So now there is a widespread support for Musk buying Twitter? Okay, he may end up owning Twitter whether he likes it or not. It is so funny and ironic. Whatever the outcome I agree.
- jacquesm 4y ago
  It's not so much 'support' as that it is more or less inevitable, whether he likes it or not, and that has mostly to do with the price than with anything else. Worst case he will have to sell it immediately after forcibly buying it at a lower price just to make sure the rest of his empire doesn't collapse. Twitter is at best a distraction for Musk, at worst it could be his downfall.
lizardactivist 4y ago
Did anyone think he would actually be allowed to buy it? Twitter, as a weapon for propaganda and a tool for information collection, is too important and powerful to just let someone like Musk do what he wants with it.
- fwip 4y ago
  What? Elon is trying to back out of the deal, not Twitter.
- resoluteteeth 4y ago
  Nobody is trying to stop Elon Musk from buying Twitter except for Elon Musk himself. Twitter, the banks lending him money, and the other investors Elon lined up are all trying to make the transaction go forward. So the answer is clearly that yes, Elon musk is "allowed" to buy Twitter if he actually wants to. He may even have to buy it based on the agreement he signed even if he no longer wants to.
molticrystal 4y ago
> One of his hobbies is that he sometimes likes to pretend that he will acquire public companies...He seems to find this fun....When Musk pretended in 2018 that he was going to take Tesla Inc. private, he had to pay the US Securities and Exchange Commission a $20 million fine and stop being the chairman of Tesla’s board. One past example doesn't make a hobby, and I wonder if SEC interference had any impact small or large on the privatization failing. Not to add to the defense to Musk, but deals fall through all the time when scrutiny is applied to them, whether exterior or interior.
- KKdU9EXbBhmLznR 4y ago
  You're right, they should've said that his hobby is just pretending things in general. He enjoys very much being Nelson [https://www.youtube.com/watch?v=rX7wtNOkuHo https://www.youtube.com/watch?v=rX7wtNOkuHo]. The "SEC interference", as you called it, came long after he had his Nelson moment in that case. (A more accurate name for it might be "SEC slap-on-the-wrist", because it was both completely ineffective and entirely deserved.)
mabbo 4y ago
A fun side effect of all of this: if you believe in the court's ability to force Musk to buy Twitter, you should continue to buy up stock until it reaches the price Musk agreed to pay for it. If you don't believe he'll be forced to pay, you should sell and/or short until it's at whatever you think the right market value for a stock of Twitter ought to be. And wherever the price is between those two is a direct function of what experts believe the probability of each outcome is. It's like a massive betting market on a legal case.
- saurik 4y ago
  Well, minus a discount for however long you think it will take before that actually happens, taking into account such things as inflation, interest rates, and market performance (due to the opportunity costs of holding this stock until then).
  - KVFinn 4y ago
    >A fun side effect of all of this: if you believe in the court's ability to force Musk to buy Twitter, you should continue to buy up stock until it reaches the price Musk agreed to pay for it. How do I bet on no outcome one way or another for many many years? If there's one thing I know about the US legal system it is giant corporations battling each other takes years and years to resolve.
    - SamReidHughes 4y ago
      You can make that bet with options. https://finance.yahoo.com/quote/TWTR/options?date=1674172800&p=TWTR&straddle=true https://finance.yahoo.com/quote/TWTR/options?date=1674172800...
      - unforeseen9991 4y ago
        Specifically, with a straddle or strangle strategy
        4y ago
henry_bone 4y ago
I see the author's scepticism of the bots argument, but I don't think it's one that should be dismissed so easily. I don't know anything, but isn't the value of these big tech properties largely in the number of actual human daily active users? When Facebook acquired whatsapp, I remember reading that it wasn't the tech per se that facebook really wanted. It was the daily active users. Whatsapp had (still has? dunno) a pretty big userbase. That was the where a lot of the value lay for facebook, or so I understand. So, if daily active users are important to the value of the property, do we believe twitter's SEC filing estimates of <5% bots? Musk doesn't, or hasn't been convinced by what he has seen. That really does seem like a legit reason to abort the deal. Twitter is representing <5% bots. Musk thinks that's a wildly optimistic estimate & is prepared to call bullshit. Seems fair to me. A more cynical view might be that Musk is simply looking to lower the price. Exposure of Twitter's bot problems in a court might not be very good for the share price. Just having Musk pull out (9 kids, he never pulls out) probably dips the share price. So, isn't it all good leverage to bring the price down?
- Pulcinella 4y ago
  That’s not how any of this works. E.g. the contract he signed already has the price he agreed to buy Twitter for.
  - henry_bone 4y ago
    Could it be (& I am asking) that he can invalidate the current contract on the grounds that daily active users aren't what twitter said. Then could they draft a new contract, complete with a new price and daily active users estimates? I don't know anything, so I'm asking. If someone out there is a M&A lawyer and can shed light, that would be great.
    - svachalek 4y ago
      The first line is what he is trying to do right now. The answer seems to be "maybe", it's going to court because there's a chance that he can but Twitter also thinks there's a chance he cannot. The second, maybe. I doubt that Twitter would be interested. -- not an M&A lawyer
ethagknight 4y ago
I find it amazing that not one of the top comments gives Elon ANY consideration that maybe, just maybe, he has a legitimate case against Twitter. We don’t know what he’s found, what he was told, what he was promised, what changed on Twitter’s side. Some very top level people bailed or were fired shortly after Elon’s acquisition proposal was announced. It sure appears that Elons is just balking, but what is far more likely is that he has uncovered some deep Twitter bullshit and he plans to unveil it in court. Forced to air the dirty laundry by the court, he avoids defamation suits. Elon is extremely intelligent. Not perfect, not omniscient, maybe he screwed up? Or maybe he has a lot more info than any of us internet loons at the moment?
- deleted 4y ago
  [deleted]
- webkike 4y ago
  > It sure appears that Elons is just balking, but what is far more likely is that he has uncovered some deep Twitter bullshit and he plans to unveil it in court. Forced to air the dirty laundry by the court, he avoids defamation suits. I have no idea how you can claim that that is far more likely. You think it is more likely that Elon is going to expose the numbers Twitter reports to the SEC as off by an order of magnitude than Elon just not wanting to follow through with this deal? EVEN IF the numbers reported were off by a factor of 10, this would also have to cause advertisers to pull out! The revelations you claim Elon might make have to have material effect on the value of Twitter for them to make a difference in this impending court case. Yeah, it’s possible, I guess? But it’s definitely not more likely! Think about it this way: what could Elon possibly reveal that would make advertisers pull out? They advertise on Twitter and make money already! Why stop now??
  - ethagknight 4y ago
    From the actual SEC filing: As further described below, Mr. Musk is terminating the Merger Agreement because Twitter is in material breach of multiple provisions of that Agreement, appears to have made false and misleading representations upon which Mr. Musk relied when entering into the Merger Agreement, and is likely to suffer a Company Material Adverse Effect (as that term is defined in the Merger Agreement). I’d say that’s a pretty strong accusation that probably has something to back it up. Maybe it’s a lie, but I sure wouldn’t bet on it. My businesses have spent millions on advertising across all channels, from newspapers, magazines, billboards to social media, AdWords and influencers. I strongly believe all ad dollars yield far less than platforms want us to believe. After all, they are selling us on their platform. Much of my revenue that gets attributed to some platform would have otherwise occurred without that specific ad spend. However, I’d rather be wrong and waste some ad spend versus be wrong, lose a million in revenue. Personally, having spent money with Twitter, I suspect Twitter has no real evidence that their value proposition to customers is worth anything close to what they claim (i.e. making fraudulent claims), but that Twitter has lots of data on the unpublicized falsities of their platform (bots, click farms, otherwise fake accounts).
SV_BubbleTime 4y ago
Does anyone else see the complete pointlessness in all the cock-sure but entirely speculative comments on this? You don’t know Musk, or the backend, or anything at all besides what the media tells you and that isn’t 1/10th the whole story. I get why people wanna talk about it, just not be absolute “well I know this for a fact” smugness that most of the comments here have. The reality is NONE of you actually KNOW anything and won’t until history determines the victor and you learn some more of that side.
- jacquesm 4y ago
  The SEC filings are a matter of public record, which is part of why we call 'public' companies public in the first place: Twitter is - and Musk is as well - bound to do a lot of this out in the open because it affects the price of a listed stock.
- FabHK 4y ago
  Eh? The merger agreement is a legal contract between Twitter and Musk, and it is a matter of public record [1]. And some people are certainly qualified to opine on these issues, particularly Matt Levine, who has worked as an M&A lawyer and investment banker. [1] https://www.sec.gov/Archives/edgar/data/1418091/000119312522176753/d283119dprer14a.htm https://www.sec.gov/Archives/edgar/data/1418091/000119312522...
jmpeax 4y ago
> Twitter has said in its SEC filings that it estimates that fewer than 5% of its monetizable daily active users are “false or spam accounts” Is this different to total percentage of false or spam accounts? The monetizable daily active users seems like a very specific subpopulation of total twitter accounts.
- vehementi 4y ago
  Yes, it is crucially different. mDAU is defined in the SEC filings which you can easily check. Basically it boils down to, there's say a billion twitter accounts. A shitload are inactive, or obviously bots, or joke accounts, or actual alts (don't double-count), or API users, or people using Tweetdeck, or doing all sorts of other things that Twitter can easily detect are not resulting in eyeballs on ads. Twitter boils down the number of "users that use Twitter clients that display ads" down to "just" 230M/day. Twitter then claims that, of those users, who are mostly just every day people logging in, maybe liking a post, scrolling a bit, seeing an ad on a real Twitter client -- of those users, when they sample them, they find that <5% of them are bots (like headless browsers and whatnot). That is obviously a completely different measurement than just overall bot accounts, or how often you will personally see bots posting, or how many of your followers are bots. Totally unrelated numbers. Musk knows this but still knowingly confuses them to try to trick people into thinking Twitter is lying about that 5% number (since it's pretty obvious there are many bots on twitter)
crikeyjoe 4y ago
gfodor 4y ago
Will any of these people eat crow if the deal closes at a lower price? Probably as much every other time they’ve said Musk was done with Twitter and then escalated towards owning it.
- mypastself 4y ago
  Lower than what? What are Levine’s claims to that effect? He states that Musk’s lawyers are likely hoping he’d have to pay only the $1B breakup fee, and Twitter is looking for the full “specific performance” $33B. There is little certainty about the outcome at this point.
mlindner 4y ago
millerm 4y ago
Lordy. Elon is NOT the richest person in the world. Lost interest, as I do with all articles about Musk.
tiberriver256 4y ago
If the designer of Bloomberg.com is on HN... thank your for making a decent looking news site. Literally every other site I'm bombarded with sensory overload. This site just lets me read the article in sweet serenity.
- pyronite 4y ago
  Something tells me it's not the designers responsible for sensory overload on other news sites.
  - boruto 4y ago
    It's always that product manager who wants more ad placements to meet revenue targets.
Consultant32452 4y ago
Court can't force Elon to buy Twitter. Worst case scenario is Musk pays Twitter $1 Billion "pull out" fee which is in the contract and the article mentions. More likely Musk is able to reasonably prove in court that Twitter isn't reporting bots/spam accounts correctly, he gets out of the contract, only pays millions in court cost, data scientist, and lawyer fees.
w0mbat 4y ago
BIG_COMPANY will often start to buy MEDIUM_COMPANY and then find that the other company has looming problems, has been faking user numbers/reviews/accounts etc, and the deal falls through. I cannot legally name names but this happens all the time.
paulpauper 4y ago
The stock closed at $36.81 on Friday, and other social-media stocks are down significantly since April. (Snap Inc. is down about 57% since April 13; even Meta Platforms Inc. — Facebook — is down more than 20%.) Meanwhile Tesla Inc. stock, the main source of Musk’s wealth, Or maybe that was because the overall stock market was down a lot. Meta being down 20$ is about the same as the S&P 500. Also it is obviously untrue! Companies advertise on Twitter because it sells products! lol Twitter ads are notoriously expensive. It's mostly big companies buying them to build awareness, not to move product.
