His character, along with his foil Chuck Rodes, trick people into knee jerking traps. The more "public" of a trap, the better for them. A lot of wall street plays in the show are based on real world plays. This article read like it came out of an episode.
If I knew the play, I wouldnt be sharing it publicly.
My whole point is, Musk made a series of public actions that made a stir. One action had the board make a knee-jerk decision that seems somewhat logical. He's jabbing with his left and the Twitter board seems to have hopped to their left and he's maybe going to uppercut, right hook, maybe go for a knee or do nothing at all and get hammered on martinis or mojitos or whatever a rich super villian likes to drink.
This is all a public side show for some greater end down the road or Musk made a drunk filing with the SEC. I dont know... well, all I do know is what's publicly available is pure propaganda to sway the public towards some greater play by someone who's going to profit off of this. I'm done with my poop now, find someone smarter to figure it out.
I wonder if Twitter would be in the right to deactivate musk’s account. They’re a company & he’s clearly trying to cause them harm. I see no reasons as to why it wouldn’t be justified. (Hilarious too, I might add.
Because depending on how you look at it, Twitter suspending Trump (and Babylon Bee et cetera) was part of the motivation for Musk to buy Twitter in the first place.
I don’t think Elon has or ever has had any affinity for Trump. He left his advisor (or something of that nature) spot in the administration quite early on for a reason.
Because he's a near-10% shareholder and accounts like his are a major driver of new account growth. I wonder if this episode has impacted growth or engagement metrics any. Hard to imagine it hasn't
That's how the game is played. If you want to take over a company without the consent of its executives, it's going to be a fight and you're probably going to lose.
The board of a public company cannot reasonably claim that they’re worth twice(!) what the market currently values their company at simply because they feel it’s true. Unless they have advertising contracts and growth metrics in the pipeline that represent a reasonable doubling of revenue and value, they’re acting legally irresponsibly. Justifying this is difficult. This is objectively a good offer.
Apparently it's lower than the current 52 week moving average of the stock price, so I don't think it would be outrageous to claim it's a low offer even without some massive deals in the pipeline.
Somewhere between 50% to 100% is the standard premium in all such acquisitions. As it stands Musk is offering 17% extra. Of course that takes the existing bump that the stock got from his initial purchase into consideration, but investors already have the ability to cash out at the current price so that lessens the attractiveness of the offer.
No, they don't really have the ability to cash out at current price. Maybe the smalltime investor but if any large institution tried to cash out the share price will tank. Just like it will tank when Musk ends up selling his shares.
Twitter has the potential to be much higher than its current value. It’s currently at a zero-earnings pricing. I don’t know whether Agrawal will turn it around, but if Elon or somebody like him stepped in, maybe they could clean house and do it. If Twitter employees are freaking out right now, it’s because they have so many people doing stuff that isn’t bringing in money.
I think the board is right to reject the offer. Twitter could be worth more. Twitter in Elon’s control would be a more valuable company.
If I were a shareholder, I’d want them to reject 52.40. Maybe not 92.40. The ideal outcome would be if Elon gets 51% control and I got to remain a shareholder.
Well, Twitter is 16 years old with $5 billions in revenue. Their maximum was ~$70 per share and that was 1 or 2 times. I don't think 92.40 is even reasonable since you have incumbents ranging from IG to tiktok.
Heck, Tiktok could add a timeline just like twitter and decimate them since Gen Z and millenials (26 and younger) are basically there. Facebook is old school and will start slowing down going forward. IG is for business since the appeal (sharing photos with friends) has been lost. Snap has its niche and Gab, Gettir, etc... are catering to the right.
People like controversy and that's the main reason twitter is relevant. Left and Right like to expose each other. That's the main reason alt-tech is not mainstream.
They will claim whatever they need to claim to justify not taking the deal. Like I said, it's how the game is played and completely standard practice. Lawsuits are also standard practice, which is why board members have insurance.
I think that clause has to be administered within a few hours and that time has already passed. It may be necessary to amputate a portion of the company.
"Twitter’s management wouldn’t have to worry about being kicked to the curb and they can continue doing what they do best, restricting conversation and censoring whatever they don’t like."
Every company I know of that did a poison pill to prevent a takeover wound up tanking within a year or two and the shareholders wound up with sand.
As a Twitter shareholder myself, the board is making a big mistake.
As a legal matter, I don't understand how a board could sell shares to other shareholders at a lower price than to the entity wanting to buy shares to gain control.
The idea that the board's fiduciary means they must maximize profits at the expense of all else is a bit of a myth. Yes, they need to look out for their shareholders but they also need to do right by the company, and companies can be formed for any legal purpose and everyone (the company and the shareholders) values things differently. It's generally been upheld that the board has a lot of autonomy and, outside of gross negligence, is generally protected by the business judgement rule.
