4 ms·

Twitter Still Wants Musk’s Money

21 points by feross 4y ago

gadnuk 4y ago
Of course. The board has a fiduciary duty and in this environment, getting the company to be sold to Musk for anywhere near the agreed upon $44 billion valuation is a win. Plus, after seeing the lawsuit filed yesterday, I think they really want Musk to have consequences for his actions. He has gotten away with making a mockery of the financial markets (remember funding secured?) for way too long. Set a precedent, make him pay!
- nomel 4y ago
  > Set a precedent, make him pay! As someone unfamiliar, for what exactly? I've tried to keep up, but I've read many contradictory things.
  - stingraycharles 4y ago
    Pay, as in, buying Twitter. He signed a legally binding agreement, tries to get out of it based on a technicality, Twitter now decides to enforce the contract.
    - FunnyBadger 4y ago
      All contracts have conditions which is not met make the contract null-and-void. Elon is claiming this. Twitter is denying it. It will be decided by a judge in a few years. Given Twitter's ethics I already have a prediction for the outcome but ultimately it's for the judge in the end.
      - anonymousab 4y ago
        > All contracts have conditions which is not met make the contract null-and-void. Yes, and when negotiating the contract with Twitter, Musk effectively waived _all_ of them.
      - nocoiner 4y ago
        Deal certainty is pretty much the key issue in public company acquisition agreements. The conditions are usually limited to things like receipt of required regulatory approvals (all but one of which has been obtained here), the shareholder vote in favor of the transaction (which will occur as soon as the SEC signs off on Twitter’s proxy filing, and which will receive the support of the vast majority of Twitter stockholders) or the absence of a “material adverse effect” (term of art) on the acquired business. Barring a material breach of the agreement by Twitter (of which there’s currently no public evidence), things have to go very, very wrong for a buyer to be able to walk. And in any event, this won’t take a couple years to resolve. Delaware chancery court decides issues like these on very, very quick timeframes. That’s why so many corporations are formed there - it’s not a tax dodge or a way to hide ownership, like you sometimes see suggested in the media. It’s because there’s a robust body of corporate common law, well developed corporate statutes and an judiciary that’s world class in adjudicating commercial disputes. Given Musk’s staggering bad faith at all stages of this transaction, it’s going to be interesting to see how that plays into the chancellor’s ruling (assuming it doesn’t settle beforehand, but if I’m Twitter, I’m taking my chances at trial unless and until there’s a ten-figure settlement on the table).
srvmshr 4y ago
I think this is not a fair title for the company in the ongoing mudfight. If Musk successfully backs out and/or legally wins over Twitter, these would torpedo the company's stock valuation & public trust, mostly over spam & bots. Twitter revenues aren't spectacular even though they are decently okay in social media ops. Any future buyer will keep this on record as a bargaining clause to drive down the price. With the deal falling apart, stocks most likely will nosedive significantly, if history shows us anything. This isn't about only money - but survival & reputation.
- nomel 4y ago
  Could this be viewed as a correction to something more realistic?
  - srvmshr 4y ago
    This could be more likely viewed as a über-rich person who toyed with a company, its investors & stockholders in bad faith. From the 62-page lawsuit document, Twitter seems to have complied with his ever-increasing demands for auditing the bot/spam problem although he acted so confident to waive off the due diligence. They gave him access to the firehose, but his demands for Twitter to give exact numbers instead of the more accepted statistical MAU metrics is purely insane. Twitter would have to audit each non-verified user to comply with most of Musk's unreasonable requests. When $TSLA went south, he seems to have realized Twitter purchase was bad idea & he would lose both ways - by reduced Tesla marketcap & buying Twitter at $54.20 per share (in an infantile attempt to put 420 meme Easter egg) for $44B. And he would have to commit more of his shares given the falling stock situation. If he manages to buy Twitter, the growth isn't going to recover his costs for a very long time (that economics merits a separate HN thread). He announced something on a whim, then the 'correction' happened as a reality check, and he is throwing every fuss as a teenager high on sugar rush to not go ahead although he is legally obliged to.
    - nomel 4y ago
      > then the 'correction' happened as a reality check Sorry, I'm not sure I follow. Are you saying that everyone realized twitter was not worth that much? Or, is it that Musk caused the stock to fall, somewhat artificially, because his disinterest at $44B is being (incorrectly?) perceived as "he's not interested because the company is not worth $44B" rather than "he's not interested because <other>"?
moogly 4y ago
As someone who thinks Twitter is a net negative for society, and only marginally better than Facebook, I must say if this case isn't a slam-dunk in Twitter's favor, something is really, incredibly rotten in the state of Denmark.
- xhkkffbf 4y ago
  A slam dunk? Oh, I don't know. The confusion over the bots is real. The financial value of all of these social networks is 100% dependent on the number of real eyeballs that can be sold to advertisers. They've been claiming less than 5% for years and all of a sudden, they started hedging their claims. Then the head of data science left. If you ask me, the real problem for the social networks is click fraud and this is just the first cut. Furthermore, now that Twitter has filed the law suit, the defendant (Musk) gets to ask for discovery to defend himself. Twitter is going to have to turn over the data anyway.
  - kklisura 4y ago
    > Twitter is going to have to turn over the data anyway. But Twitter already did this, at least in one part. From the lawsuit: > On or about June 9, 2022, Musk’s counsel indicated that granting access to 30 days’ worth of historical firehose data would satisfy Musk’s request for the firehose data. So, on June 15, the company gave Musk’s team secure access to that raw data — about 49 tebibytes’ worth. It did so even though the merger agreement did not require the sharing of this information.
  - nocoiner 4y ago
    Here’s an excerpt from Twitter’s 2014 annual report. I think they’ve been pretty clear for quite a while that there is subjectivity and judgment that goes into their estimates of monetized users that are bots. “The numbers of active users and timeline views presented in this Annual Report on Form 10-K are based on internal company data. While these numbers are based on what we believe to be reasonable estimates for the applicable period of measurement, there are inherent challenges in measuring usage and user engagement across our large user base around the world. For example, there are a number of false or spam accounts in existence on our platform. We have performed an internal review of a sample of accounts and estimate that false or spam accounts represented less than 5% of our MAUs as of December 31, 2014. In making this determination, we applied significant judgment, so our estimation of false or spam accounts may not accurately represent the actual number of such accounts, and the actual number of false or spam accounts could be higher than we have estimated.” The case isn’t a slam dunk only because public company merger agreements aren’t normally signed on a whim and/or for the lulz. Even here, where there’s a very clear specific performance obligation, Delaware chancellors normally don’t love enforcing specific performance (though they absolutely will, especially in the case of a buyer who’s obviously trying to avoid its contractual obligations based on a pretext). The real tension here comes from the cap on damages, the chance that Musk blows up the committed debt financing, and the quantum of damages actually suffered by Twitter shareholders if the deal doesn’t close. Those are the actually interesting issues that will get hashed out in court - not some baseless claims about bots that could have and should have been diligenced by the buyer prior to signing a binding $44 billion acquisition agreement.
jollybean 4y ago
Twitter owners want $50B for something currently valued at $25B well yes of course. To characterize this as 'Twitter' is a bit misleading because we think of it as a corporate financial operations decision. This is an 'owner' thing.
stats111 4y ago
I believe Musk will increase Twitter's accountability, which will benefit the platform and its users.
- cafard 4y ago
  How will he do so--as owner? If so, Twitter will have increased Musk's accountability first.
puffoflogic 4y ago
A couple months ago The Narrative was that Musk's acquisition was the end of human society. What happened to change that into "do it or else"? I can't figure it out.

