Elon’s Out(bloomberg.com) |
Elon’s Out(bloomberg.com) |
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.
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.)
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.
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.
> 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.
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?
The timing makes no sense for bots to be a legit explanation. Elon is just a troll.
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.
1.) Twitter would need to be egregiously wrong. If Musk found that 7% of mDAU were bots, he would likely still be forced to purchase
2.) I feel like the inverse; that Twitter, it’s board, manager and employees were all in on a massive conspiracy to understate the bot problem for almost a decade. The number they presented wasn’t something they just gave musk, it was a number that they have been reporting to the SEC and investors for several years. It would be a massive fraud for Twitter to have committed.
In my opinion the whole thing is a massive distraction so Elon could pull out. The amount of people who only read (but never post) likely dwarfs the number of bots elon suspects there is (if the 90-9-1 rule is anything to go by). The mDAU number is a different, much larger, number than actual tweeters
The second, maybe. I doubt that Twitter would be interested.
-- not an M&A lawyer
And even if so, I don't think 2% of a user count is a "material adverse change" by the merger agreement.
Twitter has to pursue receiving that-- either in consummation of the deal or adequate recompense. If their board doesn't, they'll be sued into oblivion by their own shareholders. It's do-or-die.
That doesn't mean, though, if they were offered a couple billion less for Twitter and were sure that Musk would then close... that they might not blink, rather than wobble $19B+ on a court case.
The problem is, a $2B discount on Twitter doesn't improve Musk's financial condition much or make the deal materially less stupid for him.
Per Levine:
But it’s messy, and you can sort of see a path to “Musk says the deal is off, so his banks walk away, so his financing isn’t available, so he doesn’t have to close the deal and can get away with just paying $1 billion.”
And the "Musk says the deal is off" part doesn't even have to enter into it. The banks could come, independently, to a last-minute change of opinion on his collateral--whatever that was for this deal.
When it comes to "sued into oblivion by their own shareholders", who exactly are they? ETFs & mutual funds, of which Twitter is only a fraction of a sliver of their portfolio? CIA/DOD "dark money", stirring up foreigners (& domestics!) against "rogue" regimes (i.e. "arab spring")? Large shareholders (like Saudi, or hedgies), who were the ones giving the board up-to-the-minute instruction on how to (mis)handle the Musk offer in the first place?
Twitter has been a propaganda asset for a long time. The large stake-holders surely understand that they have far more to lose in discovery & cross-examination than Elon's offer. I am talking Snowden-tier revelations here.
If Musk can't close because he's blown up his financing... you think this lets him get off clean? He's attempting to walk away before any such eventuality has occurred and Twitter shareholders are incurring costs.
> The banks could come, independently, to a last-minute change of opinion on his collateral--whatever that was for this deal.
If that happened, that's something he should have argued in his letter and something there would be evidence of before Musk tried to walk away.
> When it comes to "sued into oblivion by their own shareholders", who exactly are they?
High powered law firm representing a few chosen shareholders that gets a class designated of all Twitter holders that don't opt out.... just like substantially all shareholder lawsuits of public companies.
Asking this question this way makes me wonder if you have any background knowledge here at all.
My words were "slap on the wrist." I think only having to pay $1B instead of $46.5B meets the criteria.
> something he should have argued in his letter
That's Levine's analysis of, "if the banks don’t put up their $13 billion then he doesn’t have to put up his $33.5 billion".
Going by Levine's "Exhibit E", I find it hard to believe that the banks generated this much verbiage without a single escape hatch:
https://www.sec.gov/Archives/edgar/data/0001418091/000110465...
> gets a class designated of all Twitter holders
Yes. I understand how class action works. If Twitter were a normal company, that's what one would (correctly) expect to happen. But it isn't. I think Twitter would take on a class action before airing its dirty laundry.
The real wobble is about $19B-- the difference between Twitter's market value and the acquisition offer. I think it is likely Elon pays well in excess of $1B, but maybe captures a little bit of that $19B for himself.
> That's Levine's analysis of, "if the banks don’t put up their $13 billion then he doesn’t have to put up his $33.5 billion".
Yah, and getting the banks to walk and then trying to walk from the deal would be a way to try and pay only $1B. The problem is, he's walked before the banks.
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.
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.
But that's not how it works. That's why we have contracts, and covenants, etc.: it's so that, if conditions change, one party cannot say "oops, sorry, changed my mind" and walk.
(Also, the offer "Elon got stuck with" is his own, and even bears his childish signature of a weed joke.)
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.
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.
We see in states where such an expectation is not present, that it becomes an enormous invisible drag on all business activity and degrades the civic functioning of society.
One of the crowning achievements of Western Liberalism was the concept of "rule of law" and that there would exist an impartial, powerful judiciary independent of political power that could bring massive resources to bear to enforce contracts.
But there are always exceptions written in the contracts and Elon would be foolish not to spend a few million to try to trigger an exception to renegotiate the contract. It just makes business sense.
(Not that they've ever been perfect, but I feel like we're on the decline and they need tending).
It’s like selling a house and buyer makes an offer with no contingencies.
Sure, you can sue them to close the deal but the juice isn’t worth the squeeze. Does Twitter want to be locked into some multi-year court battle?
They’ll settle and the news will move onto something else.
Delaware courts are pretty fast. The court case could conceivably be finished before the end of this year.
LOL, I'm sure the juice will be worth the squeeze on a $44 billion dollar house.
That really depends on the offer you accepted (A), the current value of the house (B), the cost of litigation (C), and the price you put on your time and mental energy (D). If A > B + C + D, it makes sense to force the buyer to close. And in most cases, you're relying on the buyer to close in order to be able to close on the house you're moving to so you may have no choice.
It’s a profitable venture for twitter
Those 44 billion USD may be worth a lot less in 2024 or 2025.
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.
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.
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.
You’re welcome.
By imaginging them as different, you are giving them great power and throwing away your own. You are as smart as they are.
Imagine some lowly millionaire putting a bid in for a piece of land / cottage he wants, and the karma that can come from that. Same thing, different scale.
Not necessarily, but those are the ones that you will hear the most about.
No, seriously. Just keep finding better ones.
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-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.
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.
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.
Link: https://www.bloomberg.com/account/newsletters/money-stuff
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?
I cannot legally name names but this happens all the time.
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.
It's bad, clearly, when this has negative externalities. A better Elon would stop himself from hurting people with these adventures - but, I also think it's possible that without this trait, whatever you call it, Elon wouldn't have made the progress in the areas he has. On net I think he's still done a tremendous amount.
Let's stop glorifying the personality - when has that ever worked out well? The US will get along fine without Musk (maybe better without this cult of personality).
https://en.wikipedia.org/wiki/Defense_Production_Act_of_1950
There is zero indication that he would do such a thing as he has no history of doing so. Elon spares no breath praising NASA any time he is asked about NASA.
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.
Musk is a special case because he has done things like threatening to ruin the careers of SEC lawyers who have come after him, and he has the power to make that happen.
Is this illegal? Probably. Does Musk get away with it? Yes.
"“What are they going to do if there is a judgment and he says, ‘Well, I’m still not going to buy it’?” said Zohar Goshen, professor of transactional law at Columbia Law School. “They don’t really have tools to force him to go through with it. You don’t put people in jail because they don’t buy something.”"
https://www.wsj.com/articles/twitter-elon-musk-set-for-unpre...
There are remedies for people like you and me and most people who disobey court orders.
You can observe time and again that for those who are well connected and have some billions, the concept of law is far more malleable.
And by history, he may very well be right.
No. He’s suggesting that Musk’s wealth and power will make the people who work in US courts reluctant to impose financial penalties, find liability, and seize assets.
If you would like to go see ways in which the government fails to penalize powerful entities, look no further than the financial crisis fines. What you were told were 10 figure fines ended up becoming a few million dollars in consumer relief headaches
If your interpretation of the post suggests that a highly qualified attorney is getting the basics of US law absurdly incorrect, you might want to reconsider whether you're understanding the intended meaning.
(Here, Levine is making a specific claim about the remedies that the Delaware chancellory court typically employs, not about the authority of US courts)
How do you seize billions of dollars of stock without affecting share prices?
This is pure speculation on my part, but I don’t think it’s insane.
A Delaware court doesn’t have as much reach as you might think if most of Musk’s assets are not there.
This should have been obvious by now. Cash rules everything around me.
They will set their lawyers at it and come to a settlement. The super rich know better than to be at each others throats, that sort of behavior is for the poor...
I'm overall a fan of Musk, but this is too far. There simply must be rule of law for the United States to remain a dynamic society.
I have no idea what will happen here. Musk is clearly in the wrong both legally and ethically, but I suspect he will weasel out of resbonsibility for the damage he's caused. That alone will be bad enough, but the much larger risk is that it opens the floodgates for slightly less powerful scumbags to flout the law.
US law and democracy are shakier than I've seen in my lifetime, and Musk is actively taking a sledgehammer to a piece of that foundation for his own greed and whim.
The Delaware court isn't some magical place run by elves. It's a court in the US. You know what's a lot cheaper than $34 billion dollars, or heck even $1 billion dollars? $200k for 3-4 judges.