> Yes, they need to look out for their shareholders but they also need to do right by the company, and companies can be formed for any legal purpose and everyone (the company and the shareholders) values things differently
The board has a lot of leeway into how they achieve profit for the shareholders, but all decisions they make must be nominally in the interest of that goal (assuming we're discussing a for-profit company such as Twitter). They can basically claim anything they do is done in the interest of shareholder value and be safe, but if they said "we know the company will lose money on this, but we really like X so we'll spend company money on it", they would pretty clearly be in breach of their fiduciary duty.
You gave a very clear example of a breach. To add to your point, Elon's offer is both conditional on financing and too low, so we will implement a poison pill would never be seen as a breach.
At least in Delaware law, a board's fiduciary duty involves a duty of care, loyalty, and good faith. While acting to maximize their personal interests or egregiously working against profits could be considered a breach, not trying to maximally make profits probably wouldn't be.
All of this would need to be litigated on a case-by-case basis, but many modern cases have found that companies can freely act to maximize the wages of their employees at the expense of dividends or act charitably even when there aren't tax breaks.
That said, I'm not sure this really even applies in the case of Twitter---I think its not unreasonable to argue that the innate value of Twitter is so much higher than what Musk is offering that its better for the shareholders to wait even thinking purely in terms of profits (I would probably personally disagree with that, but I don't think its any more unreasonable than plenty of other valuations I see)
Yes, they don't have to maximize profits, but they also can't ignore profit to the benefit of other values they deem more important, per the very old but still in force Dodge v Ford.
As long as they are not egregiously and obviously acting against that goal, or taking decisions without deliberation, the law would favor them in any trial that only hinged on whether the price offered by Musk was better than the market. Basically the burden of proof to show that it could not have been a good business decision would lie with the plaintiff, and I very much doubt that you could build a solid case of that.
I don't think Dodge v. Ford isn't a great case to cite here for two reasons:
1) I think the trend of accepting that corporations can exist for reasons other than to generate profit is a post-ww2 phenomenon and this case is from 1919
2) Perhaps more importantly, Dodge v. Ford was a case before the Michigan Supreme Court and, to my knowledge, has never been used in a case in Delaware.
I mean, saying "We are concerned about a hostile takeover attempt by a person who isn't allowed to be an officer of a public company anymore because he has show himself either unwilling or unable to be a fiduciary for stockholders, and we are trying to protect our stockholders from him" seems like a slam dunk in court.
Musk is offering to buy out all stockholders, so if the sale goes through, he will be the sole owner of Twitter, and all current stock holders will receive cash.
On the other hand, the board can easily say "we don't beleive this deal offered by a person who isn't allowed to be a public officer of a company anymore will ever go through, either because he will retract it or because he will be unable to secure funding; and we beleive attempting the deal will hurt stock prices and profits for current shareholders" and then I agree, it would probably be a slam dunk in court.
A for-profit company is there for profit. There is no other way to interpret shareholder value in a for-profit company, for purposes of discussing fiduciary duty.
Now, providing profit/share-holder value need not mean maximizing said profit - it just means that profit must always be considered in any business decision, it can never be entirely ignored in favor of other things.
Note that not even shareholders get to decide what kind of value they expect their board to offer them. That definition of value is set in stone by the type of corporation. The board of a for-profit company has a fiduciary duty to the shareholders of the company as pertains to profits.
If 100% of the shareholders of Twitter voted to ask the board to sacrifice profit for free speech; and the board decided to ignore this request entirely and publicly announced they would limit free speech at every trun to focus on profits, the shareholders would have no chance of winning a breach of fiduciary duty trial against the board. The board has no legal duty to uphold some abstract values that shareholders hold dear, they only have a legal duty to act in the interest of company profit as they see fit.
> it just means that profit must always be considered in any business decision, it can never be entirely ignored in favor of other things.
The word "entirely" is doing a lot of work there.
> The board of a for-profit company has a fiduciary duty to the shareholders of the company as pertains to profits.
This is a dramatic oversimplification that borders on falsehood, as you noted yourself in your previous paragraph. As a trivial example, the board would be entirely entitled to claim that their goal is very long term profit maximization, and that this will result in decades of losses (effectively Amazon's strategy).
We also now have "Public Benefit Corporation" as a codification of a for-profit corporation that does not have profit as its primary motivation (at least in 35 states & DC), but obviously that does not apply in the case of Twitter.
> As a trivial example, the board would be entirely entitled to claim that their goal is very long term profit maximization, and that this will result in decades of losses (effectively Amazon's strategy).
Yes, but that's still a profit based motivation. My point was that the board of a for-profit company doesn't have a fiduciary duty to represent non-financial interests of the company or shareholders.