pengaru 4y ago
Am I the only one who initially read the title as Elon came out of the closet?
- cozos 4y ago
  yes
ETH_start 4y ago
This is an absurd article. The idea that Musk was just "pretending" to want to buy Twitter, and went through the process of tendering a purchase offer for show, defies any kind of common sense.
elif 4y ago
Considering he owns 8% of shares and can't buy more than 15%, I doubt he went through all of this to shock down stock prices or for the luls, as the author assumes. He is rich but doesn't usually like burning money.
stakkur 4y ago
The law on this is clear, and the remedies are also clear. Musk playing the contemptuous clown prince aside, the court isn’t going to be ‘intimidated’, and Musk can’t simply evade/ignore judgments/orders. What a weirdly amateurish article.
AceJohnny2 4y ago
I am reminded of Neal Stephenson's Cryptonomicon, in which a significant plot point was a hostile buyer using due diligence as a kind of DoS attack on the protagonist's company.
extheat 4y ago
So much noise here and ill-informed comments fail to give a broader understanding of what's going on. Elon bought up Twitter shares early in the year for a reason, because he wanted more control over Twitter. He bought up so much Twitter shares that when it was announced via the SEC, Twitter offered a board seat under the clause that he wouldn't acquire too much % control over the company. He obliged, but then left when he realized he couldn't make the changes he desired at the company. Plus, people on the board at the time, specifically Dorsey, was nudging him to buy out the company as a whole. So he did, hastingly. That was an ill-informed decision and obviously a mistake made with respect to doing due-diligence. In hindsight, before the market crash that price may have made sense. But fast forward today with looming recession talk, it's pretty clear he realized it's overvalued (we know this from tweets about twitter deal being repriced). And so he needed an escape hatch, hence the issue with bots and the unverifiable mDAU was a great talking point. In fact, he may as well be right on the issue as Twitter doesn't want to reveal how they calculate it. What he's trying to do right now is pretty clearly force the board to give a better deal. He's not sold any stock and likely won't unless he's actually out for good. But given the amount of effort and thought he's put into it and making it clear that he should pay a lower price depending on the bot issue, I don't think there's much doubt he's not actually leaving Twitter. Whether the courts will force an acquisition at the current price however, is a looming question. My bet is they settle at a lower price.
- nocoiner 4y ago
  Almost everything in this comment is wrong or misleading. The point of an acquisition agreement isn’t to give the buyer optionality to acquire another company, it’s to ensure the buyer honors its commitment to acquire another company during the period between the time the buyer agrees to acquire it, and the time is it able to close on taking ownership. Maybe EM developed buyer’s remorse because of the decline in equity markets, or a belated realization that the CCP will have significant leverage on how he runs twitter, or just woke up the day after signing with that feeling you get when you realize you’ve knocked up Grimes not once but twice. Just because EM wants an escape hatch, doesn’t make it so. There’s a pretty tight contract that says he needs to buy twitter, at the agreed price, using the committed financing he arranged. EM can try to retrade the price all day long, but then there’s still that pesky matter of a binding contract… to buy Twitter… at the price he agreed with the board… that doesn’t have a diligence out or an “ehhh changed my mind” termination provision. For a variety of reasons, the board doesn’t have a tremendous number of appealing options (like none) but they have a strong contract that explicitly contains EM’s affirmative obligation to, y’know, buy Twitter. That fact has very little to do with his feeling.
tzury 4y ago
Elon Musk apparently has bigger issues that should have been preventing him from playing with the idea of buying twitter, and yet, he went for it, following a tweet that simply went out of control... - Tesla plants challenges worldwide (From China to Berlin via Texas) - Cybertruck ever postponing release date? - SolarCity and the dissmissed promises - Neuralink: Simply read the Wikipedia's entry [1] - Hyperloop (or is it hyperflop) - Boring company (more and more video demos) nothing is done... So, with so much to get in order (and I am avoiding personal matters which don't seemed any cheerful for the man), with so much, why don't we simply get ourselves a new toy, named twitter? Recently USA has a president that was following his impoolsive, late night tweets, by pushing his staff to form them as a new policy... [1] https://en.wikipedia.org/wiki/Neuralink https://en.wikipedia.org/wiki/Neuralink
- mattbrewsbytes 4y ago
  I think the other thing is in the US he now has some competition and they may just overtake the % of EV’s sold in a few years. People will have choices for EV instead of pick Tesla so he potentially used this buying twitter to sell off a bunch of stock. I wouldn’t be surprised if he finds other reasons to sell off massive amounts of stock in the next 2 years. My guess is cybertruck will be DOA. Anyone who wants an EV Truck is likely going to order an F-150 Lightning - looks like every other F-150, F-150 is the best selling automobile in the US. Once other auto makers ramp up production, Tesla cars will continue to be a niche luxury product with some gimmicky features.
deleted 4y ago
[deleted]
mathgenius 4y ago
I love how Matt Levine is alternately hilarious, and then dry as dust. It's like he wants everyone to suffer what lawyers go through on a daily basis, so he lures you in with some light hearted funny, and then before you know it, you're in the middle of reading some long sentence in a contract that's so convoluted you just want to pull your eyes out. Ha, good one Matt!
closedloop129 4y ago
How much is this beneficial to the Twitter brand? Twitter gets free exposure from all the news and a boost in reputation if only 5% of users are bots. Is there room for growth? I have the impression that Twitter is for information junkies who all should already have heard of Twitter.
- pavlov 4y ago
  That seems to be the main growth problem for Twitter. It has extreme product-market fit for a certain type of information junkie, but 15 years of optimizing the product for them has made it impenetrable to other potential users. As Matt Levine likes to complain, not even Twitter’s own board and executives seem to use or like the product. It is a hostile and unappealing environment to most people.
DarkmSparks 4y ago
Why does it have to be that complicated? Twitter says only 5% of its active users are bots. Anyone who has paid attention to say Joe Bidens follower count[1] would put it closer to 50% [1] https://www.dailymail.co.uk/news/article-10829675/Almost-half-President-Bidens-Twitter-followers-FAKE-audit-reveals.html https://www.dailymail.co.uk/news/article-10829675/Almost-hal... Bloomberg says there is no evidence of this... yeah, personally I dont really see any evidence of twitter having more than 200 or 300 million real users, and only a small fraction of those will be active. "Maybe" if they werent completely blocked in China and Russia it would be possible to believe there is more.
- philipwhiuk 4y ago
  The problem is that Twitter distinguishes 'automated account' from 'mininimum wage-farm account'. The later are not bots even though they are not genuine engagement.
  - DarkmSparks 4y ago
    Surely the problem is the believability of twitter claiming they have about 50% the number of active users as instagram (250million vs 500million). When a cursory glance of twitter accounts shows its only a small number of American celebrities and a few global politicians that still use twitter instead of telegram. The onus is on twitter to prove that 250million number, and Musks lawyers are saying they fell well short of doing so. A bloomberg hit piece on Musk claiming Musk didnt show it isnt true wont save twitter, and they've been in terminal decline even before they banned Trump.
- FabHK 4y ago
  So? That doesn't absolve Musk from his obligation to buy Twitter, as agreed in the merger agreement.
jokoon 4y ago
The half-lying, half-dancing-around-legality, reminds me of Trump. It's like American capitalism has a big vulnerability and Musk is hacking it. Capitalism always needs to be properly regulated to work properly, but it quickly cracks when some people work hard to hack it and cause problems. As always, don't hate the criminals, just hate the game.
mrlonglong 4y ago
Long winded way to say Elon's really an arsehole.
kreetx 4y ago
"Oh Elon" - has journalism really sunken to this? They must really not like him at Bloomberg.
pipeline_peak 4y ago
I can’t read a thing in this snark infested Mickey Mouse tabloid
nabla9 4y ago
This is a second time Musk has offered to buy a public company in bad faith. His reputation as a sufficiently reliable counterparty is gone.
- loufe 4y ago
  Let's not forget that this is a take, not an indisputable fact. Whether ostensible or true, he has cited potentially valid reasons for both cases (he DID have investors lined up to take it private and there WAS a lack of openness to investigate Twitter). I'm not saying he did or he didn't, I just find this kind of assertion (indeed the whole tone of the article) to be a bit flippant and more of a channeling for dislike of someone then for honest unbiased speculation of what is going on.
- wolverine876 4y ago
  The NY Times had an article recently about how all burnt Wall Street financiers, in places like Goldman Sachs, say they will finance Musk again.
  - nabla9 4y ago
    Goldman Sachs & other banks are not burned in this. They collect commissions and fees from loans. They deal with increasing risk by increasing fees, collateral and interest rate. That will restrict the deals Musk can afford.
- aaaaaaaaata 4y ago
  His money will keep on talking tomorrow, unfortunately.
  - nabla9 4y ago
    His dollar is worth 70 cent after this. It's likely that this will be the most expensive manic episode any individual has suffered.
    - prox 4y ago
niklasbuschmann 4y ago
Could Musk buy Twitter shares on the open market before the deal closes?
alphabetting 4y ago
I found this part most interesting. Public awareness of the Delaware Court of Chancery is about to skyrocket during this court battle. The fact that Musk is working in such bad faith here — that he seems so unconcerned with law and the contract he signed — cuts both ways. On the one hand, it will certainly annoy a Delaware chancellor; Delaware likes to think of itself as a stable place for corporate deals, with predictable law and binding contracts, and Musk’s antics undermine that. On the other hand it might intimidate a Delaware chancellor: What if the court orders Musk to close the deal and he says no? They’re not gonna put him in Chancery jail. The guy is pretty contemptuous of legal authority; he thinks he is above the law and he might be right. A showdown between Musk and a judge might undermine Delaware corporate law more than letting him weasel out of the deal would.
- throwaway09223 4y ago
  > What if the court orders Musk to close the deal and he says no? I can't believe people are taking this very silly statement seriously. This is utter nonsense. There are remedies for people who disobey court orders. Having assets makes you more vulnerable to a court's authority because you have something to lose. If a court orders specific performance and he doesn't do it then he's liable and the court will take his assets to compensate. Is Levine seriously suggesting that US courts don't have the authority to impose financial penalties, find liability, and seize assets? This is such an absurd thing to say it's hard to find a way to charitably respond.
  - hotpotamus 4y ago
    Anytime the idea of a wealth tax is brought up, I see commenters coming out of the woodwork to say that it would be impossible to actually collect it from the wealthy. Though I will note that it seems like we are able to collect yachts and planes from Russian oligarchs now, so perhaps our techniques have advanced in the last few months.
    - sascha_sl 4y ago
      There's an entire profession who's job it is to go full scale threat modeling on assets held directly or indirectly by the extremely rich. Seems likely they either didn't account for war sanctions or thought the impacted assets would not be worth putting behind 10 proxy legal owners for the unlikely case of such sanctions. Yachts and planes seem like they'd be particularly hard to turn into assets owned by a local proxy entity, since they move around so much.
tailrecursion 4y ago
I'd like to learn how to read billionaires' minds. Anyone know a good book I can read so that I can have the skills of this opinion writer?
- tveita 4y ago
  https://en.wikipedia.org/wiki/DSM-5 https://en.wikipedia.org/wiki/DSM-5
- wolverine876 4y ago
  Just look at yourself and people you know. You want to know how to read humans' minds; humans with a billion dollars are no different. By imaginging them as different, you are giving them great power and throwing away your own. You are as smart as they are.
- aaaaaaaaata 4y ago
  Internet comment threads. No, seriously. Just keep finding better ones.
- hotpotamus 4y ago
  “I want more” You’re welcome.
  - ThalesX 4y ago
    I met an almost billionaire once; I mentioned how a million dollars would cover me for the rest of my life and she followed with a 10 minute speech on how money is horrible and she can't sleep at night for their concern. I was moved but I confessed I'd still want that million dollars to fall out of the sky. It didn't feel like she "wanted more".
