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The reason why Musk eventually bought Twitter, when he did, and at the price he paid, was to avoid having to testify under oath in the lawsuit against him. He w

by bambax 4y ago

The reason why Musk eventually bought Twitter, when he did, and at the price he paid, was to avoid having to testify under oath in the lawsuit against him. He was going to be deposed, exposed, and in the end he was also going to lose and suffer the indignity of having to pay a high price for something he fiercely said he didn't want anymore. Better bite the bullet earlier than later. Now that doesn't explain why he wanted to buy Twitter in the first place, but there doesn't necessarily need to be a strong reason. He got frustrated as a user, he got bored, he thought "hey why not buy that thing" and that set a series of cogs in motion that couldn't be stopped before it was too late. (He's the richest guy in the world; one would assume there are armies of people around him making sure his desires are met fast. If he says "let's buy Twitter", then those people make it happen.) I don't think he has the beginning of a plan. He said "free speech!", and then also "but not hellscape!" But, some amount of free speech without being a pure hellscape is close to what Twitter is right now. That's not a plan for the future, that's an observation of how things are at present. If he can simply wait for Twitter to be worth as much as he paid for it, so that he can sell it again and cover his losses, that will be a fairly good outcome. Easier said than done, though.

narrator 4y ago
The job of a good lawyer is to predict what the judge is going to say after the client has wasted his money on litigating. The main purpose of going all the way to trial is if someone is lying. Then that's the job of the jury to determine who's lying and who's telling the truth.
rburhum 4y ago
He implied in a few interviews that he wants to turn it into a WeChat version of the west. Doesn't 200M+ daily active users opens up that door.
- djvdq 4y ago
  You have to remember that those 200M+ users are located in many, many countries, with different laws and customs
- bambax 4y ago
  He mentioned "the everything app" I think once? But -- IMHO -- people who tweet don't fit the profile of people who would need such an app. They're trying to sell stuff, not buy stuff.
  - Slartie 4y ago
    They are also demonstrating that they're likely to use specialized services for specific tasks - Twitter is a very specialized tool. This is the exact opposite from someone who draws any profit from an "everything app". If not even Facebook with its userbase of people already using a single mediocre tool for different purposes manages to crack the "everything app for the west" nut, Twitter is bound to fail. Maybe everyone is bound to fail simply because the concept does not fly in the west.
- dathinab 4y ago
  It doesn't for the same reason there isn't already a "WeChat" of the west. Additionally Twitter has as far as I can tell (speculative) a much much less stable foundation in the EU then it seems if you just look at daily users count.
  - nghou 4y ago
    > It doesn't for the same reason there isn't already a "WeChat" of the west. iMessage? (US) WhatsApp? (EU)
    - dathinab 4y ago
      WeChat is so much more then WhatsApp (for China) EDIT: It's not only what everyone has (WeChat in China), instead of just many people (WhatsApp in EU). It's also the default payment service, you pay through it all the time in all kinds of situations. It's like WhatsApp but more monopolistic combined with PayPal but also more monopolistic. And both with full government support so no worries some bank lobby gets in you way.
    - rburhum 4y ago
      payments? community? local user discovery? etc etc
- adrr 4y ago
  Twitter is a microblogging site. Not a messaging platform. He could have bought snapchat which is based on messaging.
  - tomrod 4y ago
    Twitter is a pool of highly capable people, a large user base, and, currently, opportunity. A messaging platform added to their microblogging service is not outside the realm. It already has DM and Vine-like video.
    - adrr 4y ago
      Digg tried to pivot too.
      - tomrod 4y ago
