4 ms·

People seem to be discounting the fact that Elon still owns 9% of the company and is one of the largest shareholders. He just wants a chance to renegotiate as h

People seem to be discounting the fact that Elon still owns 9% of the company and is one of the largest shareholders. He just wants a chance to renegotiate as he know if he actually walks away he will lose around $5B.

Eji1700 4y ago
If he's allowed to actually walk. Legally speaking he waived due process and twitter is suing with the specific performance clause. If it were just about anyone else I'd say there's 0 chance they'd be getting out of this, but since it's musk he might be able to walk.
- cwkoss 4y ago
  didn't he waive due diligence, not due process? Or do those mean the same thing in this context?
  - Sebb767 4y ago
    He signed that he knows everything he needs to know about the company and wants to buy it. Now he wants to back out with the claim that he actually did not know everything, which is a pretty hard sell. Though it's important to note that his lawyers are well aware that this will never fly and therefore the actual court case is them trying to find an edge case where Twitter actually broke the contract (that's the shoddy talk about Twitter apparently rate limiting the data analysis). Which is still a hard sell, but there's at least a chance they'll get away with it.
    - formercoder 4y ago
      He’s not claiming that he actually didn’t know everything, he’s claiming that Twitter lied in public filings not related to the deal.
      - dragonwriter 4y ago
        > He’s not claiming that he actually didn’t know everything Yes; he is. > he’s claiming that Twitter lied in public filings not related to the deal. He explicitly claims that they are deeply related to the deal.
      - Sebb767 4y ago
        And the "not related to the deal" part is the problem - even if he wins this claim, this does not necessarily constitute MAE and therefore does not get him out of the deal. Due diligence includes verifying those numbers or at least checking where they come from, especially if they are as important to the deal as they now appear to be.
        ergocoder 4y ago
        It may or may not help. But it would certainly be a major bargaining chip for Elon. No execs want to go to jail for fraud. These execs are worth 50m+. Losing money is insignificant. Going to jail is a very huge deal
        Sebb767 4y ago
        It would be quite funny if he got Twitter into SEC trouble, just to become it's owner a bit later; especially given their history. Anyway, this is just my unprofessional opinion, but for him to be able to prove intentional deceit is already going to be quite hard. Conditional on him managing that, he'd need to use a number he - by his own statements - hardly believed to clear the incredibly high bar of MAE in Delaware. I think it's very unlikely that he will be able to exit the deal this way. To address your edit: I don't see how he'd manage to prove fraud without already providing enough evidence to send execs to jail. Also, the SEC would be the one prosecuting people anyway - he has nothing to bargain with. Lastly, this does not change the fact that the bot number, no matter how made up, will very likely not be sufficient to get out of this deal.
        ergocoder 4y ago
  - AnimalMuppet 4y ago
    "Due diligence" is the diligence (= carefulness) that you should exert before signing on the deal. Don't trust what the other side tells you. Instead, check. "Due process" is the legal steps that have to be followed in a court case (especially a criminal one). You can waive due process - if you're not going to make the government work through all the steps, because you know that it's not going to get you any benefit in the end, say. Musk waived due diligence, not due process.
  - gbear605 4y ago
    They don’t mean the same thing, but the reason he’s giving for walking away (an estimate of the fraction of mDAUs that are bots) is not a valid reason under the contract. It would have to be a material statement (ie. affect the value by 25%, iirc), plus the phrasing in the filings was “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 filing basically says nothing, so it can’t be wrong in a material way. It’s just not a valid reason under the contract.
    - astrange 4y ago
      It doesn’t even make sense as a reason to be upset, because - he was buying the company in order to solve the bot problem, and it being worse just makes that more important. - if Twitter is overreporting their real users then their revenue per user is actually higher and they’re a better business.
sweezyjeezy 4y ago
Why would he lose $5B? He wouldn't have to forfeit the shares already owned as far as I know?
- SXX 4y ago
  I guess it wouldn't be 5B loss, but there is a good chance shares will drop enough in value for him to lose more than $1B.
majormajor 4y ago
Of course, if Elon's right, and Twitter has been showing ads to way more bots than anyone else has realized[0], than that's gonna seriously tank Twitter's value. So my question is: what did he learn between the point when he decided to buy all those shares at a high price and the point where he started making a stink about bots? He hasn't made any claims based on new information. Did he just spend a massive amount of money on Twitter stock with zero idea of how much it should actually be worth, and only have second thoughts after signing a deal to buy the company? There's no scenario where his actions look economically sound, so the implausible-on-the-face-of-it "do it for the lulz" argument seems like one of the last best guesses available. [0] the internet ad space is filled with players, and generally a low-trust industry for obvious reasons, so this claim strikes me as extremely dubious, but here we are
- ben_jones 4y ago
  > "do it for the lulz" argument seems like one of the last best guesses available Or Musk is, was, and always will be, a financier, and is doing all this because at some point it made sense to his broader financial plans - dumping Tesla stock near its peak and minimizing the fallback. Then there was you know, an economic collapse, shortly after this started going into motion. Maybe, I don't know, the financial collapse had some impact on the cost/benefit and changed the course? Why do people always throw out the simplest most obvious solution in favor of conspiracy and cult-of-personality worship ("do it for the lulz")? 1) Musk wanted to offload Tesla (which he himself said was overvalued). Twitter was as good a reason as any to do so. 2) Economic collapse made the deal unfeasible. 3) When you owe the bank a billion dollars its the banks problem, Musk knows the deal is worthless and is more then happy to let the courts settle it to optimize his personal costs.
  - majormajor 4y ago
    This theory certainly has logic to it but, at this point, is "acting before he thinks" really not an option for "simplest most obvious solution" for Elon Musk's non-SpaceX/Telsa-core-business-decision actions? How many more 4/20 references does he need to sneak in? He disclosed his share in early April and then signed the deal in late April. TWTR today is about where it was from January-April pre-news-of-his-investment, so the value of his initial Twitter investment actually looks pretty stable even post-"economic collapse" (the Dow, for instance, is down 10% over this period, hence the square quotes - obviously no picnic, but did people think the crazy 2020 runup wouldn't lead to a correction?). TWTR has already largely corrected from it's 2020/2021 peak, other than that it fairly steadily went up to be almost double what it was worth 5 years ago, still seems like a solid buy if you're trying to diversify your Tesla holdings that grew way more quickly than that. TSLA is down 37% meanwhile from April 4 peak before the Twitter drama started. If that's because of the deal, and if that's weighing on his plans now, clearly even in the most rational case he wildly mis-judged that one. And in getting out of some TSLA he also got INTO a bunch of TWTR (unless possibly he already sold that at the peak?). Which he now seems determined to tank the value of. But heck, since Twitter is still valued about where it was before, but Tesla has fallen, "getting out of some Tesla stock for something more stable" seems to still make a lot of sense. He thought it was worth buying at this share price before, he even made an offer to pay a big premium (against a higher price driven by the news of his move, of course), so... what of that was unforseeable or seems dramatically different.
tedunangst 4y ago
The big question for me is how quickly will the bot problem be "resolved" after it's apparent the deal is going through whether he likes it or not.
deleted 4y ago
[deleted]