    - hotpotamus 4y ago
      How did you meet her? Were you at a zen meditation retreat after retiring from remunerative employment? On a semi-related note, one of the most predictive factors of stress in any primate societies is inequality, but one of the more surprising factors is that stress increases for everyone, even those at the top of the heap.
metadat 4y ago
Un-paywalled: https://archive.ph/5nLiC https://archive.ph/5nLiC
ReaLNero 4y ago
BTW, to those who don't know -- Money stuff is free if you subscribe to it as an email newsletter. Link: https://www.bloomberg.com/account/newsletters/money-stuff https://www.bloomberg.com/account/newsletters/money-stuff
- dang 4y ago
  (We detached this subthread from https://news.ycombinator.com/item?id=32036815 https://news.ycombinator.com/item?id=32036815.)
- slotrans 4y ago
  and you absolutely should subscribe because it is fantastic and hilarious
- deleted 4y ago
  [deleted]
- vitorsr 4y ago
  Plus, as prominently displayed in a Pinned Tweet on Levine’s Twitter: https://twitter.com/matt_levine https://twitter.com/matt_levine
xiphias2 4y ago
I don’t understand why we need to make things personal: a multibillionaire with practically unlimited resources is negotiating with a multibillion dollar corporation with practically unlimited resources. It’s clear that the offer Elon got stuck with has an unrealistic price at this point (and Elon just want a reason to get out of the deal), just like it’s clear that Twitter’s management is incompetent in the last few years. I just hope that there will be a lawsuit with juicy details so that I can get my popcorn, but I believe the 2 parties will settle.
- roca 4y ago
  Twitter management probably didn't have much choice but to accept the deal. Turning down an offer significantly above the stock price sounds like a trigger for a shareholder lawsuit.
- addicted 4y ago
  Elon only got stuck with it because he explicitly waived the right to due diligence which would have protected him from all this. He tried to act badass but came out looking like a dumbass. Everything since is his effort to get out of this (which he will…one of the nice things about having a lot of money is that it’s very hard to lose, no matter how illegal whatever you’re doing is), but is also trying to pretend he didn’t do something really really dumb. I see absolutely no reason to help Elon rewrite history especially when he could very well paid the penalty and walked away like he contractually agreed to, which would have ended the matter right there.
- jollybean 4y ago
  Twitter management is not incompetent, Musk set his own price. He should definitely pay a fine. You can't walk into a situation and cause major chaos - literally executive turnover, stock going crazy, all sorts of turmoil - and then walk away on bad faith and excuses. Also - he does not have unlimited resources. He literally cannot afford this deal right now.
  - eftychis 4y ago
    He practically bought it; it's unlikely an agency or third party to intervene / object; only thing to "save" him is stating he doesn't have the monwy/funding was pulled due to lack of information. Even then, I doubt he would avoid it. Of course they can drag each other to the bottom until one gives up. I doubt Musk will and Twitter might have existential issues if it doesn't get bought with rumors related to their user base quality.
rabite 4y ago
- deleted 4y ago
  [deleted]
- paulgb 4y ago
  > but all he needs to have defense standing might be a single one of the millions of accounts Twitter has claimed is an active monetizable user to be shown to be a bot There’s some good discussion in the article (whose author has a law degree) about why that’s not the case.
- deleted 4y ago
  [deleted]
- deleted 4y ago
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theptip 4y ago
There's been a lot of speculating around here on exactly what it would take for Musk to get out of this deal; here's the TLDR of the analysis from Levine: > Musk cannot get out of the deal just because one of Twitter’s representations is false. He still has to close the deal unless the representation is false and it would have a “material adverse effect” on Twitter. This is a famously under-defined term but it generally needs to be a pretty catastrophic effect. If the bots are 6% of mDAUs, whatever. If the bots are 75% of mDAUs and Twitter has been knowingly misleading its advertisers, and Musk can expose that scam and advertisers flee and Twitter faces legal trouble for its fraud, then, sure, material adverse effect. As to whether there is any evidence of a false representation (not even addressing material adverse effect due to that false representation): > The only basis for the claim is that “preliminary analysis by Mr. Musk’s advisors of the information provided by Twitter to date causes Mr. Musk to strongly believe that the proportion of false and spam accounts included in the reported mDAU count is wildly higher than 5%.” Notice that Ringler does not say that the analysis shows that the bots are “wildly higher than 5%” of mDAUs: That would be a factual claim that, I suspect, Musk’s advisers know is false. They make only the subjective claim that Musk “strongly believes” it. And then, perhaps the better grounds for Musk to prevail: > The second pretext is: Twitter is not giving Musk enough information about the bot problem. This is a better pretext, for technical legal reasons, which we have also discussed previously. In the closing conditions to the merger, representations are qualified by “material adverse effect”; just finding that a representation is false would not give Musk the right to terminate the deal unless it caused an MAE. But covenants are qualified by “all material respects”: In the merger agreement, Twitter promised to do certain things between signing and closing, and it has to do those things, whether or not there would be a material adverse effect from not doing them. So if Musk can prove that Twitter hasn’t complied with its obligations, he can get out of the deal.
- Turing_Machine 4y ago
  > If the bots are 6% of mDAUs, whatever. It seems like the purchase price should be of the order of 6% less in that case. 6% of $44 billion is not a trivial amount of money.
  - 4y ago
hartator 4y ago
> that it has knowingly been massively understating the number of bot accounts in order to trick companies into buying Twitter ads and shareholders into buying Twitter stock Wasn’t Google Ads 80% fake clicks on some studies? It won’t be surprising Twitter Ads is actually worse. There is so zero incentive to clean it up and so many shady reasons to do it.
- tptacek 4y ago
  That might actually hurt Musk's argument, because Google is incredibly lucrative despite the belief that ad clicks are overwhelmingly fake. The rule of thumb Levine (an attorney) gave a few posts ago for MAE's in Delaware courts is "sufficient to cause a 40% drop in profitability". Not stock price, not mDAU numbers, but income statements.
  - digianarchist 4y ago
    > That might actually hurt Musk's argument, because Google is incredibly lucrative despite the belief that ad clicks are overwhelmingly fake. They're still charging advertisers for those clicks.
    - tptacek 4y ago
      Yes, and?
      - digianarchist 4y ago
        I don’t think it quite aligns with monetizing a user base with a large portion of fake users. Plus the advertisements are distributed unlike Twitter.
    - morelisp 4y ago
      If the claimed rate of fake clicks is significantly wrong advertisers are unhappy. But whether it's high is irrelevant. For an advertiser, $1 per click with 0% fake or $0.50 per click with 50% fake are equivalent, except the first one requires tremendous overhead to maintain likely making the whole endeavor less efficient.
hartator 4y ago
If “serious” business led us to wars like in Ukraine, I’ll take Elon Musk’s expensive jokes any day.
anonu 4y ago
Twitter feeds are pretty public, albeit expensive to buy the firehose. Nonetheless, shouldn't a handful of motivated hackers be able to answer the bot question??
- csours 4y ago
  The way I see it, the bot question isn't about "bots on Twitter", it's about "bots, spam, and insincere people on Twitter that annoy Elon Musk". That is, Elon does not enjoy the flood of spam that he has to interact with. His experience as a user of Twitter is poor.
- erk__ 4y ago
  The issue here is that only twitter knows who they count as a mDAU. So there could be a lot of bots that are simply not included in their counts.
  - vehementi 4y ago
    Well, it depends on what is in the firehose. What twitter really knows that you can't just see, is how (with what client) users are logging in and whether their ad tracker URLs are being triggered (i.e. the user really did result in an ad impression). If Musk can determine that directly or indirectly from the firehose then he could say "here's how I calculated it and it's 9%" or something, I guess.
    - Lazare 4y ago
      Using entirely made up nunbers, I think the situation is something like: * Firehose shows 800m accounts were active yesterday * Using data from the firehose (user agents, IP addresses, behaviour analysis, etc.) you can flag 500m of those accounts as fake, spam, bots, etc., leaving 300m * Twitter then uses their experience, intuition, business judgement, etc., to apply an additional adjustment to those numbers, reduces them by 25%, and announces a mDAU of 225m * Musk calls foul, and says they should have used a bigger discount, because a lot of that 225m are still fake or spam accounts * Twitter says no, they're pretty sure it's like 11m of that 225m at most In this hypothetical, the firehose data isn't helpful, because it's just one of the inputs, and not the one that's in dispute. Musk isn't arguing about whether there were 800m (or whatever) total active accounts, or 300m seemingly real accounts, but over whether 25% was a good guess for how many fake accounts were hidden in that seemingly real accounts.
frankohn 4y ago
My idea is that Elon Musk is just leveraging it's wealth and public visibility to gain a lot of money easily tricking the markets. Especially those market where people are more easily gullible. I think he did it with bitcoins when it declared Tesla will accept Bitcoin payments on the same basis of ordinary payments. Just later he abruptly dismissed the whole thing because the operation was terminated. In the meantime I guess he just acquired a lot of bitcoins before the public announcement and just sold them when the price was much higher. I think that stock market and Bitcoin market are easily gullible by wealthy people because a lot of people investing are inexperienced and are easily influenced by press communication without ground truth basis.
petilon 4y ago
This article says Musk agreed to buy Twitter mostly as a joke. I think there's a far better explanation. This wasn't a joke for Musk because after agreeing to buy Twitter he proceeded to sell billions of dollars' worth of TSLA stock, supposedly to finance the purchase. Even for the richest man in the world that's not a joke. I think a better explanation is that Musk offered to buy Twitter as a cover for selling billions of dollars' worth of TSLA. Look at this story: https://www.wsj.com/articles/elon-musk-sells-billions-of-dollars-in-tesla-stock-11651197227 https://www.wsj.com/articles/elon-musk-sells-billions-of-dol... The headline is: "Elon Musk Sells $8.5 Billion of Tesla Shares After Deal to Buy Twitter" Why does he need a cover? Because TSLA is way too overvalued. He has to know that it is overvalued. Tesla's market cap is double of Toyota, VW, Mercedes, BMW, GM, Honda, Ferrari and Volvo all combined! [1]. If you sell stock while knowing your company's stock is way too overvalued, you're fleecing unsophisticated investors. Pretending to buy Twitter provides a convenient cover. Musk pretended that TSLA valuation is reasonable. Musk even called out Gates for shorting TSLA stock [2]. If he didn't have a cover then Musk would look like a hypocrite for selling TSLA. In reality, both Musk and Gates sold TSLA, the only difference is that Musk sold stocks he owned, but Gates sold borrowed stocks. But Musk used buying Twitter as a cover, so he gets to pretend to be morally superior. Even though both men sold TSLA, according to Musk, Gates' sales means that he isn't serious about climate change [3]. [1] https://companiesmarketcap.com/automakers/largest-automakers-by-market-cap/ https://companiesmarketcap.com/automakers/largest-automakers... [2] https://nypost.com/2022/05/31/elon-musk-calls-out-bill-gates-for-his-multi-billion-dollar-tesla-short-position/ https://nypost.com/2022/05/31/elon-musk-calls-out-bill-gates... [3] https://www.businessinsider.com/bill-gates-shorting-tesla-wont-hurt-musk-says-sigh-2022-6 https://www.businessinsider.com/bill-gates-shorting-tesla-wo...
- akelly 4y ago
  If that was his plan, why didn't he put an out in the contract?
  - perlgeek 4y ago
    Because then the Twitter board wouldn't have signed it.
t_mann 4y ago
Can we also take a moment to appreciate the tongue-in-cheek writing style of this (fairly thorough, by my impression) analysis of rather dry things like SEC filings, merger covenants,...?
- calmoo 4y ago
  Matt Levine is fantastic, highly recommend subscribing to his newsletter.
- dreamcompiler 4y ago
  This is why Levine's is one of a very few newsletters I subscribe to, and I read it immediately when it arrives. He's both entertaining and educational. I know a great deal more about finance now than I did a year ago, and that's because of Matt Levine.
- dan-robertson 4y ago
  (Note that he writes a newsletter like this roughly daily, though not ordinarily on weekends. It’s is free to subscribe to)
  - tyleo 4y ago
    Money Stuff is really good. Some of my favorites are right around when GameStop started to spike.