The Supreme Court just changed the law of the land based on a right-wing political campaign. You think a billionare, let alone the richest billionare is going to be subject to any serious consequences? It's absurd to even entertain this.
If enough money makes you untouchable by the law, then our system is simply broken.
The problem here isn't that wealth is power, it will always be power. The issue is that a single person has been allowed to accumulate too much.
Once a person has wealth over, say, $500 million, then there should be a 100% tax.
if you look at this as a problem with the rich, you're not being creative enough.
Speaking as if we're assuming Musk gets away with this, this is a justice enforcement problem -- when all the mega-rich are gone the justice system that displays this level of corruption will just skim the highest payers available to them; they won't just give up these corrupt practices because there isn't a local billionaire to tap.
On a practical level, every large financial institution with dollar assets (I mean this literally) has a far greater vested interest in maintaining a productive relationship with the Chancery than they do with Musk.
On a political level, could easily see the Delaware governor getting a kick out of sending the state police to arrest Musk for contempt, impound his assets.
Then again, Musk is a pretty good gambler.
If they don’t make an example of Musk (if he so deserves it), the same thing will happen and Delaware will become less useful for corporations.
This is completely wrong, right? The evidence might not be terrific but it's definitely more than a whisper.
The purchase price of 54.20 per share would net a lot more than a billion given the current share price.
Of all the funny things I have read this week this takes the cake, Biden will not allow him to get away with it, not a joke.
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??
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).
Given this and previous behaviour it seems pretty reasonable to assume that Musk was doing it for the lolz and to get attention as "the savior of free speech".
It's useful to note that after he signed the contract the market decided he wasn't serious about it. That's the closest we have to an objective judgement on Musk's intentions.
What is your calculation/reasoning that that is far more likely? How did you come to that?
I don’t have a dog in the hunt, I genuinely don’t care of the outcome, I don’t think Twitter is worth buying, I don’t care if Elon loses several billion or whatever. I just wouldn’t bet against him on something like this where he has much more information than any of us. That’s a pretty simple calculation.
Unfortunately, the time to do that was BEFORE he signed the contract. He didn't have to sign the contract without due diligence.
> Or maybe he has a lot more info than any of us internet loons at the moment?
Let me know how that turns out. Maybe the horse will sing. http://www-personal.umich.edu/~jlawler/aue/sig.html
>>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).
Again, from the latest filing, these are pretty damning:
>> In addition, during the June 30, 2022 call, Twitter’s representatives indicated for the first time that the workflow and processes for detecting spam and false accounts in the mDAU population is different and separate from the workflow and processes for identifying and suspending accounts in violation of Twitter’s policies. On that call, Twitter indicated that it would not be willing to provide information regarding the methodologies employed to identify and suspend such accounts.
Furthermore:
>> Despite public speculation on this point, Mr. Musk did not waive his right to review Twitter’s data and information simply because he chose not to seek this data and information before entering into the Merger Agreement. In fact, he negotiated access and information rights within the Merger Agreement precisely so that he could review data and information that is important to Twitter’s business before financing and completing the transaction.
Everything I've seen about Musk suggests that he is not particularly smart, but he is audacious. The hyperloop, the claims about autonomous driving, the boring company nonsense, and all sorts of other Tesla-related claims have all come out to be massive disappointments.
If 64,000 people bet on a coin flipping heads 16 times in a row, one of them is going to make it. That one is Elon Musk.
Other than that, this will be a side-show court battle now, unless one party has reason to continue arguing about it in public sphere.
A court can compel "specific performance" if the contract's terms require it.
I mean, if a street sweeper thinks he is King, you might convince or compel him to get treated when he comes in to contact with the system. But when the King thinks he is King... that is a much more difficult problem to deal with.. usually the kingdom joins in with his madness so as to keep him happy.
And tangential to that kind of behavior, Apple recently was paying a weekly 5 million Euro fine in the Netherlands rather than comply with an order from regulators.
What?? The value of their service is what their customers are willing to pay, which they've done so to the tune of BILLIONS per year. They would not continue to do so if they didn't get the value Twitter charges for their service.
Customers care about return on investment, and if spending $1 on the platform bring in more value than that, then they'll continue to spend on that platform. It really is that simple. Ad platforms have tools to help customers make the most of their spend, but ultimately ROI will dictate how much they'll spend on it.
I'm also a small-time Adwords user, and while I'm sure there's some click fraud going on, what I care about is getting more value per dollar than I spend.
Not to mention, how many corporations which Musk has shares in, are Delaware companies?
All of this, how to assess and collect damages, goes back to Roman law.
Maybe his ego is incompatible with not owning the things he relies on but in this case that ownership comes with a pretty hefty price tag and even people at Musk's level don't throw around tens of billions of dollars lightly (normally speaking, that is).
The price in the deal was set by professional lawyers at Goldman Sachs, so if it was beyond stupid, it was not Elon’s fault.
The deal was proposed before the recession, and at that time there were people proposing that the price is too low, because Twitter stock was over $60 at some point.
Of course in the current market Elon would pay a few billions to get out of the deal, but it’s a different deal than what it has been a few months ago.
The real question you should ask yourself is, if $44 billion is on the line, how long would you continue to pursue the case in the face of lawyers who are just trying to drag it out? Even if it went on for years (it's not assured Musk's lawyers could drag it out past a year), I can think of 44 billion reasons to continue with the case.
They won’t get any more buyers while it’s happening and it’s a massive distraction.
I’ve worked at companies like this and it brutal on employee morale. People just leave.
No one is going to buy Twitter at anything close to what Musk offered.
>I’ve worked at companies like this and it brutal on employee morale. People just leave.
You know how much Twitter engineers get paid, right? Twitter offer fully remote positions; no engineer with any sense is going to work at some no-name company for ~$100k if they can get an offer from Twitter, which will be almost twice that at least.
Who cares? If you think you're going to win, it's just Elon causing his future employees to quit. It's not going to affect your payday of $54.20. Similarly, no other buyers will make lower offers. Those are, by definition, worse than just suing.
https://fortune.com/2022/03/02/vladimir-putin-net-worth-2022...
During communism dignitaries didn’t have much money-wealth, or even true material wealth. But they were powerful nevertheless.
Still a strong #2, but he sure is trying his hardest for that top spot.
You imagine how distracting it would be for Twitter to have this in their quarterly updates? They certainly aren’t selling the company until it’s resolved.
My prediction - lots of public tough talk, then a quiet resolution.
Twitter is worth $28b and Musk's offer was $44b - a $16bn delta. The most annual revenue that a single law firm in the US has made is about $4bn.[1]
Any amount Twitter could spend on lawyers is nothing compared to what they stand to make by winning.
If you're accounting for whatever "toll" it takes on the company's leadership and employee morale, $16bn is about 2.75 years of operating expenses. Even if you assume every employee is operating at 50% mental capacity the entire time, it still makes sense to fight as long as it's over in <= 5 years.
1. https://en.wikipedia.org/wiki/List_of_largest_law_firms_by_r...
There's basically no way they could possibly spend even a tiny fraction of the overall deal's worth fighting this even if it went on for years. Not spending that money to fight this would really be stupid.
There's no shortage of law firms willing to go up against billionaires. Hell, there's no shortage of firms willing to go up against criminal enterprises like drug cartels.
The idea that Musk is somehow more threatening than the types that the US court system regularly puts under their thumb is simply laughable.
This Musk will ruin careers stuff is way, way overblown. If they lose his business, he wasn't worth working with in the first place.
What Musk did was petty and questionable, but it didn't fundamentally change anything for Cooley.
It's not a big deal.
Does he? How can he do so?
He can talk big, he can bluster, but can he actually ruin a government lawyer's career? I kind of doubt it.
Case studies are what has happened e.g. with Microsoft, other large businesses - long legal battles are fought, nothing happens while things are in limbo.
When the rubber finally hits the road, things happen fairly quickly, but until then it does look a bit like "nothing happens".
This is of course, a problem, perhaps one that needs innovating around.
I'm open to that criticism; I'm typically pretty skeptical of appeals to authority myself.
But to be clear: the appeal to authority I'm making isn't "legal opinion of a lawyer" (I agree that's very weak) but rather "opinion on corporate law by a Wachtell attorney who practiced corporate law" (Wachtell is probably the best corporate law firm in the world, and clearly in the top handful)
That’s not how the court works, except in extreme circumstances which don’t apply to this twitter acquisition attempt.
Also, Musk asserts that upto 50% of twitter users are bots, which is totally believable. So the chances Musk will have to pay anything is actually remote, since twitter would have to produce evidence that would reveal trade secrets.
Here’s my prediction: Musk will pay nothing because Twitter has allowed itself to be infiltrated with bots and revealing this will be far more damaging than losing out on a billion. Musk will walk away.
That is precisely what the merger agreement is: a contract forcing Musk to buy Twitter.
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.
I wish. It was through an investor and it was incidental.
He recently sold a 7.5 million dollar Malibu second home (though he got a good deal on it in 1971 when he bought it)... https://www.latimes.com/business/realestate/hot-property/la-...
Delaware Court of Chancery loves ordering specific performance on deals.
But the amount of value wobbled sure pushes both sides towards settlement.