        Indeed. They weren't as successful after. Perhaps Twitter repeats history, or perhaps they do something new.
- bushbaba 4y ago
  You assume 200M+ human daily active users. A large portion of Twitter's DAU & MAU are bots.
- jameshart 4y ago
  I can't square that ambition with the idea that Twitter is 4x overstaffed and needs to shed 75% of its workforce, though. If he has ambitions to turn Twitter into an Everything App, he'll need to diverrt a significant portion of the workforce onto that project, leaving him with a fraction of a fraction of the current workforce to keep Twitter's microblogging and ad shilling platform up and running.
dragontamer 4y ago
> If he can simply wait for Twitter to be worth as much as he paid for it, so that he can sell it again and cover his losses, that will be a fairly good outcome. This is a leveraged buyout. That means that $13 Billion was borrowed from Morgan Stanley to make this deal happen, and Twitter is the owner of that debt. Estimates are ~$1.3 Billion / year in interest payments (the most risky $3 Billion is unsecured loans, expected to be CCC-rated, and CCC-rated debt is around 16% right now). So I think 10% is a reasonable estimate for what this financing will cost. In 2021, Twitter made... _NEGATIVE_ 200-million bucks. So... yeah. Add $1.3 Billion of interest payments on top of that, and I think we got a problem here folks. Another note: TWTR's revenue (mostly advertisements) is $5 Billion/year. I really dunno where they're gonna find $1.3 Billion/year from. ----- What Musk bought here is a white elephant. It will cost tons of money just to stay afloat, let alone "make money" or even "retain value". If Elon Musk holds onto this and "only" loses a few dozen billion over the next few years, I think he'd have done a good job. I have no expectation that TWTR will remain a $44 Billion company over the next decade. Selling the company off for $20 Billion 5 years from now (IE: a $24 Billion loss) would be a herculean effort as it is IMO.
- dpflan 4y ago
  The debt payments and IR -- was this the trick to have the money upfront, then sell the debt, so banks, do they own any amount of Twitter or did they get a payout immediately after "the ink dried", and now this $1.3bb scenario is going to be offloaded onto someone else? Financial engineering that leads to Musk's ownership and banks payout. And now is the when the price of that debt is highest, so the highest possible payout (?). Because you've pointed out the paradoxical financials, IR payments seem whimsical, or a way to eventually sell more TSLA stock... Any good resources on the deal structure?
  - dragontamer 4y ago
    I don't recall the full details. But I think it was roughly 50% effectively fixed (in April 2022) and 50% effectively adjustable. Thus: the estimate for ~10% for the overall debt deal. The fixed-portion of the debt is already hilarious to look at, IIRC Morgan Stanley expected 11% yields for the CCC tranche, but are now looking at 16%+. Morgan Stanley's losses are already in the hundreds-of-millions.
VBprogrammer 4y ago
When normal people get drunk and have bad ideas they phone an ex-girlfriend or sign up to a marathon. When you are the richest man in the you blow half your fortune on a social media platform.
newsclues 4y ago
I view Elon's purchase of Twitter the same as other ultra wealthy people that purchase a news or media business (The Atlantic - Laurene Powell, Washington Post - Bezos), a way to shape narratives and control information. The question is, was a new media platform worth the price compared to a "newspaper" or magazine?
saltminer 4y ago
I've read some speculation that Musk did it because he wanted to dump a bunch of Tesla stock without tanking its price (with the justification being to help fund the Twitter buyout) and thought he could somehow back out of the agreement unscathed. I have no idea how accurate that is, though, and I'm certainly not a lawyer.
- Zigurd 4y ago
  An odd was to do that. TSLA is down by half from last year. If you believe the TSLA bulls he sold at the bottom to buy something that instantly loses him half what he paid.
leobg 4y ago