498 points by jaxonrice 4y ago

dang 4y ago

Recent and related: Notice of termination of Twitter merger agreement - https://news.ycombinator.com/item?id=32027341 https://news.ycombinator.com/item?id=32027341 - July 2022 (1361 comments)

mlindner 4y ago
Not just related, this thread should be merged with that one. There is nothing new in this opinion piece article.
- dang 4y ago
  That's probably true, but the other thread has over 1300 comments, so a merge would be a monster.
- panphora 4y ago
  I disagree. As a non-lawyer, non-financier, I found the deep & well-thought-out explanation fascinating. This is one of the best articles I've read this year.
  - ncann 4y ago
    You should subscribe to Matt Levine's newsletter if you enjoy his writing. It's fantastic, plus it's free and you don't have to visit Bloomberg's site.

georgeburdell 4y ago

Musk holds a key piece of America’s future in space in SpaceX. I wonder if it’s only a matter of time before he starts dangling that to get what he wants in cases like this. I still am generally favorable toward Elon, but I think we’re seeing him transform into a villain

ta8645 4y ago
I don't know about a villain, but he definitely isn't a saviour. Was hoping he'd follow through in reforming Twitter. But it turns out, even with all his resources, he's actually pretty weak in comparison to the forces set against him.
- sroussey 4y ago
  Elon is the force against himself. No conspiracy required.
  - ta8645 4y ago
    To pretend he doesn't have powerful enemies is just silly. It's not some kooky conspiracy theory. The only question is if you think his enemies are justified or not.
    - svachalek 4y ago
      How did powerful enemies force him to make a public bid to buy Twitter, and then force him to back out of it? I'd like to hear the non kooky conspiracy explanation for that.
      - ta8645 4y ago
        Who said anything about him being forced to do such a thing? People make bad decisions all the time, including Musk. But given human nature and frailty, people under a great deal of pressure and opposition like musk is, are likely to make worse decisions than they otherwise would.
        spaced-out 4y ago
        The only people I see "opposing" Musk are randos on Twitter he gets into arguments with. I wouldn't exactly call that a "great deal of pressure".
    - 4y ago

adventured 4y ago

Musk wasn't pretending to buy Twitter, the article is using a sort of simpleton interpretation of Musk's behavior. That's the interpretation someone would take if they dislike Musk and get overly emotional about his behavior. Musk is x y z. Oh my god, did you see the tweet he sent out!?! I just hate Musk, blah blah blah. He's such a terrible human. This one time he called a person a really bad name. - That's the type of person that reads Musk's Twitter acquisition attempt the way the article is. I don't care much about Musk one way or another, but this is not a complicated context and the author is plain wrong. What happened is the market for hyper overvalued stocks has crashed. He was faced with the scenario of paying double for Twitter vs what it was really worth. Remove the Musk prop and the stock collapses. Next up, the stock is heading south of $30 / share. It might be worth taking over for $20-$25 / share at most. Musk didn't want to pay $20 billion more for Twitter than he had to, even for him that was a bridge too far. Particularly while his own paper bubble fortune is just as at risk of implosion as the rest. It was really, really, really dumb timing. That was Musk's actual issue.

kcplate 4y ago
This to me seems the most reasonable explanation and explains most of the behaviors involved on both sides. I don’t buy into “it was just a joke that went too far” theory. Musk doesn’t want a turd. Twitter, essentially made a deal with the devil (from their perspective). Despite being initially opposed to this deal, they now has to sue to try and make it happen, because I suspect if it doesn’t “south of $30” is going to be more like “around $20” and there are a whole bunch of folks that might get interested in a takeover at that level with far more villain potential than Musk.
- dodobirdlord 4y ago
  The possibility of other takeovers doesn’t need to factor into this. If Twitter’s share price is significantly below the price they can force Musk to buy the company at, then the board has an obligation to shareholders to force the sale, and will be sued by the shareholders if they don’t.
  - 4y ago

georgia_peach 4y ago

This is politics masquerading as legal analysis. Twitter, by its own admission, lied about their user count for years. Elon will either go without penalty, or take a slap on the wrist. Levine spends a lot of time shilling on bots because he knows that's a weak spot for the Elon haterz club. https://nairametrics.com/2022/04/28/twitter-says-it-inflated-user-numbers-by-1-9-million-for-3-years/ https://nairametrics.com/2022/04/28/twitter-says-it-inflated... edit: Not an Elon fan BTW. Just don't appreciate this Levine's axe-grinding masquerading as impartial legal analysis.