But ... each party's willingness and ability to settle varies based on moving market prices and economic conditions.
Is that the normal punishment?
There isn't even one single court imposed fine which he hasn't paid.
That's what I thought. Musk just ignores the law and gets away with things on a regular basis.
I frankly don't see any "enemies." Are the SEC his "enemies?" I don't think so, he goes out of his way to bend securities law. If you go poking a bear and it takes a swipe at you - you're simply a fool, and the bear is not your enemy.
So they aim to provide a somewhat lower valuation.
This stuff goes both ways. Yes Elon has a lot of money. But twitter is worth XX billions of dollars.
Twitter is willing to spend a lot of those billions of dollars, in order to get Elon to pay the agreed upon price that he committed too.
This is not the case of a nobody vs a billionaire. This is instead multiple billion dollar entities fighting each other.
You know who has the authority to overturn that decision? Our democratically elected legislature.
> executive position who has preposterously lost the popular vote
What does the popular vote have to do with the presidency? Neither party strategizes to win the popular vote because the popular vote is meaningless. Therefore, the outcome if the popular vote has no value in determining who would win a popular vote should that be the metric by which the president is elected.
Mullosk's behavior is vastly more damaging to society compared to the quintessential enforcement example that is Martha Stewart.
When the consequences of a law violation are trivial, it’s no longer serving as a deterrent. So I think we need to find a way to deter everyone, kind of on a sliding scale or something?
Likewise, there needs to be real consequences for corporations which take advantage of paying fines as a cost of doing business. One violation can be a mistake, but it sure as heck better give you a solid reason to never do it again.
Serious question: Are you in the US? Any Western European country?
There's a tendency for people in corrupt areas to assume the whole world works like that.
There’s a tendency for sheltered and privileged people to be aloof to the corruption all around them.
In high school, everyone knew exactly who to call if you got a DUI. 10k was the going price to get a certain lawyer who gets the case in front of a certain judge and however that worked, the charge was dropped to a moving violation. Kinda sick how the system works.
We all know monarchy is tyranny, but in that category there is quite a difference between a cult ruler with a bag of shrunken heads who is getting his orders from God vs. a stable, well managed, system in which the institutions basically function, including to some extent for the poor, and yet in which which the ruling class still basically dominate and exploit everything and everyone in order to enrich themselves and maintain their power.
The latter is a social malady, the former is completely chaotic. I think people are concerned that the US is resembling the latter less and less, and resembling the former more and more.
The United States of America
> There's a tendency for people in corrupt areas to assume the whole world works like that.
Exactly. I live in a corrupt area and start with the assumption that most of the world is corrupt.
They could contact the broker holding his shares and restrain them, order them sold, and collect the proceeds.
They could seize and sell at auction the real property of any of his businesses. SpaceX rockets? Office chairs? Servers? Anything.
All of this enforcement costs money. Twitter would account for the money spent seizing assets and charge those expenses to Musk as well.
Assets seized in this way (including stock) are often sold for much less than they're ideally worth. It's Musk's problem. Twitter would be empowered to seize seize seize until they've raised enough cash to cover the judgement plus expenses.
They could not, because he does not own those businesses outright. Doing so would violate the other owners rights. They can seize his shares in SpaceX, but not SpaceX property.
But the end result is always the same. You can either voluntarily liquidate and pay your judgements or you can have someone else do it for you.
Why should the court or Twitter care if they end up converting 10x more of Elon's stock to cash?
I guess some day traders would get rich (and people that had to sell for the day or so when the stock tanked would take a bath), but that's the biggest problem I can come up with.
You’re acting like the asset value at all matters to the courts.
Elon and Twitter have a contract. Elon wants out; Twitter doesn't want to let him out; the contract only has limited conditions to allow Elon out. The court is simply deciding which of two options is the case:
1. Elon's reasons are valid; he gets out of the contract for a $1B payment.
2. Elon's reasons are not valid; he has to satisfy the contract and pay $54.20/share for Twitter.
If the judge decides in favor of #2, it is Elon's responsibility to come up with the money. (If he doesn't do so willingly, someone court-appointed will step in and do it for him.) If that tanks Tesla, that has nothing to do with the court.
Now, Tesla shareholders can sue Elon for getting the company into this pile of stank....
Trying to argue, in court, that you are entitled to have your investment insulated from loss due the primary owner selling it?
Why should that be a concern?
The drop in share prices as you do this is not your concern.
But hey, we've got beanbags and a playstation.
So he's using the 'bot' issue to find an excuse for a deal he wants out of.
[1] https://www.cbc.ca/news/business/elon-musk-twitter-1.6432315
> Musk and Twitter agreed to a so-called reverse termination fee of $1 billion when the two sides reached a deal last month. Still, the breakup fee isn’t an option payment that allows Musk to bail without consequence.
> A reverse breakup fee paid from a buyer to a target applies when there is an outside reason a deal can’t close, such as regulatory intermediation or third-party financing concerns. A buyer can also walk if there’s fraud, assuming the discovery of incorrect information has a so-called “material adverse effect.” A market dip, like the current sell-off that has caused Twitter to lose more than $9 billion in market cap, wouldn’t count as a valid reason for Musk to cut loose — breakup fee or no breakup fee — according to a senior M&A lawyer familiar with the matter.
https://www.cnbc.com/2022/05/13/elon-musk-cant-just-walk-awa...
Yes, I get that if there are 'material issues' maybe he can walk (even though he apparently waved a lot of that).
He can't just walk away for 'no reason' and not pay the fine.
The crashing price is probably not a legit reason.
Martha Stewart went to jail for 5 months for a meager case of insider trading. Musk manipulated Tesla stock in front of, literally, the whole world and got a slap in the wrist (i.e. a fine that comes to about 0.1% of its net worth). A citizen would to go jail forever for a similar thing.
I believe she went to prison for lying to investigators. The insider trading they couldn’t make stick. So in the end, maybe the cases aren’t so different?
And doing it publicly...that pretty well nerfs the old "give us the secrets, or we'll reveal the fact that you smoked week" spy gambit.
Does he? I don't remember any resolution to that, but I thought they "temporarily" suspended it pending an investigation and then never completed the investigation.
Imagine I go to mcodnalds and offer $10 for a big-mac unconditionally, lol. I'm going to get a half eaten shit sandwich and a broad grin.
The fact that you had to eliminate part of the site to make the claim remotely plausible is something you should reflect on.
I will readily admit I think Musk is a bad CEO and a worse person who goes around saying he's saving humanity, but only willing to do it if it's sexy and cool and on his terms. Meanwhile real technologies that could really help the world go unfunded. Let's also not forget that he's suggested indentured servitude as a business model for Neuralink - we should all be able to agree that is a red flag.
Would you suggest that I am his enemy now? Would he be justified hiring private investigators to harass me? Should he direct his Twitter followers to brigade me? Is this the world you want to live in? Is this what free speech advocacy looks like?
Musk has always been Steve Jobs -ish. He focused on rockets and electric cars instead of shiny things that go in your desk or pocket or wrist though, and against all odds succeeded where many others have failed. Yes he's an asshole, and I'd hate to work for him, but he's also pushed humanity forward by corralling a bunch of people to all pull in the same direction.
My issue is more with Ars, where all the reporting used to be like the rocket section, but since the acquisition by Condé Nast the rest of it has turned into tech tabloid. I want newsworthy information, not what some guy did in his personal time.
He is not pushing humanity forward and certainly isn't getting people to pull in the same direction. If you disagree, I would be curious to hear how Neuralink and his Twitter acquisition are related, or how his frequent scandals help to keep people to focused on the mission.
He has no real vision to be pushing humanity forward to, he has a series of smokescreens. It is plain for me to see that Musk has no strategy, and that these are a series of tactics to maintain relevance and distract from the issues he'd rather we forget about (such as the sexual harassment allegations that have recently been made public, or that FSD is not and has never been "one year away").
At best he's a distraction. But he's worse than that, he siphons energy and attention that should be directed towards actually addressing climate change and other existential challenges into a vortex that ultimately serves to empower him and feed his ego. His contribution to the success of SpaceX and Tesla is his prolific talent for charming people and attracting investment and attention. In many ways they succeed despite him, not because of him. In a world without Musk, people are still working on these problems and making the same breakthroughs, just under a different corporate entity.
It is not the unique insight of Elon Musk which makes these innovations possible. It is decades of research, mostly funded by the taxpayer, mostly taking place at universities and national labs. The engineers at SpaceX and Tesla are taking it the "last mile" to commercialization.
These are both critical contributions. But if Musk were not the one to hire these engineers, it would Bezos or Branson or somebody else - when the idea is ready to be commercialized, someone will be there to fund it. Being able to promote an idea and attract investment is a real and challenging skill, but it's not on the critical path to introducing these innovations to society. (It is absolutely on the critical path for creating and sustaining an individual company, however.)
that's the theme of this entire thread : rich person has a slap on the wrist announced publicly but then the punishment is never successfully fulfilled.
MS antitrust style.
I might be wrong that they suspended his clearance or that the investigation wasn't done, but that would be a different point tag. What you're making.
Courts are entirely capable of seizing such assets.
1) The court would issue a judgement for Twitter, against Musk, for $44b.