Eji1700 4y ago

If he's allowed to actually walk. Legally speaking he waived due process and twitter is suing with the specific performance clause. If it were just about anyone else I'd say there's 0 chance they'd be getting out of this, but since it's musk he might be able to walk.

cwkoss 4y ago
didn't he waive due diligence, not due process? Or do those mean the same thing in this context?
- Sebb767 4y ago
  He signed that he knows everything he needs to know about the company and wants to buy it. Now he wants to back out with the claim that he actually did not know everything, which is a pretty hard sell. Though it's important to note that his lawyers are well aware that this will never fly and therefore the actual court case is them trying to find an edge case where Twitter actually broke the contract (that's the shoddy talk about Twitter apparently rate limiting the data analysis). Which is still a hard sell, but there's at least a chance they'll get away with it.
  - formercoder 4y ago
    He’s not claiming that he actually didn’t know everything, he’s claiming that Twitter lied in public filings not related to the deal.
    - dragonwriter 4y ago
      > He’s not claiming that he actually didn’t know everything Yes; he is. > he’s claiming that Twitter lied in public filings not related to the deal. He explicitly claims that they are deeply related to the deal.
    - Sebb767 4y ago
      And the "not related to the deal" part is the problem - even if he wins this claim, this does not necessarily constitute MAE and therefore does not get him out of the deal. Due diligence includes verifying those numbers or at least checking where they come from, especially if they are as important to the deal as they now appear to be.
      - ergocoder 4y ago
        It may or may not help. But it would certainly be a major bargaining chip for Elon. No execs want to go to jail for fraud. These execs are worth 50m+. Losing money is insignificant. Going to jail is a very huge deal
        Sebb767 4y ago
        It would be quite funny if he got Twitter into SEC trouble, just to become it's owner a bit later; especially given their history. Anyway, this is just my unprofessional opinion, but for him to be able to prove intentional deceit is already going to be quite hard. Conditional on him managing that, he'd need to use a number he - by his own statements - hardly believed to clear the incredibly high bar of MAE in Delaware. I think it's very unlikely that he will be able to exit the deal this way. To address your edit: I don't see how he'd manage to prove fraud without already providing enough evidence to send execs to jail. Also, the SEC would be the one prosecuting people anyway - he has nothing to bargain with. Lastly, this does not change the fact that the bot number, no matter how made up, will very likely not be sufficient to get out of this deal.
        ergocoder 4y ago
- AnimalMuppet 4y ago
  "Due diligence" is the diligence (= carefulness) that you should exert before signing on the deal. Don't trust what the other side tells you. Instead, check. "Due process" is the legal steps that have to be followed in a court case (especially a criminal one). You can waive due process - if you're not going to make the government work through all the steps, because you know that it's not going to get you any benefit in the end, say. Musk waived due diligence, not due process.
- gbear605 4y ago
  They don’t mean the same thing, but the reason he’s giving for walking away (an estimate of the fraction of mDAUs that are bots) is not a valid reason under the contract. It would have to be a material statement (ie. affect the value by 25%, iirc), plus the phrasing in the filings was “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 filing basically says nothing, so it can’t be wrong in a material way. It’s just not a valid reason under the contract.
  - astrange 4y ago
    It doesn’t even make sense as a reason to be upset, because - he was buying the company in order to solve the bot problem, and it being worse just makes that more important. - if Twitter is overreporting their real users then their revenue per user is actually higher and they’re a better business.