georgia_peach 4y ago
VerminOctopus1 4y ago
You saying that Twitter’s SEC filings over the last several years included knowingly falsified information?
- georgia_peach 4y ago
  > The social media company, Twitter, has admitted to overstating the figure of the platform’s users by 1.9 million in the last three years. The company disclosed this in its Q1 2022 financial report released today. The revelation comes days after the board of the company accepted a $44 billion offer by Elon Musk to take over Twitter. > Twitter says an “error” introduced in Q1 2019, resulted in the overstatement of its monetizable daily active usage or users (mDAU). According to the company, this went on undiscovered for three years. Three years, and they figured this out mere days after being strong-armed into accepting the Musk offer they wanted to evade? I have a bridge to sell to anyone who believes Twitter didn't already know.
  - thombat 4y ago
    From https://www.statista.com/statistics/970920/monetizable-daily-active-twitter-users-worldwide/ https://www.statista.com/statistics/970920/monetizable-daily... that figure of 1.9M is rather less than 2% of their MDAU figure, and less than the MDAU growth in almost any quarter. So more of a correction than a revolution.

jp57 4y ago

Another hypothesis: Triggering a legal battle in the courts is a delaying technique to push out the acquisition until the economy rebounds (and Tesla and Twitter valuations with it), or until after the 2024 election, because Elon realized that he doesn't actually want to let Trump back onto the platform. (Perhaps because he perfers DeSantis)

treis 4y ago
IMHO this is the key point. Twitter has a strong case in court but courts usually take a long time. Probably at least a couple years for all the appeals to run their course. And at any time during that process Elon can decide that he actually wants Twitter and complete the transaction. It's a huge distraction for Twitter and probably won't be worth it in the long run. I expect a settlement with Elon paying some cash as a breakup fee.
walnutclosefarm 4y ago
Or, it's a feint to bring Twitter back to the bargaining table to lower the price outright. I'd lay odds that Musk is betting Twitter needs a buyer enough to prefer a better deal (for Musk) to a cash settlement that left them still looking for a buyer.
usefulcat 4y ago
> Elon realized that he doesn't actually want to let Trump back onto the platform I'm not buying that; it's not like he couldn't just change his position on a whim. It certainly wouldn't be the first time.
inglor_cz 4y ago
What about interim inflation? The US isn't used to high inflation, so inflation is often not baked into contracts. But we are possibly facing a period of high inflation. Those 44 billion USD may be worth a lot less in 2024 or 2025.

victor106 4y ago

Elon’s going to get away with this. Even though he shouldn’t. The rich play by different rules and the law lets them. If the rest of us did the same we would have to pay ridiculous fines and/or spent time behind bars.

VerminOctopus1 4y ago
Normally I would agree with you, but you have to consider that he’s up against people who are also extremely rich. The legal system might actually need to maintain legitimacy through the proceedings and not just crumple under Elon’s never-ending tantrum.
KKdU9EXbBhmLznR 4y ago
He most likely will have to pay a ridiculous fine (or, more likely, settlement). Of course, the ridiculousness of it will be that it doesn't consider his incredible means, and therefore he'll never miss it and it will have absolutely no impact on his behavior.
f6v 4y ago
It’s not that he’s just rich. He’s involved in double-purpose tech that USA government uses.

labrador 4y ago

I believe he was sincere, but found out quickly that a lot of people had strong feelings about his plans for the platform. It's possible he was in danger of losing people he really needs for his other businesses. I don't blame him for bailing out on a lose/lose situation.

checkurprivlege 4y ago
Correct a tide of hatred turned against him Musk correctly reacted by withdrawing and not wanting any of this you can keep the social media and deal with your hatred yourselves or your therapist
deleted 4y ago
[deleted]
KKdU9EXbBhmLznR 4y ago
... how is that an excuse? He knew that full well before he ever started thinking about buying it, much less making public statements about it. (Just like he knew about the bots)
- labrador 4y ago
  He is self-described as having autism to some degree, so reading the emotional landscape is probably not his strength.
  - deleted 4y ago
    [deleted]
  - encryptluks2 4y ago
    Lol.. you should be his lawyer. Your honor, his affluezna made him do it. It isn't his fault.
    - labrador 4y ago
      Seems like people forget billionaires are human and "to err is human" somehow doesn't apply to them

KKdU9EXbBhmLznR 4y ago

> Would he line up billions of dollars of financing and sign a binding merger agreement with a specific-performance clause and a $1 billion breakup fee as a joke? I mean! Nobody else would! But he might! What a silly thing to say. Of course he would; I'd also risk $20 (~1/200th of my assets, like $1b is for Musk) on a joke, especially if I knew I'd almost certainly never lose that much.

TedShiller 4y ago

It’s good he exposed Twitter as biased

kukx 4y ago

So now there is a widespread support for Musk buying Twitter? Okay, he may end up owning Twitter whether he likes it or not. It is so funny and ironic. Whatever the outcome I agree.

jacquesm 4y ago
It's not so much 'support' as that it is more or less inevitable, whether he likes it or not, and that has mostly to do with the price than with anything else. Worst case he will have to sell it immediately after forcibly buying it at a lower price just to make sure the rest of his empire doesn't collapse. Twitter is at best a distraction for Musk, at worst it could be his downfall.

lizardactivist 4y ago

Did anyone think he would actually be allowed to buy it? Twitter, as a weapon for propaganda and a tool for information collection, is too important and powerful to just let someone like Musk do what he wants with it.

fwip 4y ago
What? Elon is trying to back out of the deal, not Twitter.
resoluteteeth 4y ago
Nobody is trying to stop Elon Musk from buying Twitter except for Elon Musk himself. Twitter, the banks lending him money, and the other investors Elon lined up are all trying to make the transaction go forward. So the answer is clearly that yes, Elon musk is "allowed" to buy Twitter if he actually wants to. He may even have to buy it based on the agreement he signed even if he no longer wants to.

molticrystal 4y ago

> One of his hobbies is that he sometimes likes to pretend that he will acquire public companies...He seems to find this fun....When Musk pretended in 2018 that he was going to take Tesla Inc. private, he had to pay the US Securities and Exchange Commission a $20 million fine and stop being the chairman of Tesla’s board. One past example doesn't make a hobby, and I wonder if SEC interference had any impact small or large on the privatization failing. Not to add to the defense to Musk, but deals fall through all the time when scrutiny is applied to them, whether exterior or interior.

KKdU9EXbBhmLznR 4y ago
You're right, they should've said that his hobby is just pretending things in general. He enjoys very much being Nelson [https://www.youtube.com/watch?v=rX7wtNOkuHo https://www.youtube.com/watch?v=rX7wtNOkuHo]. The "SEC interference", as you called it, came long after he had his Nelson moment in that case. (A more accurate name for it might be "SEC slap-on-the-wrist", because it was both completely ineffective and entirely deserved.)

mabbo 4y ago

A fun side effect of all of this: if you believe in the court's ability to force Musk to buy Twitter, you should continue to buy up stock until it reaches the price Musk agreed to pay for it. If you don't believe he'll be forced to pay, you should sell and/or short until it's at whatever you think the right market value for a stock of Twitter ought to be. And wherever the price is between those two is a direct function of what experts believe the probability of each outcome is. It's like a massive betting market on a legal case.

saurik 4y ago
Well, minus a discount for however long you think it will take before that actually happens, taking into account such things as inflation, interest rates, and market performance (due to the opportunity costs of holding this stock until then).
- KVFinn 4y ago
  >A fun side effect of all of this: if you believe in the court's ability to force Musk to buy Twitter, you should continue to buy up stock until it reaches the price Musk agreed to pay for it. How do I bet on no outcome one way or another for many many years? If there's one thing I know about the US legal system it is giant corporations battling each other takes years and years to resolve.
  - SamReidHughes 4y ago
    You can make that bet with options. https://finance.yahoo.com/quote/TWTR/options?date=1674172800&p=TWTR&straddle=true https://finance.yahoo.com/quote/TWTR/options?date=1674172800...
    - unforeseen9991 4y ago
      Specifically, with a straddle or strangle strategy
      - 4y ago

henry_bone 4y ago

I see the author's scepticism of the bots argument, but I don't think it's one that should be dismissed so easily. I don't know anything, but isn't the value of these big tech properties largely in the number of actual human daily active users? When Facebook acquired whatsapp, I remember reading that it wasn't the tech per se that facebook really wanted. It was the daily active users. Whatsapp had (still has? dunno) a pretty big userbase. That was the where a lot of the value lay for facebook, or so I understand. So, if daily active users are important to the value of the property, do we believe twitter's SEC filing estimates of <5% bots? Musk doesn't, or hasn't been convinced by what he has seen. That really does seem like a legit reason to abort the deal. Twitter is representing <5% bots. Musk thinks that's a wildly optimistic estimate & is prepared to call bullshit. Seems fair to me. A more cynical view might be that Musk is simply looking to lower the price. Exposure of Twitter's bot problems in a court might not be very good for the share price. Just having Musk pull out (9 kids, he never pulls out) probably dips the share price. So, isn't it all good leverage to bring the price down?

Pulcinella 4y ago
That’s not how any of this works. E.g. the contract he signed already has the price he agreed to buy Twitter for.
- henry_bone 4y ago
  Could it be (& I am asking) that he can invalidate the current contract on the grounds that daily active users aren't what twitter said. Then could they draft a new contract, complete with a new price and daily active users estimates? I don't know anything, so I'm asking. If someone out there is a M&A lawyer and can shed light, that would be great.
  - svachalek 4y ago
    The first line is what he is trying to do right now. The answer seems to be "maybe", it's going to court because there's a chance that he can but Twitter also thinks there's a chance he cannot. The second, maybe. I doubt that Twitter would be interested. -- not an M&A lawyer

ethagknight 4y ago

I find it amazing that not one of the top comments gives Elon ANY consideration that maybe, just maybe, he has a legitimate case against Twitter. We don’t know what he’s found, what he was told, what he was promised, what changed on Twitter’s side. Some very top level people bailed or were fired shortly after Elon’s acquisition proposal was announced. It sure appears that Elons is just balking, but what is far more likely is that he has uncovered some deep Twitter bullshit and he plans to unveil it in court. Forced to air the dirty laundry by the court, he avoids defamation suits. Elon is extremely intelligent. Not perfect, not omniscient, maybe he screwed up? Or maybe he has a lot more info than any of us internet loons at the moment?