2) Musk would either voluntarily pay it by selling his own assets, or he would refuse. If he refuses, then:
3) Twitter would go about seizing and selling Musk's assets, until they have raised funds to cover the $44b judgement.
Twitter could levy whatever brokerage or account Musk uses to hold his shares. Somewhere there is an account which records the shares. Twitter would serve the entity managing the account with a levy, and order the shares be liquidated.
No they won't. This is Twitter, not Oracle.
Civil court works on fiscal, property to mitigate damage. If he is found to breach contract, a court could order seizure of assets (cash or property).
There could be punitive damages assessed too, if his actions are seen as purposefully malign.
You can have criminal contempt in a civil case and criminal contempt in a civil case. The rules vary by state but in PA it’s civil contempt is used to force people to comply where criminal is punishment for disobedience.
That will certainly stop anyone from pulling this bullshit again!
There are lots of successful examples - constitutions, voting, term limits, separate judiciary, non-political commuters, etc
The big problem I see in the design of egalitarian systems, is explicitly addressing the need for continuous response to new forms of centralization. I don’t know of any significant systems that were designed with any explicit statement of prioritizing that (vs. just general support for fixes, amendments, etc.)
For instance, the centralization of US political power into only two parties, where (temporary) single party rule of three branches is actually a practical possibility should have triggered some major reforms before it spun out of control.
A simple requirement that no coordinated individual or organization have sway over more than 25% of political seats, and political organizations at the federal and state levels must be separated, would do wonders for decentralization and better representation.
But the constitution is silent on any guidance or requirement on addressing new power centralization problems.
It is the hard root problem of power, but not systemizing progress on it is to accept inevitable dystopia
However it might be interesting to explore an option that required people who own a stake in a company that has grown beyond a certain size to be required to siphon off some of those shares to employees over time in a way where it was not conducted on the open market and would not affect share price.
I also question whether corporate entities should be allowed to own shares and what the benefits are of that. Should private investment firms be allowed to accumulate massive stakes in public companies?
The federal constitution says that voting is left up to the states, so arguably the centralization problem is ~50 different experiments which have all gone wrong in the exact same way.
You could say that the federal constitution should have put some guidance in place to stop exactly this correlated failure, but ironically that would introduce more centralization as there would be one rule forced on all the individual states.
Whether that's a good idea or not I think depends on how good the rule is in practice. Unfortunately the rule you suggest highlights just how difficult it is to write a good one. For example, how do you define "coordinated organization"?
If both major parties split into 50 different organizations that all happened to endorse the same candidate for president (but for nominally different state-specific reasons), should the SCOTUS have the power to ban those political organizations (and perhaps ban one and not the other)?
Fortunately we can look to other countries that have managed to avoid political duopoly by using voting systems which don't penalize people for voting for new parties. Even better, some US states have already implemented such a system[0], and, going back to your point about constitutions, the people of Maine managed to introduce RCV not because of a constitutional requirement, but despite a narrow (state) constitutional prohibition.[1]
[0] https://en.wikipedia.org/wiki/Ranked-choice_voting_in_the_Un...
[1] https://en.wikipedia.org/wiki/Ranked-choice_voting_in_the_Un...
> Fortunately we can look to other countries that have managed to avoid political duopoly by using voting systems which don't penalize people for voting for new parties. Even better, some US states have already implemented such a system[0], and, going back to your point about constitutions, the people of Maine managed to introduce RCV not because of a constitutional requirement, but despite a narrow (state) constitutional prohibition.[1]
I think you are right, voting systems are the best place to start.
That and prohibitions on justices and congressfolk from weighing in on matters they have a personal or political interest in, such as receiving political funds or assistance.
Imagine if donating to a politician whose influence you want will make it more likely they cannot help you. That leaves donations reflecting people's assessment of who will better run the country in a more general sense. Those donations look more like "free speech" than the rampant influence purchasing that overwhelms the system today.
If the constitution forbid parties from operating across state lines, or operating in more than 20 states, or holding more than 20% of seats in either Federal legislative body, … there would never be single party rule at the Federal level which is where it would matter most.
> If both major parties split into 50 different organizations that all happened to endorse the same candidate for president (but for nominally different state-specific reasons), should the SCOTUS have the power to ban those political organizations (and perhaps ban one and not the other)?
While collusion (meaning surreptitious coordination, in this case) between 50 state level parties would certainly be possible, it would be substantially more difficult than coordinating 50 state offices of a single political party as it is today.
Today, all senate campaigns are basically running for one shared constituency: big money from anywhere in the US, and political support from the same party, across the US.
The tight link that should exist between a politicians power base and the politicians electorate has been broken, for state level elections of Federal positions.
A fundamental problem, that we are all burdened to solve, is how do we get from an ideological government to a scientific one. Until we do that, we're all just plugging holes in a sinking ship.
Such a reductive view, on any group, isn't productive.
and would be undemocratic
Of course first-past the post voting systems won't work here, but that doesn't make it undemocratic.
His wealth today comes largely because Tesla (under his leadership as CEO) has become a company that investors now believe is incredibly valuable, and they've driven up the stock price. At what point in this process did Musk "accumulate" this ownership of Tesla, and exactly what do you propose should have happened to stop him?
Tesla has been successful in many of its lines of business and succeeded when many thought they couldn’t, that is undebatable. The failure of our system is that its stock price is completely out of line with the reality that reflects that success.
You can buy shares in other car manufacturers. Why would Tesla disproportionately benefit from inflated asset prices?
What should have happened is wider distribution of profits among Tesla employees, who are the ones actually doing the work. It’s fine if the CEO is considered an extremely valuable employee and gets a larger share, within limits. Pretty sure he could live a great life with a few million dollars, which would both limit his undeserved power and benefit everyone doing the work.
Every unit of time (year or month) you have to declare what stocks you own and you get taxed based on how much they're worth.
Local governments are starved for money, and almost all of their funding comes from local property taxes, that is, normal people. So, these mega-rich are allowed to get unboundedly wealthy, while normal people have to pay to keep society running as a minimal level. The mega-rich's money, as well as corporations', needs to flow back through the system. It does no good to let it concentrate so heavily and ultimately do nothing while it sits there.
But I disagree in that I think we absolutely should avoid it because a larger federal government has been heavily correlated with less local funding (so much so that the SALT deduction was once a thing). It's given rise to globalization and large multi-national conglomerates. It creates a situation where power & money is too concentrated.
I agree with that, but they could just, you know, lower taxes on the lower and middle class to balance it out.
I’m a US tax payer since less than a decade. My experience is that I pay a significant portion of my incomes to taxes that only marginally benefit me or folks around me.
Recent uptick of direct distribution is nice.
But a leadership in the stewarding of the land would be tasteful and send the right message IMO.
It’s fascinating to see the Western European countries I’m familiar with being blinded by the economic might of the US but not realizing how little the average citizen benefit from it.
With that said, the parent commenter subscribes to what political philsophies and/or ethics? ...
If you tax them 100% they'll just stop working or bail to another country, and then you collect zero tax revenue from them. At 70% most of them will just suck it up and pay.
(I realize France is a counterpoint here, but I'd argue it was a half-assed attempt, and they have neighboring French-speaking tax havens that have no real U.S. equivalent.)
The reality is that nobody knows for sure what the curve of revenue vs. tax rate looks like other than at those two end points, which makes the entire concept completely useless.
Your inability to conceive of a useful purpose for such a quantity of money does not justify prohibiting its existence.
>I do not understand how the U.S. government does not view these billionaires as serious ideological threats to democracy, the court system, national security, etc
Cooperation. A government that can't handle the idea of powerful citizens has all the tools it needs to make almost all those people (hard to banish all the Christian missionaries, and martyring them is the surest way to grow more) leave or fall in line, but I don't think many people look at Venezuela or North Korea as ideal places to govern in terms of democracy, the court system, national security, etc.
What inability and where was it demonstrated? Are you referring to a useful purpose if it was taxed or a useful purpose for individuals to have such wealth? If the latter, then I propose that an individual containing such wealth is less useful than it being returned.
Those things and countries you mentioned have nothing to do with this discussion.
Yep, it's kinda sick but also kinda true.
I have not done an analysis on exactly which of Musk's private companies are jointly owned, and how the ownership is structured. It's a comment on hn for crying out loud.
He can't just walk away and _pay_ the fine.
He is obligated to close the deal and Twitter can force him to do so. If some external force stops the deal from happening - or if he can show that Twitter egregiously violated the agreement - he can get away with not buying Twitter, but he still has to pay them $1B.
How could Musk possibly have done this, which must have been against the advice of his Bankers?
"I'm sending men to mars, ergo, I know more about M&A than i-bankers?
This is the kind of hubris that takes people down.
That's presumably what he told people and not "hey I'm just joking around, make sure to write the terms so the deal never actually completes"
What he doesn't have is the inclination.
Anyway, I'm no expert on Musk, and I have almost zero interest in Tesla, or Twitter, or any of this clown show. So maybe my ballpark guesstimations of all the relevant numbers are way off. So take it all with a huge pinch of salt. I am just some uninformed spectator watching two lizards fight in the dust and speculating who will win or whatever :)
Edit: leveraged -> unleveraged, woops
BUT, if Elon fights back hard, Twitter will have to stop.