sweezyjeezy 4y ago

Why would he lose $5B? He wouldn't have to forfeit the shares already owned as far as I know?

SXX 4y ago
I guess it wouldn't be 5B loss, but there is a good chance shares will drop enough in value for him to lose more than $1B.

majormajor 4y ago

Of course, if Elon's right, and Twitter has been showing ads to way more bots than anyone else has realized[0], than that's gonna seriously tank Twitter's value. So my question is: what did he learn between the point when he decided to buy all those shares at a high price and the point where he started making a stink about bots? He hasn't made any claims based on new information. Did he just spend a massive amount of money on Twitter stock with zero idea of how much it should actually be worth, and only have second thoughts after signing a deal to buy the company? There's no scenario where his actions look economically sound, so the implausible-on-the-face-of-it "do it for the lulz" argument seems like one of the last best guesses available. [0] the internet ad space is filled with players, and generally a low-trust industry for obvious reasons, so this claim strikes me as extremely dubious, but here we are

ben_jones 4y ago
> "do it for the lulz" argument seems like one of the last best guesses available Or Musk is, was, and always will be, a financier, and is doing all this because at some point it made sense to his broader financial plans - dumping Tesla stock near its peak and minimizing the fallback. Then there was you know, an economic collapse, shortly after this started going into motion. Maybe, I don't know, the financial collapse had some impact on the cost/benefit and changed the course? Why do people always throw out the simplest most obvious solution in favor of conspiracy and cult-of-personality worship ("do it for the lulz")? 1) Musk wanted to offload Tesla (which he himself said was overvalued). Twitter was as good a reason as any to do so. 2) Economic collapse made the deal unfeasible. 3) When you owe the bank a billion dollars its the banks problem, Musk knows the deal is worthless and is more then happy to let the courts settle it to optimize his personal costs.
- majormajor 4y ago
  This theory certainly has logic to it but, at this point, is "acting before he thinks" really not an option for "simplest most obvious solution" for Elon Musk's non-SpaceX/Telsa-core-business-decision actions? How many more 4/20 references does he need to sneak in? He disclosed his share in early April and then signed the deal in late April. TWTR today is about where it was from January-April pre-news-of-his-investment, so the value of his initial Twitter investment actually looks pretty stable even post-"economic collapse" (the Dow, for instance, is down 10% over this period, hence the square quotes - obviously no picnic, but did people think the crazy 2020 runup wouldn't lead to a correction?). TWTR has already largely corrected from it's 2020/2021 peak, other than that it fairly steadily went up to be almost double what it was worth 5 years ago, still seems like a solid buy if you're trying to diversify your Tesla holdings that grew way more quickly than that. TSLA is down 37% meanwhile from April 4 peak before the Twitter drama started. If that's because of the deal, and if that's weighing on his plans now, clearly even in the most rational case he wildly mis-judged that one. And in getting out of some TSLA he also got INTO a bunch of TWTR (unless possibly he already sold that at the peak?). Which he now seems determined to tank the value of. But heck, since Twitter is still valued about where it was before, but Tesla has fallen, "getting out of some Tesla stock for something more stable" seems to still make a lot of sense. He thought it was worth buying at this share price before, he even made an offer to pay a big premium (against a higher price driven by the news of his move, of course), so... what of that was unforseeable or seems dramatically different.

tedunangst 4y ago

The big question for me is how quickly will the bot problem be "resolved" after it's apparent the deal is going through whether he likes it or not.

deleted 4y ago

[deleted]