He said exactly why he bought Twitter. Yet you dismiss his reasons out of hand. Don’t even mention them in your analysis. And presents this theory of a very reactive, fearful personality who is motivated by money and has little vision for the future. (People will agree with you. Because the question they ask is: “How is Elon Musk a smaller person than I am?”. They ask that not because they want to understand. But because they think this was somehow some form of personal competition. “If Elon is good I am bad“. Nietzsche said, another persons vanity triggers us only if we feel their vanity to stand in the way of our own. And sometimes, that leads us to see vanity where there might be none. Because what we’re looking at, really, is the mirror.)
- ceejayoz 4y ago
  > He said exactly why he bought Twitter. He's said any number of things that are either not true or at least misleading over the years. Taking tweets at complete face value with Musk is... unwise.
  - leobg 4y ago
    Not my experience, at all. He’s been very consistent about what he values throughout the years. And he has also been very honest about when he had been wrong (say about “having egg on his face” about FSD timelines, or “seeing the world in radar”).
    - ceejayoz 4y ago
      "Am considering taking Tesla private at $420. Funding secured." https://www.reuters.com/business/autos-transportation/court-says-musk-recklessly-tweeted-that-funding-secured-taking-tesla-private-2022-05-11/ https://www.reuters.com/business/autos-transportation/court-... > A U.S. judge has determined that Elon Musk's 2018 tweets that funding had been secured to take electric car maker Tesla private was inaccurate and reckless, saying "there was nothing concrete" about financing from Saudi Arabia's sovereign wealth fund at that time.
- dragontamer 4y ago
Grim-444 4y ago
> But, some amount of free speech without being a pure hellscape is close to what Twitter is right now. That's not a plan for the future, that's an observation of how things are at present I think the issue is that a lot of people disagree with your assessment and think the censorship has gone too far for far too long. You might not think so, but a significant portion of the population does.
romeros 4y ago
Or it could be that he was tired of Ideologues controlling the narrative and deciding what is right/wrong/misinformation/fake news etc for the rest of us.
Zigurd 4y ago
It had to be a hell of a problem he faced should the suit move forward: Twitter is worth perhaps half the price Elon paid Tesla is worth half what is was when Elon started accumulating shares IOW Elon used money that cost him 2X what is did last year to buy something worth 0.5X what he just now paid (assuming the check clears). Even for the Richest Man Ever that will sting. Innovation may take a back seat to cost cutting, like a basic LBO. Elon has creditors who lent him about $13B that got used to buy a thing worth half what was paid. What are the covenants on that? Twitter has about $4B in existing long term debt. Twitter free cash flow is negative, and 3X more negative than a year earlier. Where will debt service come from? These are the mundane, apolitical reasons Twitter faces more headwinds now than before. Elon is much about doing more with less. He will need a lot of that to happen. Twitter was badly run by several metrics.
deleted 4y ago
[deleted]
theginger 4y ago
I think he has handed people enough rope to hang themselves. It is now very clear if those figures were dodgy the deal was off so everyone involved knew the stakes were incredibly high. He now has access to all the data, all the communications and all the time he wants to prove his case. If it turns out twitter has been misleading everyone then it just takes 1 or 2 people threatened with criminal charges to make deals and everyone turns on everyone and it all collapses with enough evidence for many lawsuits to claw back money. If the evidence isn't there because they didn't mislead anyone then that's also fine, he agreed a fair deal at the time based on accurate information.
rossjudson 4y ago
The political effects Musk is after are mostly accomplished by removing bans on a small number of people and accounts. The rest can stay (roughly) the same.
password1 4y ago
What I don't understand is the lawsuit from Twitter. There's an high risk that this is going to damage the company in the long run, so why did the company decided to force him to finish the deal? Sounds a bit kinda suicidal