That is, you can't sue the board of a for-profit company because they didn't uphold their fiduciary duty to represent your interest of having a free-speech platform, even if you had made it very clear that to you this is much more important than profits, and even if you owned 100% of shares [well, you can sue, but the case will be quickly thrown out]
Conversely, the board can always claim that they made free speech a priority because they believe that will help drive long term profits, even if shareholders asked them to focus on profits to the detriment of free speech, and even if profits immediately tanked after this decision; and they will likely win in a trial.
I'm not a corporate lawyer, and by no means an expert, but I think this is propagating one of the great myths of the last 40 years or so. Profits/finances are not the sole-arbiter of success, even in for-profit companies. A fiduciary duty is not simply to profits, but to the success of the company (however it and the shareholders measure it). Granted, they likely need money to continue with whatever is their measure of success. There will always be those that feel that the sole duty of a company is to profit, but that doesn't mean they are correct.
Ok, try to find a breach of fiduciary duty trial that didn't involve profits (discussing a for-profit company, not a public benefit company or other organization).
The famous Dodge v Ford was about Ford increasing employee wages and reducing prices, at the cost of profits. One of his main motivations was to avoid paying out dividends to the Dodge brothers, who were using said dividends to bootstrap their own car company. The trial found that Ford has ample leeway in running the company as he sees fit, but can't simply ignore profit completely or do things with the sole purpose of avoiding profit.
That trial specifically seems pretty specific to his attempt to avoid paying the Dodge brothers. And I'm not saying the courts don't sometimes say that profits are the most important thing, and I'm not even saying they aren't important. But that it's not the sole thing (or even the definition of) fiduciary and so a board of directors could, as fiduciaries, make decisions at the expense of maximizing profit.
We are the largest perennially unprofitable company to ever exist. The richest guy in the world offered to invest a fifth of his net worth into the gamble of turning our company profitable while making our shareholders a massive profit.
Instead, we poisoned the system knowing that the stock is all but guaranteed to tank massively reducing our market cap and hurting our ability to take out still more loans to continue our unprofitable venture.
But we're holding true to our other nebulous values.
To prove a breach of fiduciary duty, you generally have a very high burden of evidence, unless you can show some conflict of interest or obvious lack of deliberation.
Otherwise, the business judgement rule is applied, where the presumption is that the directors acted in good faith, and you would essentially have to prove that it is impossible for Twitter stock to grow beyond the current offer.
What answer could they give for their actions that isn't immediately disprovable garbage?
Do you really think that discovery would show that this was all in good faith?
I'd bet heavily that a lot of ideological discussions would be disclosed. As that is completely contradictory to what Twitter claims is their goal, bad faith would be the only remaining option.
I would bet that no such ideological grounds would be found in discovery, even if it were true, unless the board are complete morons to discuss such things over email.
Instead, it is easy to expect they would discuss the sincerity of Musk's offer (the chance that they may accept it only for it to be retracted, as happened with the board membership offer), the plausibility of him having the required financing, the stock price today vs 6 months ago compared to the offer, and similar business discussions.
I also don't personally believe this is an ideological battle at all - it's much more likely to be a financial manouever or simple ego-driven ambition by Musk.
Under DE law, my understanding is that you are slightly off on this.
Boards do have a duty to maximize shareholder value. THAT SAID, the business judgement rule provides that judges will not second guess the board absent evidence of gross negligence or total disregard of duty. This is because the Delaware court has decided that judges are not better than boards at evaluating business decisions.
BUT! Overcoming the BJR is very difficult unless management stupidly says the quiet part out loud.
Dodge v. Ford is a celebrated case in this regard because Ford basically said at trial "Yeah my main consideration in taking [specific action] is not maximizing shareholder value" and the judge was like "Haha no, that's not how any of this works - you can't do [specific thing] now." But if Ford was like "Yeah [specific thing] would be GREAT for shareholders" under the BJR the judge would have been like "Okay, great, keep doing what you are doing. How could I possibly know better than you?"
Also there is no "need to do right by the company" - squeezing value out of the company and all of its stakeholders is completely consistent with the duties of the board members. How else would the private equity industry exist? (jk!)
Right, though I don't think it is so vague as to be meaningless. The stakeholder / shareholder value debates in corporate governance play on the extremities of this distinction a lot, with the current koan being that what is good for stakeholders is good for shareholders.
It's not, particularly in the context of takeover defenses. There were cases in the 80s where Delaware ruled that only shareholder interests--not all stakeholders'--can be considered when a Board uses its "business judgment" to deploy a poison pill. But shareholders can have aims other than maximizing profit, and companies are free to respond to them.
Right, though it is an interesting question of whether those values either have to be (1) directly fiducial (2) couched in some theory of fiducial return or (3) can be entirely non-fiducial. Doesn't really mean much in practice because management can always just cover their ass by saying that the other aims are also good for the bottom line - even if it is nonsense.