We were talking about the courts seizing the assets though, it's not being voluntarily sold.
Tax schemes and how they affect wealth, inequality, consumption, etc. is an interesting line of thought, and a necessary one, if you accept that the current one has allowed some individuals to get so rich that the rule of law breaks down in their presence.
And it's doubtful Musk was so dumb he'd enter into this contract 'just for fun' knowing the terms.
I suggested he did want to buy it, got bad advice or didn't listen to his bankers, and then the market crashed, and now he's in a bind.
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-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...
[2] https://nypost.com/2022/05/31/elon-musk-calls-out-bill-gates...
[3] https://www.businessinsider.com/bill-gates-shorting-tesla-wo...
> Is it fun for him? If he manages to walk away having spent only millions in financing fees, millions in legal fees and say $1 billion in termination fees, was it worth it? What did he get out of this? The guy really seems to like being on Twitter, and he did make himself the main character in Twitter's drama for months on end. That’s nice for him I guess. Also he made the lives of Twitter’s executives and employees pretty miserable; as a fellow Twitter addict I can kind of see the appeal of that? I always assume that “everyone who works at Twitter hates the product and its users,” and I suppose this is a case of the richest and weirdest user getting some revenge on the employees. He also gave himself an excuse to sell a bunch of Tesla stock near the highs. He maybe got an edit button too? Maybe that’s worth a billion dollars to him?
But for that to be the sole reason of the whole circus is conspiracy theory.
> Musk has buying Twitter as a cover
It's a very, very annoying/distracting cover, not to mention an expensive one.
It is hard to say how expensive it actually is… if he had sold overpriced Tesla stock without cover, could that lose be much more than - one billion termination fee?
Indeed he does. He has talked about this publicly in various interviews over the years. [1]
> Musk pretended that TSLA valuation is reasonable. Musk even called out Gates for shorting TSLA stock
Musk definitely really dislikes short sellers, no doubt about that. However that is different from pretending that TSLA valuation is reasonable.
--
[1] A decent example is the 2021 Kara Swisher interview, where he states I have literally gone on record and said that our stock price is too high. https://youtu.be/O1bZg7frOmI?t=2450
Uhm... Exactly this is mentioned in the article:
> He also gave himself an excuse to sell a bunch of Tesla stock near the highs.
So Levine already mentioned this.
Bezos has also sold off a massive chunk of assets?
There's nothing odd at all about shorting the market during this time.
Maybe he sold more shares than he needed while he was at it; like you'd withdraw a bit more cash than you really need at the ATM.
Then the market down turn sobered him up.
Simple.
It is possible of course, but unlikely. Musk doesn't seem to me as a person who might be surprised by this market crash, I heard him talking about the coming crash and how it will influence his plans before he started talking about buying twitter. My memory may be faulty but I think he mentioned it for example in December when justifying himself pushing SpaceX engineers to work harder to bring Raptor 2.
It seems more plausible for me that he tried to sell Tesla shares before the crash hit them.
Everyone seems to want to attribute it to some projected character fault in Musk, a chance to elevate their morality or intelligence higher than a famous rich guy.
Musks offer was strategically made before yearly earnings, when everyone posted bad earnings the market tanked.
Why waive due diligence then? What’s that saying don’t assume malice when it can be explained by ignorance.
Most people would do their due diligence under NDA for a while while negotiating prices before making an announcement, and before lining up funding.
Excuse me what ? He alwways said it was overvalued. I dont think anyone would have bat an eye if he had sold for no reason
He did? I thought he said more than once that he believes the stock price to be too high.
But what will the legacy of all this mess be? It's looking a lot like Howard Hughes, except that Hughes successfully monetized his stage presence. Elon has officially thrown in the towel, and spit in the face of his wider audience in the process.
IDK. Most people work their entire life not even getting to 1 million.
This is outright false and goes directly against his multiple stated instances of saying that the Tesla stock price is overvalued. Don't make things up to suit your biases.
This phrase gets thrown around a lot with dunning-kreuger confidence so I'd like to add context that it's not unusual for a market disruptor to be worth more than the sum of its legacy competitors - you are on a tech website related to startup incubator you should know this already.
I mean it will be overvalued if Toyota gets its act together - if the competition can produce reliable electric cars for the mass market. I suspect that this is not quite happening due to some real technical problems. A mass market electric car would need to handle some real problems with battery depreciation/range loss. I am not sure if that is happening, right now.
I found quite a range of opinions on battery depreciation, not quite sure who is right (never owned one):
https://www.carwow.co.uk/blog/do-electric-cars-depreciate#gr...
https://www.cars.com/articles/your-guide-to-ev-batteries-pre...
https://www.motorbiscuit.com/how-long-will-an-ev-battery-las...
But it is patently absurd for them to be higher than all other car companies combined. By any possible measure, they are far far smaller, and have far smaller prospects for growth, than the rest of the card industry put together.
The only place where Tesla has a lead is in sales of BEVs, where indeed they are selling more than the rest of the industry combined, except for some Chinese companies. However, BEVs are still a tiny part of the car market, and are likely to remain so for the next ten years at least.
Elon despises the SEC and he's now has exposed that the "less than 5%" of accounts are bots, that the SEC should have verified and accepted their methods for determining that number - and it should be adequate and reasonable to give a grounded-in-reality output, and it seems like it's a total bullshit statement.
I'd be surprised if Twitter stockholders don't sue the SEC.
He did the opposite of that. The Twitter CEO's explanations are quite believable, and Musk has not presented a single tiny shred of evidence against them. He hasn't even presented any methodology he used to arrive at the belief that the 5% is wrong - and note that his lawyers were careful to call it a belief only, since they know full well that claiming it as a fact would be indefensible in court.
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.
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.
"If you don't believe he'll be forced to pay..."
Those are two very different statements.
I absolutely believe the court can compel Elon to satisfy the contract he's gotten himself into. I don't necessarily believe the court will do so. Specific performance isn't a popular result in those courts, apparently. That being said,...
"...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."
Yeah, no. If I thought like that, I'd have shorted Tesla long ago. I also know that "the market can remain irrational longer than you can remain solvent."
I wouldn't call the hordes on Robinhood "experts": they are the marks that Elon plays like a fiddle on Twitter.
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.
They're still charging advertisers for those clicks.
On then other hand, bot accounts help get bozos elected, encourage mass shootings, etc.
Come to think of it, I don't think it depends on your perspective. Bot accounts are a much bigger issue than click fraud.
Notice of termination of Twitter merger agreement - https://news.ycombinator.com/item?id=32027341 - July 2022 (1361 comments)
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.
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.
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)
His reputation as a sufficiently reliable counterparty is gone.
Yeah ok ... <cue the Titanic sinking>.
It's likely that this will be the most expensive manic episode any individual has suffered.
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
- 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...
Recently USA has a president that was following his impoolsive, late night tweets, by pushing his staff to form them as a new policy...
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.
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.
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.
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/1418091/000119312522...
> 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.
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.
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.
He makes no sense.
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.
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.
He is rich but doesn't usually like burning money.
Twitter is at best a distraction for Musk, at worst it could be his downfall.
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.
The only question is regarding which entity is liable. If a judgement were entered against SpaceX, for example, then absolutely rockets and real property owned by SpaceX can be directly seized.
Without looking, I'm certain there are at least a few companies owned by Musk which could have their assets taken directly.
Musk is eccentric, and doesn't have all of his communication go through a PR team. Show me anybody else at a similar publicity level who isn't behind 3 layers of PR firewalls. Of course there will be scandals. You just don't see all the detestable opinions the other rich and famous people have.
In addition, he has a lot of powerful enemies. Big Oil, ULA etc have been hit hard by the work he's done to bring new tech to public consciousness. Who Killed The Electric Car etc. I'm surprised there haven't been many more of the unfalsifiable type of scandals or even court cases tying up his time.
3 years ago, everybody loved him. He was saving the planet with Tesla and bringing back American access to the ISS with SpaceX. Suddenly people care more about him not being married to the celebrity he is having children with, or that he isn't happy with a corporate deal, like somehow we're all major Twitter shareholders. It's ridiculous, and I'm pointing out how the media is shaping people's opinions on frankly irrelevant details in the greater scheme of things.
I'm not a lawyer, and I haven't read the contract Musk made with Twitter. Unless you're somehow different on both of those counts, it may behoove you to consider where your strong opinions on this matter come from, and whether they are really yours.
Musk's reputation was killed by Musk, and it was because he showed the world who he was. I realized his words were nonsense and formed an opinion based on his actions. You should consider doing the same.
As a final note, I think you should consider it a red flag in your own thinking when you can't even conceive that someone would disagree with you on this topic, and you need to invoke a conspiracy to explain my having a differing opinion. Regardless of how you feel about Musk, even if you're correct, that should jump out to you as a problem which deserves reflection.
It isn't a conspiracy that rich people control the media - this was a big part of people's initial objection to his purchase of Twitter, wasn't it? Why would it be in any way controversial that other rich people don't like him and are trying to undercut him? Isn't this even what you're doing, on a small scale?