by bambax 4y ago

narrator 4y ago

The job of a good lawyer is to predict what the judge is going to say after the client has wasted his money on litigating. The main purpose of going all the way to trial is if someone is lying. Then that's the job of the jury to determine who's lying and who's telling the truth.

rburhum 4y ago

He implied in a few interviews that he wants to turn it into a WeChat version of the west. Doesn't 200M+ daily active users opens up that door.

djvdq 4y ago
You have to remember that those 200M+ users are located in many, many countries, with different laws and customs
bambax 4y ago
He mentioned "the everything app" I think once? But -- IMHO -- people who tweet don't fit the profile of people who would need such an app. They're trying to sell stuff, not buy stuff.
- Slartie 4y ago
  They are also demonstrating that they're likely to use specialized services for specific tasks - Twitter is a very specialized tool. This is the exact opposite from someone who draws any profit from an "everything app". If not even Facebook with its userbase of people already using a single mediocre tool for different purposes manages to crack the "everything app for the west" nut, Twitter is bound to fail. Maybe everyone is bound to fail simply because the concept does not fly in the west.
dathinab 4y ago
It doesn't for the same reason there isn't already a "WeChat" of the west. Additionally Twitter has as far as I can tell (speculative) a much much less stable foundation in the EU then it seems if you just look at daily users count.
- nghou 4y ago
  > It doesn't for the same reason there isn't already a "WeChat" of the west. iMessage? (US) WhatsApp? (EU)
  - dathinab 4y ago
    WeChat is so much more then WhatsApp (for China) EDIT: It's not only what everyone has (WeChat in China), instead of just many people (WhatsApp in EU). It's also the default payment service, you pay through it all the time in all kinds of situations. It's like WhatsApp but more monopolistic combined with PayPal but also more monopolistic. And both with full government support so no worries some bank lobby gets in you way.
  - rburhum 4y ago
    payments? community? local user discovery? etc etc
adrr 4y ago
Twitter is a microblogging site. Not a messaging platform. He could have bought snapchat which is based on messaging.
- tomrod 4y ago
  Twitter is a pool of highly capable people, a large user base, and, currently, opportunity. A messaging platform added to their microblogging service is not outside the realm. It already has DM and Vine-like video.
  - adrr 4y ago
    Digg tried to pivot too.
    - tomrod 4y ago
      Indeed. They weren't as successful after. Perhaps Twitter repeats history, or perhaps they do something new.
bushbaba 4y ago
You assume 200M+ human daily active users. A large portion of Twitter's DAU & MAU are bots.
jameshart 4y ago
I can't square that ambition with the idea that Twitter is 4x overstaffed and needs to shed 75% of its workforce, though. If he has ambitions to turn Twitter into an Everything App, he'll need to diverrt a significant portion of the workforce onto that project, leaving him with a fraction of a fraction of the current workforce to keep Twitter's microblogging and ad shilling platform up and running.

dragontamer 4y ago

> If he can simply wait for Twitter to be worth as much as he paid for it, so that he can sell it again and cover his losses, that will be a fairly good outcome. This is a leveraged buyout. That means that $13 Billion was borrowed from Morgan Stanley to make this deal happen, and Twitter is the owner of that debt. Estimates are ~$1.3 Billion / year in interest payments (the most risky $3 Billion is unsecured loans, expected to be CCC-rated, and CCC-rated debt is around 16% right now). So I think 10% is a reasonable estimate for what this financing will cost. In 2021, Twitter made... _NEGATIVE_ 200-million bucks. So... yeah. Add $1.3 Billion of interest payments on top of that, and I think we got a problem here folks. Another note: TWTR's revenue (mostly advertisements) is $5 Billion/year. I really dunno where they're gonna find $1.3 Billion/year from. ----- What Musk bought here is a white elephant. It will cost tons of money just to stay afloat, let alone "make money" or even "retain value". If Elon Musk holds onto this and "only" loses a few dozen billion over the next few years, I think he'd have done a good job. I have no expectation that TWTR will remain a $44 Billion company over the next decade. Selling the company off for $20 Billion 5 years from now (IE: a $24 Billion loss) would be a herculean effort as it is IMO.

dpflan 4y ago
The debt payments and IR -- was this the trick to have the money upfront, then sell the debt, so banks, do they own any amount of Twitter or did they get a payout immediately after "the ink dried", and now this $1.3bb scenario is going to be offloaded onto someone else? Financial engineering that leads to Musk's ownership and banks payout. And now is the when the price of that debt is highest, so the highest possible payout (?). Because you've pointed out the paradoxical financials, IR payments seem whimsical, or a way to eventually sell more TSLA stock... Any good resources on the deal structure?
- dragontamer 4y ago
  I don't recall the full details. But I think it was roughly 50% effectively fixed (in April 2022) and 50% effectively adjustable. Thus: the estimate for ~10% for the overall debt deal. The fixed-portion of the debt is already hilarious to look at, IIRC Morgan Stanley expected 11% yields for the CCC tranche, but are now looking at 16%+. Morgan Stanley's losses are already in the hundreds-of-millions.

VBprogrammer 4y ago

When normal people get drunk and have bad ideas they phone an ex-girlfriend or sign up to a marathon. When you are the richest man in the you blow half your fortune on a social media platform.

newsclues 4y ago

I view Elon's purchase of Twitter the same as other ultra wealthy people that purchase a news or media business (The Atlantic - Laurene Powell, Washington Post - Bezos), a way to shape narratives and control information. The question is, was a new media platform worth the price compared to a "newspaper" or magazine?

saltminer 4y ago

I've read some speculation that Musk did it because he wanted to dump a bunch of Tesla stock without tanking its price (with the justification being to help fund the Twitter buyout) and thought he could somehow back out of the agreement unscathed. I have no idea how accurate that is, though, and I'm certainly not a lawyer.