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webkike 4y ago
> It sure appears that Elons is just balking, but what is far more likely is that he has uncovered some deep Twitter bullshit and he plans to unveil it in court. Forced to air the dirty laundry by the court, he avoids defamation suits. I have no idea how you can claim that that is far more likely. You think it is more likely that Elon is going to expose the numbers Twitter reports to the SEC as off by an order of magnitude than Elon just not wanting to follow through with this deal? EVEN IF the numbers reported were off by a factor of 10, this would also have to cause advertisers to pull out! The revelations you claim Elon might make have to have material effect on the value of Twitter for them to make a difference in this impending court case. Yeah, it’s possible, I guess? But it’s definitely not more likely! Think about it this way: what could Elon possibly reveal that would make advertisers pull out? They advertise on Twitter and make money already! Why stop now??
- ethagknight 4y ago
  From the actual SEC filing: As further described below, Mr. Musk is terminating the Merger Agreement because Twitter is in material breach of multiple provisions of that Agreement, appears to have made false and misleading representations upon which Mr. Musk relied when entering into the Merger Agreement, and is likely to suffer a Company Material Adverse Effect (as that term is defined in the Merger Agreement). I’d say that’s a pretty strong accusation that probably has something to back it up. Maybe it’s a lie, but I sure wouldn’t bet on it. My businesses have spent millions on advertising across all channels, from newspapers, magazines, billboards to social media, AdWords and influencers. I strongly believe all ad dollars yield far less than platforms want us to believe. After all, they are selling us on their platform. Much of my revenue that gets attributed to some platform would have otherwise occurred without that specific ad spend. However, I’d rather be wrong and waste some ad spend versus be wrong, lose a million in revenue. Personally, having spent money with Twitter, I suspect Twitter has no real evidence that their value proposition to customers is worth anything close to what they claim (i.e. making fraudulent claims), but that Twitter has lots of data on the unpublicized falsities of their platform (bots, click farms, otherwise fake accounts).

SV_BubbleTime 4y ago

Does anyone else see the complete pointlessness in all the cock-sure but entirely speculative comments on this? You don’t know Musk, or the backend, or anything at all besides what the media tells you and that isn’t 1/10th the whole story. I get why people wanna talk about it, just not be absolute “well I know this for a fact” smugness that most of the comments here have. The reality is NONE of you actually KNOW anything and won’t until history determines the victor and you learn some more of that side.

jacquesm 4y ago
The SEC filings are a matter of public record, which is part of why we call 'public' companies public in the first place: Twitter is - and Musk is as well - bound to do a lot of this out in the open because it affects the price of a listed stock.
FabHK 4y ago
Eh? The merger agreement is a legal contract between Twitter and Musk, and it is a matter of public record [1]. And some people are certainly qualified to opine on these issues, particularly Matt Levine, who has worked as an M&A lawyer and investment banker. [1] https://www.sec.gov/Archives/edgar/data/1418091/000119312522176753/d283119dprer14a.htm https://www.sec.gov/Archives/edgar/data/1418091/000119312522...

jmpeax 4y ago

> Twitter has said in its SEC filings that it estimates that fewer than 5% of its monetizable daily active users are “false or spam accounts” Is this different to total percentage of false or spam accounts? The monetizable daily active users seems like a very specific subpopulation of total twitter accounts.

vehementi 4y ago
Yes, it is crucially different. mDAU is defined in the SEC filings which you can easily check. Basically it boils down to, there's say a billion twitter accounts. A shitload are inactive, or obviously bots, or joke accounts, or actual alts (don't double-count), or API users, or people using Tweetdeck, or doing all sorts of other things that Twitter can easily detect are not resulting in eyeballs on ads. Twitter boils down the number of "users that use Twitter clients that display ads" down to "just" 230M/day. Twitter then claims that, of those users, who are mostly just every day people logging in, maybe liking a post, scrolling a bit, seeing an ad on a real Twitter client -- of those users, when they sample them, they find that <5% of them are bots (like headless browsers and whatnot). That is obviously a completely different measurement than just overall bot accounts, or how often you will personally see bots posting, or how many of your followers are bots. Totally unrelated numbers. Musk knows this but still knowingly confuses them to try to trick people into thinking Twitter is lying about that 5% number (since it's pretty obvious there are many bots on twitter)

crikeyjoe 4y ago

gfodor 4y ago

Will any of these people eat crow if the deal closes at a lower price? Probably as much every other time they’ve said Musk was done with Twitter and then escalated towards owning it.

mypastself 4y ago
Lower than what? What are Levine’s claims to that effect? He states that Musk’s lawyers are likely hoping he’d have to pay only the $1B breakup fee, and Twitter is looking for the full “specific performance” $33B. There is little certainty about the outcome at this point.

mlindner 4y ago

millerm 4y ago

Lordy. Elon is NOT the richest person in the world. Lost interest, as I do with all articles about Musk.

tiberriver256 4y ago

If the designer of Bloomberg.com is on HN... thank your for making a decent looking news site. Literally every other site I'm bombarded with sensory overload. This site just lets me read the article in sweet serenity.

pyronite 4y ago
Something tells me it's not the designers responsible for sensory overload on other news sites.
- boruto 4y ago
  It's always that product manager who wants more ad placements to meet revenue targets.

Consultant32452 4y ago

Court can't force Elon to buy Twitter. Worst case scenario is Musk pays Twitter $1 Billion "pull out" fee which is in the contract and the article mentions. More likely Musk is able to reasonably prove in court that Twitter isn't reporting bots/spam accounts correctly, he gets out of the contract, only pays millions in court cost, data scientist, and lawyer fees.

w0mbat 4y ago

BIG_COMPANY will often start to buy MEDIUM_COMPANY and then find that the other company has looming problems, has been faking user numbers/reviews/accounts etc, and the deal falls through. I cannot legally name names but this happens all the time.

paulpauper 4y ago

The stock closed at $36.81 on Friday, and other social-media stocks are down significantly since April. (Snap Inc. is down about 57% since April 13; even Meta Platforms Inc. — Facebook — is down more than 20%.) Meanwhile Tesla Inc. stock, the main source of Musk’s wealth, Or maybe that was because the overall stock market was down a lot. Meta being down 20$ is about the same as the S&P 500. Also it is obviously untrue! Companies advertise on Twitter because it sells products! lol Twitter ads are notoriously expensive. It's mostly big companies buying them to build awareness, not to move product.

pengaru 4y ago

Am I the only one who initially read the title as Elon came out of the closet?

cozos 4y ago
yes

ETH_start 4y ago

This is an absurd article. The idea that Musk was just "pretending" to want to buy Twitter, and went through the process of tendering a purchase offer for show, defies any kind of common sense.

elif 4y ago

Considering he owns 8% of shares and can't buy more than 15%, I doubt he went through all of this to shock down stock prices or for the luls, as the author assumes. He is rich but doesn't usually like burning money.

stakkur 4y ago

The law on this is clear, and the remedies are also clear. Musk playing the contemptuous clown prince aside, the court isn’t going to be ‘intimidated’, and Musk can’t simply evade/ignore judgments/orders. What a weirdly amateurish article.

AceJohnny2 4y ago

I am reminded of Neal Stephenson's Cryptonomicon, in which a significant plot point was a hostile buyer using due diligence as a kind of DoS attack on the protagonist's company.

extheat 4y ago

So much noise here and ill-informed comments fail to give a broader understanding of what's going on. Elon bought up Twitter shares early in the year for a reason, because he wanted more control over Twitter. He bought up so much Twitter shares that when it was announced via the SEC, Twitter offered a board seat under the clause that he wouldn't acquire too much % control over the company. He obliged, but then left when he realized he couldn't make the changes he desired at the company. Plus, people on the board at the time, specifically Dorsey, was nudging him to buy out the company as a whole. So he did, hastingly. That was an ill-informed decision and obviously a mistake made with respect to doing due-diligence. In hindsight, before the market crash that price may have made sense. But fast forward today with looming recession talk, it's pretty clear he realized it's overvalued (we know this from tweets about twitter deal being repriced). And so he needed an escape hatch, hence the issue with bots and the unverifiable mDAU was a great talking point. In fact, he may as well be right on the issue as Twitter doesn't want to reveal how they calculate it. What he's trying to do right now is pretty clearly force the board to give a better deal. He's not sold any stock and likely won't unless he's actually out for good. But given the amount of effort and thought he's put into it and making it clear that he should pay a lower price depending on the bot issue, I don't think there's much doubt he's not actually leaving Twitter. Whether the courts will force an acquisition at the current price however, is a looming question. My bet is they settle at a lower price.

nocoiner 4y ago
Almost everything in this comment is wrong or misleading. The point of an acquisition agreement isn’t to give the buyer optionality to acquire another company, it’s to ensure the buyer honors its commitment to acquire another company during the period between the time the buyer agrees to acquire it, and the time is it able to close on taking ownership. Maybe EM developed buyer’s remorse because of the decline in equity markets, or a belated realization that the CCP will have significant leverage on how he runs twitter, or just woke up the day after signing with that feeling you get when you realize you’ve knocked up Grimes not once but twice. Just because EM wants an escape hatch, doesn’t make it so. There’s a pretty tight contract that says he needs to buy twitter, at the agreed price, using the committed financing he arranged. EM can try to retrade the price all day long, but then there’s still that pesky matter of a binding contract… to buy Twitter… at the price he agreed with the board… that doesn’t have a diligence out or an “ehhh changed my mind” termination provision. For a variety of reasons, the board doesn’t have a tremendous number of appealing options (like none) but they have a strong contract that explicitly contains EM’s affirmative obligation to, y’know, buy Twitter. That fact has very little to do with his feeling.

tzury 4y ago

Elon Musk apparently has bigger issues that should have been preventing him from playing with the idea of buying twitter, and yet, he went for it, following a tweet that simply went out of control... - Tesla plants challenges worldwide (From China to Berlin via Texas) - Cybertruck ever postponing release date? - SolarCity and the dissmissed promises - Neuralink: Simply read the Wikipedia's entry [1] - Hyperloop (or is it hyperflop) - Boring company (more and more video demos) nothing is done... So, with so much to get in order (and I am avoiding personal matters which don't seemed any cheerful for the man), with so much, why don't we simply get ourselves a new toy, named twitter? Recently USA has a president that was following his impoolsive, late night tweets, by pushing his staff to form them as a new policy... [1] https://en.wikipedia.org/wiki/Neuralink https://en.wikipedia.org/wiki/Neuralink

mattbrewsbytes 4y ago
I think the other thing is in the US he now has some competition and they may just overtake the % of EV’s sold in a few years. People will have choices for EV instead of pick Tesla so he potentially used this buying twitter to sell off a bunch of stock. I wouldn’t be surprised if he finds other reasons to sell off massive amounts of stock in the next 2 years. My guess is cybertruck will be DOA. Anyone who wants an EV Truck is likely going to order an F-150 Lightning - looks like every other F-150, F-150 is the best selling automobile in the US. Once other auto makers ramp up production, Tesla cars will continue to be a niche luxury product with some gimmicky features.