21 points by feross 4y ago

Of course. The board has a fiduciary duty and in this environment, getting the company to be sold to Musk for anywhere near the agreed upon $44 billion valuation is a win. Plus, after seeing the lawsuit filed yesterday, I think they really want Musk to have consequences for his actions. He has gotten away with making a mockery of the financial markets (remember funding secured?) for way too long. Set a precedent, make him pay!

nomel 4y ago
> Set a precedent, make him pay! As someone unfamiliar, for what exactly? I've tried to keep up, but I've read many contradictory things.
- stingraycharles 4y ago
  Pay, as in, buying Twitter. He signed a legally binding agreement, tries to get out of it based on a technicality, Twitter now decides to enforce the contract.
  - FunnyBadger 4y ago
    All contracts have conditions which is not met make the contract null-and-void. Elon is claiming this. Twitter is denying it. It will be decided by a judge in a few years. Given Twitter's ethics I already have a prediction for the outcome but ultimately it's for the judge in the end.
    - anonymousab 4y ago
      > All contracts have conditions which is not met make the contract null-and-void. Yes, and when negotiating the contract with Twitter, Musk effectively waived _all_ of them.
    - nocoiner 4y ago
      Deal certainty is pretty much the key issue in public company acquisition agreements. The conditions are usually limited to things like receipt of required regulatory approvals (all but one of which has been obtained here), the shareholder vote in favor of the transaction (which will occur as soon as the SEC signs off on Twitter’s proxy filing, and which will receive the support of the vast majority of Twitter stockholders) or the absence of a “material adverse effect” (term of art) on the acquired business. Barring a material breach of the agreement by Twitter (of which there’s currently no public evidence), things have to go very, very wrong for a buyer to be able to walk. And in any event, this won’t take a couple years to resolve. Delaware chancery court decides issues like these on very, very quick timeframes. That’s why so many corporations are formed there - it’s not a tax dodge or a way to hide ownership, like you sometimes see suggested in the media. It’s because there’s a robust body of corporate common law, well developed corporate statutes and an judiciary that’s world class in adjudicating commercial disputes. Given Musk’s staggering bad faith at all stages of this transaction, it’s going to be interesting to see how that plays into the chancellor’s ruling (assuming it doesn’t settle beforehand, but if I’m Twitter, I’m taking my chances at trial unless and until there’s a ten-figure settlement on the table).

