Elon & Twitter

[Knightshade]

You are factually correct (as always ) but I wonder why Twitter is trading at $32.65 a share?

I mean, why was it trading for $36.91 a share just this past Friday, before Elon said he was backing out of the deal? Why has it been under $40 for a month now?

Did nobody in the market believe the sale would go through then either or has the market just been brutal lately?

The maximum settlement that Twitter can receive in the contract is only $1 billion. There is the specific performance clause so the judge could order Elon to buy Twitter for the agreed upon price. What if the judge orders Elon to buy Twitter and he refuses? Is it enforceable?

... yes...ish?

I mean I suppose he could somehow before judgement move 100% of his assets to a foreign bank with no ties to the US, and physically flee to someplace a contempt of court order can't reach him too- but that seems unlikely. And insanely bad for all his other companies.

But I don't see any way what is generally considered the preeminent corporate law court in the country doesn't do everything within its power to punish someone trying to ignore its judgement.

Matt Levine talks about it here: Bloomberg - Are you a robot?

I didn't see anything in there about Elon simply ignoring the court ruling...just possible ideas for out of court settlements-- can you cite it?

I think the best out for Elon might be this hypothetical scenario. What if another party steps in and makes an offer to buy twitter @36$(10% premium to today's closing price). If the SP continues to drop the offer can be lower. At some point other parties will show interest imo.

Who? And why would they want it?

As a TSLA investor I'm honestly not looking forward to the legal battle unfold over a period of 6-12 months

FWIW Delaware Chancery is pretty fast... for example from when the LVMH lawsuit was filed it was less than 4 months to the trial date. I'd be pretty surprised if this takes even 6 months to resolve, let alone 12.

This whole deal was so hastily completed. I'm also surprised by the uber TSLA bulls not even thinking of the possibility of Elon losing this court battle. I don't get how the possibility of Twitter winning this case is incomprehensible.

There is a contingent who feels that because Elon is brilliant (undeniably true) and he's very smart about many things (undeniably true as well) he must be smart about every thing, and there's some 12-D chess game he's playing- instead of having rushed into a deal without proper DD and now wanting out without much legal basis for doing so.

Even the many things Elon has outright admitted he's done wrong they tend to ignore or deny he did wrong. You can ID them by the folks who hit this post with a disagree

 

[Daniel in SD]

I didn't see anything in there about Elon simply ignoring the court ruling...just possible ideas for out of court settlements-- can you cite it?

Explicitly suggested in his last piece: Elon & Twitter
It's a reason that the judge might not want to order Elon to buy Twitter.

I mean I suppose he could somehow before judgement move 100% of his assets to a foreign bank with no ties to the US, and physically flee to someplace a contempt of court order can't reach him too- but that seems unlikely. And insanely bad for all his other companies.

But I don't see any way what is generally considered the preeminent corporate law court in the country doesn't do everything within its power to punish someone trying to ignore its judgement.

I agree it does seem like it would be impossible to escape Delaware's reach.

I mean, why was it trading for $36.91 a share just this past Friday, before Elon said he was backing out of the deal? Why has it been under $40 for a month now?

Did nobody in the market believe the sale would go through then either or has the market just been brutal lately?

Yeah, it's been clear Elon was going to try to get out of the deal since a few weeks after he signed it. If I could buy a share of Twitter and be guaranteed $54.20 for it later this year I would pay pretty close to $54.20 for it now!
When deals are likely to go through they stay close to the agreed upon sale price.

 

[AlanSubie4Life]

https://twitter.com/x/status/1546549205983846400

What evidence is there that the mDAU number is clearly incorrect? I'm so confused. No one cares how many bots there are or how much they tweet and overwhelm people's feeds; that's entirely unrelated to the mDAU number!!!! There is really just no connection at all expected between that phenomenon and the mDAU measurement. Again, 99% of Twitter accounts may well be bots. It doesn't matter. There may well be a bot problem that Elon can clean up once he is forced to buy Twitter, possibly at a small discount. But again, 10% of mDAU being bots...fine...Twitter's on solid ground. 2%....also solid ground. They haven't made any firm representations of the number anyway; best to just view it as a rough estimate. 50% - that's probably material. But there's zero evidence that that's the case. Again, you can't look at how many bot accounts there are or how many bot tweets there are to determine this. It's irrelevant!

So can we drop this nonsense about mDAU bots in this thread? It's by far the weakest argument Elon's got and it's boring.