Zigurd 4y ago
An odd was to do that. TSLA is down by half from last year. If you believe the TSLA bulls he sold at the bottom to buy something that instantly loses him half what he paid.

leobg 4y ago

He said exactly why he bought Twitter. Yet you dismiss his reasons out of hand. Don’t even mention them in your analysis. And presents this theory of a very reactive, fearful personality who is motivated by money and has little vision for the future. (People will agree with you. Because the question they ask is: “How is Elon Musk a smaller person than I am?”. They ask that not because they want to understand. But because they think this was somehow some form of personal competition. “If Elon is good I am bad“. Nietzsche said, another persons vanity triggers us only if we feel their vanity to stand in the way of our own. And sometimes, that leads us to see vanity where there might be none. Because what we’re looking at, really, is the mirror.)

ceejayoz 4y ago
> He said exactly why he bought Twitter. He's said any number of things that are either not true or at least misleading over the years. Taking tweets at complete face value with Musk is... unwise.
- leobg 4y ago
  Not my experience, at all. He’s been very consistent about what he values throughout the years. And he has also been very honest about when he had been wrong (say about “having egg on his face” about FSD timelines, or “seeing the world in radar”).
  - ceejayoz 4y ago
    "Am considering taking Tesla private at $420. Funding secured." https://www.reuters.com/business/autos-transportation/court-says-musk-recklessly-tweeted-that-funding-secured-taking-tesla-private-2022-05-11/ https://www.reuters.com/business/autos-transportation/court-... > A U.S. judge has determined that Elon Musk's 2018 tweets that funding had been secured to take electric car maker Tesla private was inaccurate and reckless, saying "there was nothing concrete" about financing from Saudi Arabia's sovereign wealth fund at that time.
dragontamer 4y ago

Grim-444 4y ago

> But, some amount of free speech without being a pure hellscape is close to what Twitter is right now. That's not a plan for the future, that's an observation of how things are at present I think the issue is that a lot of people disagree with your assessment and think the censorship has gone too far for far too long. You might not think so, but a significant portion of the population does.

romeros 4y ago

Or it could be that he was tired of Ideologues controlling the narrative and deciding what is right/wrong/misinformation/fake news etc for the rest of us.

Zigurd 4y ago

It had to be a hell of a problem he faced should the suit move forward: Twitter is worth perhaps half the price Elon paid Tesla is worth half what is was when Elon started accumulating shares IOW Elon used money that cost him 2X what is did last year to buy something worth 0.5X what he just now paid (assuming the check clears). Even for the Richest Man Ever that will sting. Innovation may take a back seat to cost cutting, like a basic LBO. Elon has creditors who lent him about $13B that got used to buy a thing worth half what was paid. What are the covenants on that? Twitter has about $4B in existing long term debt. Twitter free cash flow is negative, and 3X more negative than a year earlier. Where will debt service come from? These are the mundane, apolitical reasons Twitter faces more headwinds now than before. Elon is much about doing more with less. He will need a lot of that to happen. Twitter was badly run by several metrics.

deleted 4y ago

[deleted]

theginger 4y ago

I think he has handed people enough rope to hang themselves. It is now very clear if those figures were dodgy the deal was off so everyone involved knew the stakes were incredibly high. He now has access to all the data, all the communications and all the time he wants to prove his case. If it turns out twitter has been misleading everyone then it just takes 1 or 2 people threatened with criminal charges to make deals and everyone turns on everyone and it all collapses with enough evidence for many lawsuits to claw back money. If the evidence isn't there because they didn't mislead anyone then that's also fine, he agreed a fair deal at the time based on accurate information.

rossjudson 4y ago

The political effects Musk is after are mostly accomplished by removing bans on a small number of people and accounts. The rest can stay (roughly) the same.

password1 4y ago

What I don't understand is the lawsuit from Twitter. There's an high risk that this is going to damage the company in the long run, so why did the company decided to force him to finish the deal? Sounds a bit kinda suicidal