srvmshr 4y ago

I think this is not a fair title for the company in the ongoing mudfight. If Musk successfully backs out and/or legally wins over Twitter, these would torpedo the company's stock valuation & public trust, mostly over spam & bots. Twitter revenues aren't spectacular even though they are decently okay in social media ops. Any future buyer will keep this on record as a bargaining clause to drive down the price. With the deal falling apart, stocks most likely will nosedive significantly, if history shows us anything. This isn't about only money - but survival & reputation.

nomel 4y ago
Could this be viewed as a correction to something more realistic?
- srvmshr 4y ago
  This could be more likely viewed as a über-rich person who toyed with a company, its investors & stockholders in bad faith. From the 62-page lawsuit document, Twitter seems to have complied with his ever-increasing demands for auditing the bot/spam problem although he acted so confident to waive off the due diligence. They gave him access to the firehose, but his demands for Twitter to give exact numbers instead of the more accepted statistical MAU metrics is purely insane. Twitter would have to audit each non-verified user to comply with most of Musk's unreasonable requests. When $TSLA went south, he seems to have realized Twitter purchase was bad idea & he would lose both ways - by reduced Tesla marketcap & buying Twitter at $54.20 per share (in an infantile attempt to put 420 meme Easter egg) for $44B. And he would have to commit more of his shares given the falling stock situation. If he manages to buy Twitter, the growth isn't going to recover his costs for a very long time (that economics merits a separate HN thread). He announced something on a whim, then the 'correction' happened as a reality check, and he is throwing every fuss as a teenager high on sugar rush to not go ahead although he is legally obliged to.
  - nomel 4y ago
    > then the 'correction' happened as a reality check Sorry, I'm not sure I follow. Are you saying that everyone realized twitter was not worth that much? Or, is it that Musk caused the stock to fall, somewhat artificially, because his disinterest at $44B is being (incorrectly?) perceived as "he's not interested because the company is not worth $44B" rather than "he's not interested because <other>"?

moogly 4y ago

As someone who thinks Twitter is a net negative for society, and only marginally better than Facebook, I must say if this case isn't a slam-dunk in Twitter's favor, something is really, incredibly rotten in the state of Denmark.

xhkkffbf 4y ago
A slam dunk? Oh, I don't know. The confusion over the bots is real. The financial value of all of these social networks is 100% dependent on the number of real eyeballs that can be sold to advertisers. They've been claiming less than 5% for years and all of a sudden, they started hedging their claims. Then the head of data science left. If you ask me, the real problem for the social networks is click fraud and this is just the first cut. Furthermore, now that Twitter has filed the law suit, the defendant (Musk) gets to ask for discovery to defend himself. Twitter is going to have to turn over the data anyway.
- kklisura 4y ago
  > Twitter is going to have to turn over the data anyway. But Twitter already did this, at least in one part. From the lawsuit: > On or about June 9, 2022, Musk’s counsel indicated that granting access to 30 days’ worth of historical firehose data would satisfy Musk’s request for the firehose data. So, on June 15, the company gave Musk’s team secure access to that raw data — about 49 tebibytes’ worth. It did so even though the merger agreement did not require the sharing of this information.
- nocoiner 4y ago
  Here’s an excerpt from Twitter’s 2014 annual report. I think they’ve been pretty clear for quite a while that there is subjectivity and judgment that goes into their estimates of monetized users that are bots. “The numbers of active users and timeline views presented in this Annual Report on Form 10-K are based on internal company data. While these numbers are based on what we believe to be reasonable estimates for the applicable period of measurement, there are inherent challenges in measuring usage and user engagement across our large user base around the world. For example, there are a number of false or spam accounts in existence on our platform. We have performed an internal review of a sample of accounts and estimate that false or spam accounts represented less than 5% of our MAUs as of December 31, 2014. In making this determination, we applied significant judgment, so our estimation of false or spam accounts may not accurately represent the actual number of such accounts, and the actual number of false or spam accounts could be higher than we have estimated.” The case isn’t a slam dunk only because public company merger agreements aren’t normally signed on a whim and/or for the lulz. Even here, where there’s a very clear specific performance obligation, Delaware chancellors normally don’t love enforcing specific performance (though they absolutely will, especially in the case of a buyer who’s obviously trying to avoid its contractual obligations based on a pretext). The real tension here comes from the cap on damages, the chance that Musk blows up the committed debt financing, and the quantum of damages actually suffered by Twitter shareholders if the deal doesn’t close. Those are the actually interesting issues that will get hashed out in court - not some baseless claims about bots that could have and should have been diligenced by the buyer prior to signing a binding $44 billion acquisition agreement.

jollybean 4y ago

Twitter owners want $50B for something currently valued at $25B well yes of course. To characterize this as 'Twitter' is a bit misleading because we think of it as a corporate financial operations decision. This is an 'owner' thing.

stats111 4y ago

I believe Musk will increase Twitter's accountability, which will benefit the platform and its users.

cafard 4y ago
How will he do so--as owner? If so, Twitter will have increased Musk's accountability first.

puffoflogic 4y ago

A couple months ago The Narrative was that Musk's acquisition was the end of human society. What happened to change that into "do it or else"? I can't figure it out.