I absolutely understand people don't like him - I don't particularly like him easier, but I am impressed by the things he's managed to achieve. I don't need to like him as a person to recognize that he's done impressive things. And I don't think either of us are qualified to be making pre-judgements on whether the Twitter contract is Musk's Spruce Goose or not.
What I mean is, the remedy for non-compliance with contracts, is fiscal, seizure, penalties of thus nature.
The goal of civil court is not the state punishing, but instead, laying out compensation, for damages, to the harmed.
There is no contempt of court for not paying these damages.
Then how does the civil court function? If nobody follows the courts order, the court is redundantly illegitimate.
No one is going to assault a cop, or have their bank shut down due to non compliance.
Where I am, what often happens is the damaged party has papers showing debt owed. It then becomes a colllection issue, sometimes, in some jurisdictions court takes an active role, in others, you have to do the work yourself.
Eg, you have to find their bank, hire a sheriff(the seizure kind), and go get what is now "your stuff".
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.
Feel free to point out specific inaccuracies. I think it's pretty clear.
> Just because EM wants an escape hatch, doesn’t make it so
Yes, never suggested it's legally permissible.
> affirmative obligation
This is armchair speculation. Even if the text might seem to be clear in outsider interpretation, this is a matter solely for the courts to determine and both sides will have an opportunity to make their points across. I stand by prediction of the board ending up settling this case. It will get obviously challenged in court, but it's not "wrong" in the sense of predicting an outcome.
This is very important for me as I need to find out if I can just walk away from all the student loans, car notes, and mortgages I may have entered into, as it’s no longer convenient for me, and I would really appreciate if I could make that my counter party’s problem
This whole thing actually creates a golden bridge eventually for the twitter board to retreat on.
The board now has an obligation to sue, otherwise they are breaching their fiduciary duty. However, almost all shareholders will realise that a 2-3 year litigation at the end of which Elon might be forced to buy, is a long way away. Better to settle for a lower price now. Both shareholders and Elon will see this. The board just needs to demonstrate they are fighting for shareholders.
I predict in 3-4 months the board will offer a shareholder vote with a lower price, and shareholders will realise that it's way better to take that deal than wait for litigation.
the thing he's pretending to ditch the deal for was the thing he allegedly wanted to fix
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.
Normally “is the mDAU figure correct” is the kind of thing you answer before you sign the merger agreement and lock in your purchase price.
Also note that the baseline in SEC filings was 5% bots, so 6% is only 1pp higher. The claim was never that it was zero.
Of course, this is all a moot point, because what an actual businessman (as opposed to a con artist) would do, if they were concerned the bot stats might be inaccurate, is make sure the agreement had specific terms in it as to what would happen if it was found to be inaccurate.
That's not what his contract says.
Either the bots are pretty close to the 5% figure Twitter says (and 6% is definitely pretty close), and Elon has to buy at the figure he specified, or they're enough higher to have a significant impact on ad revenue, and Elon doesn't have to buy at all.
(1) Would it be legal for him to own the brokerage?
(2) What if he moves all of his stock in offshore accounts?
Shares don't need to be held in a brokerage. There's always a process to identify and seize the property in question.
2) There's no such thing. TSLA is a US public company, traded on US exchanges. It's simply not possible for shares of the company to exist outside of US jurisdiction.
Elon Musk knows this and is a master at harnessing this power, which is why he’s shamelessly pumped DogeCoin and Shiba. He continually pushes his company to be the most popular brands by promising impossible futuristic products that cannot exist, but build excitement. Countless examples of these, but a few are Full Self Driving, a flying Roadster, the Tesla semi, solving transportation issues with tunnels, the Tesla bot, $25k model 3, solar roof that costs less than a normal roof, robotaxi, etc etc etc. It’s all calculated.
Generally, anyone who puts money into a 401k, will likely have some of it going to Tesla and disproportionately over other auto companies - simply because how funds are typically weighted.
(1) Would it be legal for someone to own the legal entity owning their shares of publicly traded companies?
(2) What if he moves all of his stock in offshore accounts?
"Obvious" and "rational" in one sentence seem to me suspicious every time. I'm suspicious about "obvious" itself, because of my math education, but when combined with "rational" it is just too much for me.
The answer you refer is a simpliest one: it doesn't need any special assumptions of Musk's personality and it is built on a smallest possible sample of relevant facts. May be it means that it is an obvious answer? May be. But it doesn't mean that it closer to reality than more complex opinions relying on more data points and more complex models of Musk's personality, not just an assumption of his rationality.
https://www.latimes.com/business/story/2022-04-12/musk-is-of...
I couldn't find if the research paper has been published yet or not.
He hardly mentioned the bots at all before setting out to buy Twitter.
The legal entity which maintains the list of teslas owners is ultimately tesla, but that duty will be likely given to dtcc.
A stock is ultimately just an entry on a list maintained by the company, most offload the managing of the list to DTCC and usually the pointer isn’t to you but to your broker dealer.
There is no sense of being able to hide ownership overseas, we’re talking about an American company keeping a list that points to someone, that list can’t be offshored.
https://en.m.wikipedia.org/wiki/Depository_Trust_&_Clearing_...
For one commonly used transfer agent's take, see: https://www.computershare.com/us/becoming-a-registered-share...
For them, $44b is the crumb left behind after you've eaten the small potatoes.
He may just own the shares directly with the company (we’ve largely done away with paper share certificates). Or he may have transferred them to his broker (Morgan Stanley?) (who in turn might custody them with a custodian BNY Mellon?) who holds them on his behalf. If he then transferred those shares to say DBS in Singapore MS/BNY is going to inform computershare “fyi we just sent all those Elon musk shares to DBS in Singapore” and DBS is going to say (FYI we know have custody of all those Elon musk shares)..,and when you go looking for those shares all you have to do is go to computershare with a court order and say where are Elon’s shares, and they’ll be like, oh over at DBS in Singapore… and for all I know the registrar can probably just send a note to DBS in Singapore and be like (ahh we got a court order to transfer these shares to some other guys so we did, subtract $44b from his account)
All of this is a long winded way of saying that “shares” are just entries on a ledger maintained by the company or someone else on their behalf, which makes seizing them, typically pretty easy…
Once you start looking into the ideologies of people like the Koch brothers, Robert Mercer and his family, Peter Thiel, Richard and Elizabeth Uihlein, Sheldon Adelson, Ronald Cameron, Steve Wynn, and others, you start seeing very weird and strange beliefs that are incompatible with a functional society. The primary thread is that these people do not care about others. Just look at the Koch brothers' political donations and the businesses they run. Is it then any surprise why the Republicans might not care so much about climate change and policies to mitigate it?
We have one extremist political party, and then the other, somewhat incompetent, party spends all their energy fighting back against the extremism of the other.
A certain Republican sect literally tried to overturn the presidential election, threatening to hang the vice president, killed a capital cop, ransacked the capital, and only one Republican had the guts to vote against the president. Then that same party will decry people marching for human rights and supports violence against those groups. The Republicans are the same party that supposedly stand for small government but are hell bent on telling people what they can do with their own bodies and forcing religion to be taught in public schools. Republicans' reaction to mass shootings is more guns, while they are the ones that block any investigation into why these are happening or preventing people that should not be buying guns from buying guns. I happened to drive across the country during COVID. You could tell the Republican states from the amount of masks being warn. The Republicans blocked a third supreme court nomination by a two-term president in Obama that was 10 months ahead of the presidential election, meanwhile they rushed a third supreme court appointee by a one-term president just two months before an election, throwing out every reason they used to block Obama's nomination. These are all extreme positions that don't have analogs in the Democratic party.
> have no interest in discussing real solutions
Mind pointing that out? In fact, I've elaborated quite a decent amount. I'm not sure what you've brought to the discussion other than just stating disagreement and making bad faith statements. You are free to contribute or elaborate on what you mean by the Republican party not being extreme.
The solutions I believe that could help things are: increasing tax on the wealthy, limiting the amount of political donations including to interest groups and think tanks (i.e., get private money out of politics and government), abiding by separation of church and state, and increasing primary and secondary education.
- womens rights have been thrown back 50 years
- a legitimately won election was almost overturned by a violent mob incited by Trump at the time
Have the Democrats ever incited a mob to violently overturn an election?
The fact that people like Trump, Greene, Boebert and others with extremist and narcissistic values can rise to power / influence points to major systemic failures, which eventually destroys democracy if not stopped.
How do you avoid those destructive people rise to power?
"Conspiracy theory" implies you're blaming it on... a conspiracy. Not any unofficial explanation count as a conspiracy theory.
Tesla being a Delaware corporation, it would be within the power of the chancery court to order that very thing.
It goes deeper. The increased marketing costs due to the 'fraud tax' are passed through to customers. So it's we the people who are getting screwed by fraud.
https://www.jato.com/the-global-electric-car-sales-2021-in-n...
// Edit: Added BEV
ftfy
Edit: ouch that statement might have been correct if VW hadn't sold out annual production by May and supply chain problems hamper ramp up. So it's predicted for 2024 VW BEV sales will exceed those of Tesla.
Plus the advertisements are distributed unlike Twitter.
I think Twitter does have a danger here. Their <5% bots was always an estimate. You can know, not know, or not want to know. That last part is the danger.