Instead, referring to the Bloomberg article, in this thread, we should consider the merits of the other two points Elon is making. To me these seem much more likely to succeed, as they're a lot more open to interpretation. Twitter still doesn't have to give Elon everything he asks for (there are plenty of caveats!), but I think they reasonably should be expected to be cooperative. It's not clear exactly how much they have cooperated with Elon's hectoring. And how easy is it going to be for Elon to demonstrate that Twitter has not been conducting business normally?

Did nobody in the market believe the sale would go through then either

Yes, apparently they did not believe it then and they don’t now, and furthermore believe that Elon will succeed in not buying Twitter (the chances of the court forcing a sale for a massive discount are non-existent). I don’t know why they think that, but seems to be the opinion of market.

Anyway, if Elon is going to lose, I guess the move is to buy TWTR? Seems risky though.

I didn't see anything in there about Elon simply ignoring the court ruling

He mentioned Elon might decide he’s above the law, as I recall. Not much of a strategy. But I think that boils down to ignoring the court.

As Elon said, the most entertaining outcome is the most likely. Gonna be an event made for social media.

 

[kabin]

From my brief experience with trusts and wills, there's nothing certain in law and court. There's plenty of loop holes and ambiguities open to interpretation/ruling.

 

[EVCollies]

After reading NYT and WSJ, they both seem to question if a court can compel Elon to purchase Twitter. Can he just refuse to proceed? Does he have something in escrow other than the $1B, if even that is in escrow?

 

[Bet TSLA]

Elon seems to have no concerns with destroying large amounts of his wealth.

And that sort of not caring is usually a huge advantage in any negotiations. However he's negotiating with the Twitter board, which collectively owns almost no Twitter shares, so they don't care much about the price of the stock either. All they (may) care about is not getting sued by shareholders. I don't know about that really, as perhaps there is insurance that protects them?

Anybody know if there's anything that prevents Elon from buying more TWTR on the open market?

 

[Brn2Run]

And that sort of not caring is usually a huge advantage in any negotiations. However he's negotiating with the Twitter board, which collectively owns almost no Twitter shares, so they don't care much about the price of the stock either. All they (may) care about is not getting sued by shareholders. I don't know about that really, as perhaps there is insurance that protects them?

Anybody know if there's anything that prevents Elon from buying more TWTR on the open market?

You think people are that unprofessional?

What I think is Musk`s best card in this case is that the Twitter board and the judge, if they look at it isolated, do not want him to own Twitter. (alone)

 

[MC3OZ]

You think people are that unprofessional?

What I think is Musk`s best card in this case is that the Twitter board and the judge, if they look at it isolated, do not want him to own Twitter. (alone)

The Twitter board's job is to look after the interests of shareholders which is maximising dividends and the share price.

As far as I know Twitter isn't paying dividends.

A long protracted battle with Musk will highlight the limitations of Twitter, and lead to further likely declines in the share price.

If they let Musk walk away the share price will probably keep falling.

In terms of how many bots there are and how many real users likely to engage with advertising, I'm not sure anyone has a really good way of establishing that.

As to what the court will ultimately decide, or what deal the parties may strike, my low confidence guess is, that Elon will end up buying at a price all can live with.

While the court case goes on and Elon keeps posting on Twitter, the Twitter share price is very likely to keep heading south, unless they can make some profits and pay some dividends. If the business does become profitable, then Elon's original bid price might be fair value.

If I was a Twitter lawyer I would ask the court to request that Musk stops commenting on the case, because his comments are impacting on the share price.

Sure the board might get the full offer price if they can wait it out and win the court case, but how long will that take? How low will the share price go in the interim? What will it cost in legal fees? Will anything restore confidence in the company in the meantime? Will something else supplant Twitter in the interim?

My view on social media is it is always ripe for disruption, because customer loyalty is low, and new platforms are not hard to build.

 

[Daniel in SD]

Anybody know if there's anything that prevents Elon from buying more TWTR on the open market?

Found the clause that prohibits selling shares. Didn’t find anything that prohibits buying them though. That would be super blatant market manipulation though.

“(d) The Equity Investor, Parent and Acquisition Sub shall not sell or dispose any shares of Company Common Stock while this Agreement is in effect, and shall cause their controlled Affiliates to, cause Parent Owned Shares and all other shares of Company Common Stock beneficially as of the record date for the Company Stockholder Meeting owned by them to be (A) present at the Company Stockholder Meeting for quorum purposes; and (B) voted at the Company Stockholder Meeting in favor of the adoption of this Agreement.”