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mathgenius 4y ago

I love how Matt Levine is alternately hilarious, and then dry as dust. It's like he wants everyone to suffer what lawyers go through on a daily basis, so he lures you in with some light hearted funny, and then before you know it, you're in the middle of reading some long sentence in a contract that's so convoluted you just want to pull your eyes out. Ha, good one Matt!

closedloop129 4y ago

How much is this beneficial to the Twitter brand? Twitter gets free exposure from all the news and a boost in reputation if only 5% of users are bots. Is there room for growth? I have the impression that Twitter is for information junkies who all should already have heard of Twitter.

pavlov 4y ago
That seems to be the main growth problem for Twitter. It has extreme product-market fit for a certain type of information junkie, but 15 years of optimizing the product for them has made it impenetrable to other potential users. As Matt Levine likes to complain, not even Twitter’s own board and executives seem to use or like the product. It is a hostile and unappealing environment to most people.

DarkmSparks 4y ago

Why does it have to be that complicated? Twitter says only 5% of its active users are bots. Anyone who has paid attention to say Joe Bidens follower count[1] would put it closer to 50% [1] https://www.dailymail.co.uk/news/article-10829675/Almost-half-President-Bidens-Twitter-followers-FAKE-audit-reveals.html https://www.dailymail.co.uk/news/article-10829675/Almost-hal... Bloomberg says there is no evidence of this... yeah, personally I dont really see any evidence of twitter having more than 200 or 300 million real users, and only a small fraction of those will be active. "Maybe" if they werent completely blocked in China and Russia it would be possible to believe there is more.

philipwhiuk 4y ago
The problem is that Twitter distinguishes 'automated account' from 'mininimum wage-farm account'. The later are not bots even though they are not genuine engagement.
- DarkmSparks 4y ago
  Surely the problem is the believability of twitter claiming they have about 50% the number of active users as instagram (250million vs 500million). When a cursory glance of twitter accounts shows its only a small number of American celebrities and a few global politicians that still use twitter instead of telegram. The onus is on twitter to prove that 250million number, and Musks lawyers are saying they fell well short of doing so. A bloomberg hit piece on Musk claiming Musk didnt show it isnt true wont save twitter, and they've been in terminal decline even before they banned Trump.
FabHK 4y ago
So? That doesn't absolve Musk from his obligation to buy Twitter, as agreed in the merger agreement.

jokoon 4y ago

The half-lying, half-dancing-around-legality, reminds me of Trump. It's like American capitalism has a big vulnerability and Musk is hacking it. Capitalism always needs to be properly regulated to work properly, but it quickly cracks when some people work hard to hack it and cause problems. As always, don't hate the criminals, just hate the game.

mrlonglong 4y ago

Long winded way to say Elon's really an arsehole.

kreetx 4y ago

"Oh Elon" - has journalism really sunken to this? They must really not like him at Bloomberg.

pipeline_peak 4y ago

I can’t read a thing in this snark infested Mickey Mouse tabloid

nabla9 4y ago

This is a second time Musk has offered to buy a public company in bad faith. His reputation as a sufficiently reliable counterparty is gone.

loufe 4y ago
Let's not forget that this is a take, not an indisputable fact. Whether ostensible or true, he has cited potentially valid reasons for both cases (he DID have investors lined up to take it private and there WAS a lack of openness to investigate Twitter). I'm not saying he did or he didn't, I just find this kind of assertion (indeed the whole tone of the article) to be a bit flippant and more of a channeling for dislike of someone then for honest unbiased speculation of what is going on.
wolverine876 4y ago
The NY Times had an article recently about how all burnt Wall Street financiers, in places like Goldman Sachs, say they will finance Musk again.
- nabla9 4y ago
  Goldman Sachs & other banks are not burned in this. They collect commissions and fees from loans. They deal with increasing risk by increasing fees, collateral and interest rate. That will restrict the deals Musk can afford.
aaaaaaaaata 4y ago
His money will keep on talking tomorrow, unfortunately.
- nabla9 4y ago
  His dollar is worth 70 cent after this. It's likely that this will be the most expensive manic episode any individual has suffered.
  - prox 4y ago

niklasbuschmann 4y ago

Could Musk buy Twitter shares on the open market before the deal closes?

alphabetting 4y ago

I found this part most interesting. Public awareness of the Delaware Court of Chancery is about to skyrocket during this court battle. The fact that Musk is working in such bad faith here — that he seems so unconcerned with law and the contract he signed — cuts both ways. On the one hand, it will certainly annoy a Delaware chancellor; Delaware likes to think of itself as a stable place for corporate deals, with predictable law and binding contracts, and Musk’s antics undermine that. On the other hand it might intimidate a Delaware chancellor: What if the court orders Musk to close the deal and he says no? They’re not gonna put him in Chancery jail. The guy is pretty contemptuous of legal authority; he thinks he is above the law and he might be right. A showdown between Musk and a judge might undermine Delaware corporate law more than letting him weasel out of the deal would.

throwaway09223 4y ago
> What if the court orders Musk to close the deal and he says no? I can't believe people are taking this very silly statement seriously. This is utter nonsense. There are remedies for people who disobey court orders. Having assets makes you more vulnerable to a court's authority because you have something to lose. If a court orders specific performance and he doesn't do it then he's liable and the court will take his assets to compensate. Is Levine seriously suggesting that US courts don't have the authority to impose financial penalties, find liability, and seize assets? This is such an absurd thing to say it's hard to find a way to charitably respond.
- hotpotamus 4y ago
  Anytime the idea of a wealth tax is brought up, I see commenters coming out of the woodwork to say that it would be impossible to actually collect it from the wealthy. Though I will note that it seems like we are able to collect yachts and planes from Russian oligarchs now, so perhaps our techniques have advanced in the last few months.
  - sascha_sl 4y ago
    There's an entire profession who's job it is to go full scale threat modeling on assets held directly or indirectly by the extremely rich. Seems likely they either didn't account for war sanctions or thought the impacted assets would not be worth putting behind 10 proxy legal owners for the unlikely case of such sanctions. Yachts and planes seem like they'd be particularly hard to turn into assets owned by a local proxy entity, since they move around so much.

tailrecursion 4y ago

I'd like to learn how to read billionaires' minds. Anyone know a good book I can read so that I can have the skills of this opinion writer?

tveita 4y ago
https://en.wikipedia.org/wiki/DSM-5 https://en.wikipedia.org/wiki/DSM-5
wolverine876 4y ago
Just look at yourself and people you know. You want to know how to read humans' minds; humans with a billion dollars are no different. By imaginging them as different, you are giving them great power and throwing away your own. You are as smart as they are.
aaaaaaaaata 4y ago
Internet comment threads. No, seriously. Just keep finding better ones.
hotpotamus 4y ago
“I want more” You’re welcome.
- ThalesX 4y ago
  I met an almost billionaire once; I mentioned how a million dollars would cover me for the rest of my life and she followed with a 10 minute speech on how money is horrible and she can't sleep at night for their concern. I was moved but I confessed I'd still want that million dollars to fall out of the sky. It didn't feel like she "wanted more".
  - hotpotamus 4y ago
    How did you meet her? Were you at a zen meditation retreat after retiring from remunerative employment? On a semi-related note, one of the most predictive factors of stress in any primate societies is inequality, but one of the more surprising factors is that stress increases for everyone, even those at the top of the heap.

metadat 4y ago

Un-paywalled: https://archive.ph/5nLiC https://archive.ph/5nLiC

ReaLNero 4y ago

BTW, to those who don't know -- Money stuff is free if you subscribe to it as an email newsletter. Link: https://www.bloomberg.com/account/newsletters/money-stuff https://www.bloomberg.com/account/newsletters/money-stuff

dang 4y ago
(We detached this subthread from https://news.ycombinator.com/item?id=32036815 https://news.ycombinator.com/item?id=32036815.)
slotrans 4y ago
and you absolutely should subscribe because it is fantastic and hilarious
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vitorsr 4y ago
Plus, as prominently displayed in a Pinned Tweet on Levine’s Twitter: https://twitter.com/matt_levine https://twitter.com/matt_levine

xiphias2 4y ago

I don’t understand why we need to make things personal: a multibillionaire with practically unlimited resources is negotiating with a multibillion dollar corporation with practically unlimited resources. It’s clear that the offer Elon got stuck with has an unrealistic price at this point (and Elon just want a reason to get out of the deal), just like it’s clear that Twitter’s management is incompetent in the last few years. I just hope that there will be a lawsuit with juicy details so that I can get my popcorn, but I believe the 2 parties will settle.