Having a court ordered judgement entered against you is cause and is a result of due process. It's an entirely different scenario.
We see this all the time already. For example, Medicaid won't pay for your extremely expensive end of life care if you have assets. So, people give away their assets (to a trust, to family) before applying for Medicaid to cover their nursing home. It becomes a game of cat and mouse. People will adjust where they can to avoid tax.
This also already happens with income tax. For example, executive compensation is primarily provided as capital gains rather than income because it's much more tax efficient. Everything is in the open.
The other issue here is one of cost. The IRS has to fund the cost of analyzing filings and deciding to audit. This is very different from a post-judgement scenario.
It's a very different thing.
1. A surprising departure from the rules and norms - I assume probably illegal.
2. Part of a campaign designed to ruin Russia.
You might have misunderstood the argument the anti-taxers (pro-property?) people are bringing up. There isn't a physical problem with taking wealth away from people, that part is very easy to execute. The problem is the 2nd order effects where it will turn into an unfair confiscation and do substantial damage to the ability of the host country to invest and prosper, bringing general ruin to us all. The fact that wealth confiscation is being deployed against Russians is no surprise from that perspective and not undermining the core argument.
However, if it makes you feel better, I do agree that given that the War on Terror was pointed inwards fairly quickly I expect the techniques used in the War on Russia's Economy will also move to US home soil in the next decade and there may well be large scale wealth confiscation in the US.
But this does not apply to us when we seize Russian assets? By your very logic if seizing wealth is so problematic, well we just seized a whole lot of wealth. I don't think this example actually works here.
It would be bad if we did this to ourselves. We do it to our enemies to hurt them.
If you want to make the argument that it is literal and raw might-makes-right on the high seas, ok. But that type of barbarian world is not one I encourage and it'd be a bit stunning to find someone who wants the world to work that way.
The US wouldn't do well in a world like that either, US citizens have more assets to seize than foreigners do.
Wealth is actual ownership interest in valuable companies, which can be moved offshore or the person can renounce citizenship and relocate to a country with friendlier tax laws in the extreme case.
A wealth tax would also have the effect that people expecting to generate lots of wealth would just move somewhere else to do so, or not come to the US in the first place.
Whenever I've seen it brought up it's always that it would require a constitutional amendment (specifically in the US). The federal government isn't allowed to do taxes that way under the current system (Article 1 Clause 2 Section 3).
Hell, the feds weren't even allowed to do a straight income tax until the 16th amendment.
Yes, I mostly see people saying that laws don't matter because billionaires are beyond law at this point. Who knows, perhaps that's astroturfing by troll teams employed by billionaires to try and discourage the masses. As you said, they've already got plenty of lawyers to work on it from the constitutional end - including 6 of the lawyers on the Supreme Court.
Huh. Weird. Well, I don't see it brought up on HN all that often (once a month tops?), so we must hang out in different circles outside of here.
Anyways, you have a good one.
I don't think they apply to someone who tweeted "considering to take my company private at $X a share; funding secured" when funding definitely wasn't secured.
The story where he made an(other) impulsive decision (buy Twitter!) and then realised some potential benefit as a side effect (liquidate overpriced stock without raising eyebrows) sounds plausible.
In the end, Elefino [1]. Musk gonna musk, I guess.
[1] https://www.google.com/url?q=https://m.youtube.com/watch%3Fv...
[1] https://www.google.com/url?q=https://m.youtube.com/watch%3Fv...
Try and find any instance of him attacking anyone who was an investor and then sold out.
Plus, Elon has proven himself to be morally nefarious more than anything. With the law and social expectations and plenty more.
The only thing I can find about Elon and his utterance of morality is him saying it was morally wrong to ban Donald Trump. What a joke.
Because in the over ten years I have of watching what he says and what he does I've found him to be a forthright person who says what he thinks. He's not the type to intentionally deceive others. He's often wrong, but he's upfront with what he thinks. Also he's shown many times to not be interested in financial merits. He wants to achieve great things and be known for doing great things. He only cares about money in the sense that it lets him achieve the goals he wants to achieve.
> Plus, Elon has proven himself to be morally nefarious more than anything. With the law and social expectations and plenty more.
I've not seen that myself. I've seen him let his emotions get out of control many a time that he often regrets, but I've not seen him act in an explicitly nefarious way.
> The only thing I can find about Elon and his utterance of morality is him saying it was morally wrong to ban Donald Trump. What a joke.
He didn't say that it was morally wrong to ban Donald Trump. That was an oft-repeated synthesized quote that was also taken out of context. He doesn't particularly like Donald Trump at all.
I think NFTs are stupid, but I don't think they're "a problem".
People spend lots of money on stuff I find stupid. I would never buy a Gucci handbag, they have about as much value as an NFT. But if someone else wants to, it doesn't hurt me, so, so what?
https://finance.yahoo.com/quote/TWTR/options?date=1674172800...
Where it’ll get really interesting is if the court orders specific performance (as I expect them to do, if the case makes it to a verdict). Sure, EM has a legal obligation to comply and buy the company, but what if he just….. declines? He obviously doesn’t feel like rules or the legal system apply to him (sometimes for better, but increasingly consistently for worse) but I’m not sure that I see the Delaware chancery court sending men with guns to his front door to seize $44 billion.
* 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.
There is no basis to this. And even if there was it's such a grey area that they have plenty of legal wiggle room.
So it's really to comprehend how Musk has any sort of bargaining position over this issue.
It's hard to be 100% sure, but there is a rather high probability that they will win and if they do, even if EM only has to pay a fine, they will have an official court statement saying that their bot statement is reasonable which is significantly better than leaving it with "we settled with EM since we don't think that we can defend this statement".
> In the end, even if they win, and Musk must buys the company at the deal price, by the time that goes through the markets may as well have rebounded to make the acquisition price reasonable again.
And that's fine. After all, Twitter agreed to the sale at that price.
> The winners at the end of the day would be the lawyers and millions of dollars dumped into fighting a case instead of settling.
There would be at least three winners:
1. The lawyers, but they probably already got millions over the whole mess.
2. The legal system, since there would be some indication that even EM has to follow the rules for once.
3. The shareholders who will get significantly more money and who are actually the people the board represents.>The winners at the end of the day would be the lawyers and millions of dollars dumped into fighting a case instead of settling.
I don't understand this popular hot take.
There's no rich egomaniac foil for EM, is there? There's just a corporate machine that he offered a piece of "candy" worth tens of billions and then tried to take back.
As many people have said, if EM just walks away and Twitter does nothing, the stock price is probably half of what it was supposed to be acquired for.
Ten billion dollars will fund a literal battalion of lawyers for a decade if necessary.
The point is to help Twitter's shareholders.
Specifically, to help them to the massive premium over the current stock price Elon is legally obligated to pay.
One example I can think of is LVMH made an offer for Tiffany in late 2019 for like $16.2B. It appeared to be unhappy about that price a few months later for some reason, people didn't want high end jewelry or something... They settled for like 3% less, but was that worth the bitterness? That's assuming that Arnault actually did want to go through with the deal, which, there I also believe genuinely was having second thoughts.
The reason I think Musk is trying to actually walk away is that I feel the pushing the bot thing is a pretty double-edged tactic. A lot of LVMH's arguments were that Tiffany was mismanaging the business above and beyond the covid environ i.e. not necessarily that the business is flawed, but the seller stopped caring once they sold it. The bot strat is kinda riskier because it's saying, the business is actually flawed, and the seller is misrepresenting it to me.
If it gets him out great, but if not it could potentially be like buying a house and throwing a lit molotov through the kitchen window on move-in day.
The rest of my post speaks for itself in response to most of your assertions.
Regardless, even if this were consistent, GP's argument still stands: that's an enormous asking of risk to take on. It could end up costing him more than the $8.5bn.
But, I suspect the other guy was referring to trusting in economic stability. I don't think there's any reason why sanctions against bad actors like Russia might undermine trust in American investments.
As if that's not evidence of far more barbaric mechanisms at play in geopolitics...
There is a pretty good chance this is just making people feel bad and making it harder to normalise the situation. This is action is literally not helping, and is a breach of good norms against stealing. It means the Russian billionaires will be forced to spend more of their money in Russia and have a great reason to bear a grudge against the more Western powers.
Any Russian billionaires that don't realize that this is more of Putin's incompetence than western antagonism deserve a random punitive gesture.
In reality the majority of them will see this as a great reason to bear a grudge against Putin.
A Straddle is a strategy that allows you to bet that a stock's price will change by x% by a certain date. To make money on a straddle you want the stock to go up or down by more than that percentage, the more it changes the better.
So if you believe that the matter will be resolved one way or the other by whatever date then you'd want to buy a Straddle on that date. Regardless of what happens if there is resolution by that date you'll make money.
A Strangle is the same thing but allows you to bet directionally which way the stock will move. So if you're confident the matter will be resolved by a certain date then you can buy a strangle for that date and weight it depending on the outcome you think is most likely (say if you're 60% confident the court will for Elon to pay the agreed upon price you can weight the strangle 60% towards the upside). Like the straddle as long as there is resolution you'll get paid regardless, but here you get a bigger payout if you guess the direction correctly.