If I was a Twitter lawyer I would ask the court to request that Musk stops commenting on the case, because his comments are impacting on the share price.

Sure the board might get the full offer price if they can wait it out and win the court case, but how long will that take? How low will the share price go in the interim? What will it cost in legal fees? Will anything restore confidence in the company in the meantime? Will something else supplant Twitter in the interim?

If I were a Twitter lawyer I would love for Elon to keep posting on Twitter. He might say something incriminating. His recent post could be interpreted as him only asking about bots in order to try to get out of the deal.
Not going to take years If you look at the previous cases in this court. No jury, no big backlog. Corporations don’t want cases dragging on for years. Lawyers are expensive but they’re many orders of magnitude cheaper than the amount of money Twitter shareholders are losing if the deal doesn’t go through at the agreed upon price.

And yes for the amount of money Elon has already wasted on this he could have just started his own social media company. Me and many others have suggested it! Obviously he needs to wait until these legal matters are settled. He’s tanked Twitter‘s value and gotten a lot of proprietary information from them so it wouldn‘t help his case if he did it all in bad faith.

 

[MC3OZ]

Not going to take years If you look at the previous cases in this court.

Well the ones I remember are, the Walmart case, and the Solar City shareholder cases, they dragged on for years.

As you say, this might be different, but that depends in part of what documentation and data is requested, how long that takes to compile, how long it takes to analyse. And if the judge allows any data requests.

If there is a discussion on Bots, I can see 10 different expert witnesses offering 10 different opinions, and the judge taking a nap.

Is this court the final word, or could either party appeal the judgement?

 

[Bet TSLA]

You think people are that unprofessional?

I remember that Jack Dorsey said the Twitter board was dysfunctional and had been the worst thing at Twitter for years. Starting with that information., my expectations are low.

 

[Bet TSLA]

Found the clause that prohibits selling shares. Didn’t find anything that prohibits buying them though. That would be super blatant market manipulation though.

“(d) The Equity Investor, Parent and Acquisition Sub shall not sell or dispose any shares of Company Common Stock while this Agreement is in effect, and shall cause their controlled Affiliates to, cause Parent Owned Shares and all other shares of Company Common Stock beneficially as of the record date for the Company Stockholder Meeting owned by them to be (A) present at the Company Stockholder Meeting for quorum purposes; and (B) voted at the Company Stockholder Meeting in favor of the adoption of this Agreement.”

How would that be manipulation? If your offer is predicated on the stock being worth $54/share, seems obvious that you would be a buyer at $32. And every share you bought at that price would be one that you would never need to buy at a higher price. Whether it would just be throwing good money after bad is a different question.

 

[MC3OZ]

Lawyers are expensive but they’re many orders of magnitude cheaper than the amount of money Twitter shareholders are losing if the deal doesn’t go through at the agreed upon price.

This issue is the same for both sides, IMO even delaying the deal might mean that he ultimately has to part with fewer Tesla shares.

Why would he rush to settle for full price?

 

[Daniel in SD]

This issue is the same for both sides, IMO even delaying the deal might mean that he ultimately has to part with fewer Tesla shares.

Why would he rush to settle for full price?

There’s no way Elon settles for full price!
I’m not sure what you’re saying. Both sides have all the time in the world.
Elon has already sold the shares and secured financing to complete the transaction.

 

[Daniel in SD]

How would that be manipulation? If your offer is predicated on the stock being worth $54/share, seems obvious that you would be a buyer at $32. And every share you bought at that price would be one that you would never need to buy at a higher price. Whether it would just be throwing good money after bad is a different question.

Tanking the value of a stock so that you can buy it is market manipulation.
Admittedly I’m just assuming that would be illegal. Pumping and dumping is illegal.

 

[MC3OZ]

There’s no way Elon settles for full price!
I’m not sure what you’re saying. Both sides have all the time in the world.
Elon has already sold the shares and secured financing to complete the transaction.

What I am saying is paying for lawyers makes financial sense for both parties.

Elon no longer wants to pay the original offer price.

 

[Daniel in SD]

https://twitter.com/x/status/1546720437828190208

 

[Bouba]

If Elon wins this, his superpowers will increase exponentially

 

[Daniel in SD]

What I am saying is paying for lawyers makes financial sense for both parties.

Elon no longer wants to pay the original offer price.

Absolutely.
Only correction is that the offer was accepted. Both sides agreed upon $54.20 a share.

 

[Daniel in SD]

https://twitter.com/x/status/1546636517002489856