roca 4y ago
Twitter management probably didn't have much choice but to accept the deal. Turning down an offer significantly above the stock price sounds like a trigger for a shareholder lawsuit.
addicted 4y ago
Elon only got stuck with it because he explicitly waived the right to due diligence which would have protected him from all this. He tried to act badass but came out looking like a dumbass. Everything since is his effort to get out of this (which he will…one of the nice things about having a lot of money is that it’s very hard to lose, no matter how illegal whatever you’re doing is), but is also trying to pretend he didn’t do something really really dumb. I see absolutely no reason to help Elon rewrite history especially when he could very well paid the penalty and walked away like he contractually agreed to, which would have ended the matter right there.
jollybean 4y ago
Twitter management is not incompetent, Musk set his own price. He should definitely pay a fine. You can't walk into a situation and cause major chaos - literally executive turnover, stock going crazy, all sorts of turmoil - and then walk away on bad faith and excuses. Also - he does not have unlimited resources. He literally cannot afford this deal right now.
- eftychis 4y ago
  He practically bought it; it's unlikely an agency or third party to intervene / object; only thing to "save" him is stating he doesn't have the monwy/funding was pulled due to lack of information. Even then, I doubt he would avoid it. Of course they can drag each other to the bottom until one gives up. I doubt Musk will and Twitter might have existential issues if it doesn't get bought with rumors related to their user base quality.

rabite 4y ago

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paulgb 4y ago
> but all he needs to have defense standing might be a single one of the millions of accounts Twitter has claimed is an active monetizable user to be shown to be a bot There’s some good discussion in the article (whose author has a law degree) about why that’s not the case.
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theptip 4y ago

There's been a lot of speculating around here on exactly what it would take for Musk to get out of this deal; here's the TLDR of the analysis from Levine: > Musk cannot get out of the deal just because one of Twitter’s representations is false. He still has to close the deal unless the representation is false and it would have a “material adverse effect” on Twitter. This is a famously under-defined term but it generally needs to be a pretty catastrophic effect. If the bots are 6% of mDAUs, whatever. If the bots are 75% of mDAUs and Twitter has been knowingly misleading its advertisers, and Musk can expose that scam and advertisers flee and Twitter faces legal trouble for its fraud, then, sure, material adverse effect. As to whether there is any evidence of a false representation (not even addressing material adverse effect due to that false representation): > The only basis for the claim is that “preliminary analysis by Mr. Musk’s advisors of the information provided by Twitter to date causes Mr. Musk to strongly believe that the proportion of false and spam accounts included in the reported mDAU count is wildly higher than 5%.” Notice that Ringler does not say that the analysis shows that the bots are “wildly higher than 5%” of mDAUs: That would be a factual claim that, I suspect, Musk’s advisers know is false. They make only the subjective claim that Musk “strongly believes” it. And then, perhaps the better grounds for Musk to prevail: > The second pretext is: Twitter is not giving Musk enough information about the bot problem. This is a better pretext, for technical legal reasons, which we have also discussed previously. In the closing conditions to the merger, representations are qualified by “material adverse effect”; just finding that a representation is false would not give Musk the right to terminate the deal unless it caused an MAE. But covenants are qualified by “all material respects”: In the merger agreement, Twitter promised to do certain things between signing and closing, and it has to do those things, whether or not there would be a material adverse effect from not doing them. So if Musk can prove that Twitter hasn’t complied with its obligations, he can get out of the deal.

Turing_Machine 4y ago
> If the bots are 6% of mDAUs, whatever. It seems like the purchase price should be of the order of 6% less in that case. 6% of $44 billion is not a trivial amount of money.
- 4y ago

hartator 4y ago

> that it has knowingly been massively understating the number of bot accounts in order to trick companies into buying Twitter ads and shareholders into buying Twitter stock Wasn’t Google Ads 80% fake clicks on some studies? It won’t be surprising Twitter Ads is actually worse. There is so zero incentive to clean it up and so many shady reasons to do it.

tptacek 4y ago
That might actually hurt Musk's argument, because Google is incredibly lucrative despite the belief that ad clicks are overwhelmingly fake. The rule of thumb Levine (an attorney) gave a few posts ago for MAE's in Delaware courts is "sufficient to cause a 40% drop in profitability". Not stock price, not mDAU numbers, but income statements.
- digianarchist 4y ago
  > That might actually hurt Musk's argument, because Google is incredibly lucrative despite the belief that ad clicks are overwhelmingly fake. They're still charging advertisers for those clicks.
  - tptacek 4y ago
    Yes, and?
    - digianarchist 4y ago
      I don’t think it quite aligns with monetizing a user base with a large portion of fake users. Plus the advertisements are distributed unlike Twitter.
  - morelisp 4y ago
    If the claimed rate of fake clicks is significantly wrong advertisers are unhappy. But whether it's high is irrelevant. For an advertiser, $1 per click with 0% fake or $0.50 per click with 50% fake are equivalent, except the first one requires tremendous overhead to maintain likely making the whole endeavor less efficient.

hartator 4y ago

If “serious” business led us to wars like in Ukraine, I’ll take Elon Musk’s expensive jokes any day.

anonu 4y ago

Twitter feeds are pretty public, albeit expensive to buy the firehose. Nonetheless, shouldn't a handful of motivated hackers be able to answer the bot question??

csours 4y ago
The way I see it, the bot question isn't about "bots on Twitter", it's about "bots, spam, and insincere people on Twitter that annoy Elon Musk". That is, Elon does not enjoy the flood of spam that he has to interact with. His experience as a user of Twitter is poor.
erk__ 4y ago
The issue here is that only twitter knows who they count as a mDAU. So there could be a lot of bots that are simply not included in their counts.
- vehementi 4y ago
  Well, it depends on what is in the firehose. What twitter really knows that you can't just see, is how (with what client) users are logging in and whether their ad tracker URLs are being triggered (i.e. the user really did result in an ad impression). If Musk can determine that directly or indirectly from the firehose then he could say "here's how I calculated it and it's 9%" or something, I guess.
  - Lazare 4y ago
    Using entirely made up nunbers, I think the situation is something like: * Firehose shows 800m accounts were active yesterday * Using data from the firehose (user agents, IP addresses, behaviour analysis, etc.) you can flag 500m of those accounts as fake, spam, bots, etc., leaving 300m * Twitter then uses their experience, intuition, business judgement, etc., to apply an additional adjustment to those numbers, reduces them by 25%, and announces a mDAU of 225m * Musk calls foul, and says they should have used a bigger discount, because a lot of that 225m are still fake or spam accounts * Twitter says no, they're pretty sure it's like 11m of that 225m at most In this hypothetical, the firehose data isn't helpful, because it's just one of the inputs, and not the one that's in dispute. Musk isn't arguing about whether there were 800m (or whatever) total active accounts, or 300m seemingly real accounts, but over whether 25% was a good guess for how many fake accounts were hidden in that seemingly real accounts.

frankohn 4y ago

My idea is that Elon Musk is just leveraging it's wealth and public visibility to gain a lot of money easily tricking the markets. Especially those market where people are more easily gullible. I think he did it with bitcoins when it declared Tesla will accept Bitcoin payments on the same basis of ordinary payments. Just later he abruptly dismissed the whole thing because the operation was terminated. In the meantime I guess he just acquired a lot of bitcoins before the public announcement and just sold them when the price was much higher. I think that stock market and Bitcoin market are easily gullible by wealthy people because a lot of people investing are inexperienced and are easily influenced by press communication without ground truth basis.

petilon 4y ago

This article says Musk agreed to buy Twitter mostly as a joke. I think there's a far better explanation. This wasn't a joke for Musk because after agreeing to buy Twitter he proceeded to sell billions of dollars' worth of TSLA stock, supposedly to finance the purchase. Even for the richest man in the world that's not a joke. I think a better explanation is that Musk offered to buy Twitter as a cover for selling billions of dollars' worth of TSLA. Look at this story: https://www.wsj.com/articles/elon-musk-sells-billions-of-dollars-in-tesla-stock-11651197227 https://www.wsj.com/articles/elon-musk-sells-billions-of-dol... The headline is: "Elon Musk Sells $8.5 Billion of Tesla Shares After Deal to Buy Twitter" Why does he need a cover? Because TSLA is way too overvalued. He has to know that it is overvalued. Tesla's market cap is double of Toyota, VW, Mercedes, BMW, GM, Honda, Ferrari and Volvo all combined! [1]. If you sell stock while knowing your company's stock is way too overvalued, you're fleecing unsophisticated investors. Pretending to buy Twitter provides a convenient cover. Musk pretended that TSLA valuation is reasonable. Musk even called out Gates for shorting TSLA stock [2]. If he didn't have a cover then Musk would look like a hypocrite for selling TSLA. In reality, both Musk and Gates sold TSLA, the only difference is that Musk sold stocks he owned, but Gates sold borrowed stocks. But Musk used buying Twitter as a cover, so he gets to pretend to be morally superior. Even though both men sold TSLA, according to Musk, Gates' sales means that he isn't serious about climate change [3]. [1] https://companiesmarketcap.com/automakers/largest-automakers-by-market-cap/ https://companiesmarketcap.com/automakers/largest-automakers... [2] https://nypost.com/2022/05/31/elon-musk-calls-out-bill-gates-for-his-multi-billion-dollar-tesla-short-position/ https://nypost.com/2022/05/31/elon-musk-calls-out-bill-gates... [3] https://www.businessinsider.com/bill-gates-shorting-tesla-wont-hurt-musk-says-sigh-2022-6 https://www.businessinsider.com/bill-gates-shorting-tesla-wo...

akelly 4y ago
If that was his plan, why didn't he put an out in the contract?
- perlgeek 4y ago
  Because then the Twitter board wouldn't have signed it.

t_mann 4y ago

Can we also take a moment to appreciate the tongue-in-cheek writing style of this (fairly thorough, by my impression) analysis of rather dry things like SEC filings, merger covenants,...?

calmoo 4y ago
Matt Levine is fantastic, highly recommend subscribing to his newsletter.
dreamcompiler 4y ago
This is why Levine's is one of a very few newsletters I subscribe to, and I read it immediately when it arrives. He's both entertaining and educational. I know a great deal more about finance now than I did a year ago, and that's because of Matt Levine.
dan-robertson 4y ago
(Note that he writes a newsletter like this roughly daily, though not ordinarily on weekends. It’s is free to subscribe to)
- tyleo 4y ago
  Money Stuff is really good. Some of my favorites are right around when GameStop started to spike.