Both of these can be inverted with short straddles and short strangles.
This is what you would want to purchase in the case you're talking about. If you're confident that the Twitter matter won't be resolved for a month then you can purchase a short straddle for a month from now at whatever range you feel comfortable better the twitter stock will stay between.
A short strangle would allow you to do the same but with the boundaries weighted one way or another. So instead of just saying "it won't move more than x% either direction". It allows you to say, "a month from now it will be between $x and $y" where x and y can have a different distance from the current price.
I'd steer you away from Robinhood, not just for the sake of the meme culture that's developed around it, but because other platforms generally have better research tools and support.
With all of that said, jumping straight into options trading is a big leap to take and with active investing in general I'd encourage you to look at it not as 'investing' but as gambling.
If you're doing it for fun that's all good just don't bet more than you can afford to lose.
On options losses are capped to the money invested.
Nevertheless, you should consider that a host of professional traders with much better equipment and connections are betting against you.
I've been keeping a close eye on this market (TWTR options) and in my opinion, there were no great bargains. Especially with longer term contracts, you'd need to chip into wide bid-ask spreads, and the prices didn't offer stunning deals on either side of the trade, unless you held an extreme opinion.
Have you seen him tweet that he was in a deal to take Tesla private?
Have you seen his Solar Tiles marketing stunt, where he was claiming all of the houses around him had functioning solar tiles, when instead they were pure props?
Have you seen him sell FSD with a promise that it will work in 1 year, and that it will literally pay for itself by letting your car be an autonomous taxi while you are at work?
Have you seen him claim the Tesla Cybertruck will be available for pre-orders next year?
Have you seen him claim he is backing out of this Twitter deal because of the many bots on Twitter, when he was previously claiming that he is buying Twitter to fix the bot problem?
There are instances where he might have indeed believed the ridiculous promises he was making, but he has a long history of directly lying to consumers and investors to get his way or manipulate stock (or crypto) prices.
Except he was. Have you seen the leaked tweets between him and the Saudis? He had verbal guarantees of funding and he trusted them at their word. That goes back to him being truthful, he doesn't have much ability to spot people lying to him and takes great offense at it when he finds out he was lied to.
> Have you seen his Solar Tiles marketing stunt, where he was claiming all of the houses around him had functioning solar tiles, when instead they were pure props?
It's not a marketing stunt. My friend works on them and Tesla sells them.
> Have you seen him sell FSD with a promise that it will work in 1 year, and that it will literally pay for itself by letting your car be an autonomous taxi while you are at work?
That's him being honest of his own thoughts on the matter. He keeps thinking that they're close to it being complete but then the improvement rate plateaus. He's commented as such in in interviews when asked about the repeated 1 year time periods. And the autonomous taxi is still the plan. That hasn't changed.
> Have you seen him claim the Tesla Cybertruck will be available for pre-orders next year?
Because events in the business changed. What their plans are at one point in time doesn't mean that what they say will happen.
> Have you seen him claim he is backing out of this Twitter deal because of the many bots on Twitter, when he was previously claiming that he is buying Twitter to fix the bot problem?
Except he wasn't saying he was buying Twitter to fix the bot problem. That was never the plan at all. A lot of you people have ridiculous recency bias where you completely forget the events of even a few months ago. I've seen several people in this thread state this assuredly when only a couple weeks ago we were all talking about him buying Twitter to create a internet public town square and how it was about not banning people for what they say (and people claiming how horrible this idea was), but now suddenly that's all gone and its about bots. Elon is more trustworthy than most of the posters on hacker news and reddit as at least he's consistent.
> There are instances where he might have indeed believed the ridiculous promises he was making, but he has a long history of directly lying to consumers and investors to get his way or manipulate stock (or crypto) prices.
He has a long history of making crazy predictions, and fulfilling some of them while others completely flop. A lot of people doubted that Tesla would reach 500,000 vehicles per year production rate, and yet they have, almost exactly when they planned to. Growing at a rate faster than any automotive company has grown in history. A lot of people doubted that SpaceX could re-use rockets and now they land rockets multiple times per month and re-fly them within only 2-3 weeks. A few weeks ago they launched 3 rockets (that were all being re-used) in the span of 36 hours.
(Oh and the whole supposed crypto pump and dump is a myth given that he's never come around and stopped supporting it. He's never manipulated stock prices/crypto for personal gain.)
People ignore all the promises he's fulfilled and focus on the promises that either haven't come true yet or the promises that were discarded for a better idea. The general public on the internet is incredibly disingenuous about Elon and it drives me to frustration all the time. It seems to be largely an internet problem as most people I know IRL are either neutral on him (don't really care) or like what he's done.
So when he submitted official documents that he wants to be a passive investor at Twitter while already having internal talks about buying it and/or getting a board seat he ... accidentally forgot about that?
Are these the decisions of a good engineer and a moral person? Or someone who would rather be right than prevent deaths?
Except they did fix the deficiency and he never "doubled down" on the events that happened. He did remind people to pay attention while driving reminding people that it was beta software. Your recollection of events seems to be mistaken. Additionally, "Recalls" are a legacy regulatory requirement based around the era that required you to take a vehicle into a service station to have something replaced or serviced. They're not required for a software update to fix some problem.
> Then, predictably, a second person got decapitated in the same exact manner.
You're going to have to source that as I'm not aware of any second instance of the exact same thing happening.
> Are these the decisions of a good engineer and a moral person? Or someone who would rather be right than prevent deaths?
They're the decisions of a person who's working toward the long term and thinks that saving lives in aggregate is a good thing to do even if in the process very few deaths of a different type are caused. Yes they're moral. By some accounts he's saved several thousand lives already in prevented car accidents based on the lower accident rate of vehicles running on autopilot.
You could have saved yourself the trouble and done a Google search before writing all of that.
Obviously they didn’t fix the problem because it happened again. The problem wasn’t software it was hardware. Musk’s excuse was PEBCAW (problem exists between keyboard and wheel), but in reality it was his marketing and the failure of his products to live up to his own misleading hype.
And Musk did absolutely double down because he seems to have something to prove by eschewing LiDAR. The doubling down comes from the fact that the Model 3 could have corrected these issues but it didn’t. It made them worse by removing certain sensors. And again, the issue still isn’t fixed.
> They're the decisions of a person who's working toward the long term and thinks that saving lives in aggregate is a good thing to do even if in the process very few deaths of a different type are caused. Yes they're moral.
There are many such people working toward that goal, and those who are doing so earnestly aim to create a culture of safety. Musk is not one of these people. He has chosen to unleash beta quality software/machines with deficient sensor stacks onto an unsuspecting public, a public that has not agreed to his beta test. These cars are operating in stealth mode on public streets, when they should be clearly marked with flashing lights indicating that they are autonomous vehicles, as had been established as a common safety practice among autonomous car researchers for over a decade.
Musk threw out all of this and has caused literal deaths as a result. That’s on him. He ignores industry best practices for bragging rights, and he does so with no technical or engineering basis. There’s no ethical basis for it either, including your utilitarian “ends justify the means” take, because it’s quite clear at this point he will never even get to that end. He has boxed himself into a local maxima and his pride is preventing any advancement toward the safe future you imagine. Instead he’s stuck with machines that decapitated multiple people, and he can’t design one that won’t.
Musk and Tesla have been a giant step backwards for robot ethics in the industry. The whole world would be safer if he never even got the idea of autonomous cars in his brain. We were doing just fine developing safe autonomous vehicles without him. That better safer future you imagine will happen in spite of Musk, not because of him.
Maybe I've missed out on some life experiences, but I've never seen petty theft help defuse a tense situation. It is not going to be beneficial to achieving a sane outcome.
> In reality the majority of them will see this as a great reason to bear a grudge against Putin.
This is wishful thinking. All of the thievery was done by NATO - there is a very high chance that they will identify NATO as the threat to them.
And if they do blame Putin (which I think is unlikely, groups tend to close ranks when threatened) how is that supposed to help? What are the billionaires supposed to do that the Ukraine military or US State Department can't do? Billionaires aren't that big compared to a government military.
And you're vehemently argue against points that have been known for months, the oligarchs are deeply unhappy with Putin over what has happened: https://www.washingtonpost.com/world/2022/04/29/russia-oliga...
Putin may have them under his thumb, but that doesn't mean they should be left to their comfort rather than forced to face the direct consequences of Putin's actions.
2. What do you expect to happen here? How do you think these thefts have helped the situation? Even if you want to argue that these people now hate Putin, they are powerless. The west just stripped them of all their assets.
On long options -- a purchased call, purchased short, or a combination -- then losses are capped to the money invested. On short options, losses are potentially unlimited.
Understanding the difference is obviously extremely important.
> Nevertheless, you should consider that a host of professional traders with much better equipment and connections are betting against you.
I'd rather suggest that professional and sophisticated traders are arbitraging against you. Options market makers are not usually in the business of taking a directional stance -- they don't care one way or the other about whether Musk will buy Twitter. Instead, they seek to sell you the option but buy back the risk more cheaply, beginning with dynamic hedging that is impractical for a single retail investor with limited capital.
On a short call, your loss is unlimited. On a short put, it is limited to the strike price, because the stock price can't go negative.