I said this below but I don't think Dodge v. Ford is particularly really plays much into modern case law outside of the judgement rule. To my knowledge, it's never been cited in Delaware (against the board at least).
A case that stands out more to me (being both more modern as well as at the federal level) is Burwell v. Hobby Lobby: "While it is certainly true that a central objective of for-profit corporations is to make money, modern corporate law does not require for-profit corporations to pursue profit at the expense of everything else, and many do not do so." in reference to furthering religious goals instead of profit. (https://supreme.justia.com/cases/federal/us/573/682/#tab-opi...)
I hear what you are saying. Hobby Lobby is an important case but to me Hobby Lobby doesn't really implicate the same policy concerns. Hobby Lobby was a closely held (read family held) private corporation. I agree that the language is dramatic, but I don't really think it the case has much to say about the duty to maximize shareholder value in widely held or public companies.
I read that quote from Hobby Lobby as saying "Sure, where you own the whole thing you can do what you want, whatever, it's not like you are hurting any other shareholders" but I would hesitate in relying on getting that type of language in other fact patterns.
Note that the plaintiff in Hobby Lobby was the secretary health - not a disgruntled shareholder.
"Elon said" is not a stamp of trust anymore. Elon also said TSLA would accept Dogecoin, which he had accumulated prior to communicating it. Then he sold it off.
History should be a lesson here, it's almost Deja Vu with Twitter
Even if you think Twitter stock will go up 20% next year, you'd want to take this offer. If you think it will go up 50% next year, you might still take the offer because of the risk:reward ratio.
I think last year was some serious bubbliciousness, not the true value of Twitter and all the other tech companies (and shitcoins and NFTs and basically everything else people were throwing money at)
The big reason it tanked was privacy regulations from Apple/Android. That's not changing to favor Twitter and effectively took away one of their biggest revenue streams. That's a big deal for a perennially non-profitable company.
Yeah, I don't know much about TA, but I think it probably works better for well-established cyclical stocks, not for growth (or lack thereof) stocks like TWTR.
Icahn was claiming that Netflix was undervalued. To be fair, he was also angling for an acquisition. But a bid like that usually has a half-life; the market trends to a good price — and indeed, Netflix doubled in value by mid-2013.
Elon is arguing that Twitter is mismanaged. He already probably pushed them on the edit button, even though they claimed he didn't. If he's right — and Goldman Sachs seems to agree — he could have an easier go of it next year.
> It is because at Certain Times, given Certain Circumstances, humans will Behave Badly when confronted with Certain Ideas, and if you are The Main Platform Where That Idea is Being Discussed, you cannot do NOTHING, because otherwise humans will continue behaving badly.
To paraphrase: "Ideas are dangerous, people cannot be trusted to argue on the internet because it leads to violence, therefore people have to be censored, even if the things they're saying are true".
First, the idea that lab-leak theory was related to violence against East Asians is highly, highly dubious. Second, again and again, I see people arguing that we have to dispense with our ideals because they are Too Dangerous. At some point you have to realize that these people are just cowards.
> I see people arguing that we have to dispense with our ideals because they are Too Dangerous. At some point you have to realize that these people are just cowards.
We don’t have to dispense with the ideal. But that’s what it is, an ideal. We have to remain pragmatic.
It is both funny and sad that this country made it through a revolution, a civil war, various recessions, two world wars, the looming threat of nuclear holocaust, decades of ill-advised military adventurism but apparently it's "people arguing on the internet" that causes us to stop believing in free speech. Like I said, cowards.
Bullshit. We did just fine, and the populace did just fine ignoring the quacks, just like we'll ignore all the quacks without tech companies censoring everyone. Lord above, we might come to terms with the fact we're all nuts, which would be a far more productive and unifying form of civil discourse.
it's not that we stopped believing in free speech, it's just that, like many other words and terms, "free speech" has been "Newspeaked", redefined before our very eyes, in our very lifetimes, and all they had to do to accomplish it was put the Internet in everyone's pocket and convince them it will brainwash them into being evil mindless automatons or something, unless The Right People oversee and moderate what can and cannot be discussed online. literally nobody thought this way 15 years ago.
More precisely: ideas are powerful, which means they can be dangerous.
Anyone who doesn't understand that is actually a deeper enemy of discourse than a platform owner who says their forum is not a venue for topic X or opinion Y.
Some stop here at a dichotomy: "you want to ban ideas, I will be oppressed!" or "I must literally be allowed to put my words in your speech vehicle and be given full access to its audience without any abrogation of that privilege or I am being oppressed!"
Others start to understand what the legal system has with both weapons and speech: perhaps there are some activities or forms it takes that need nuanced consideration. Time, place, manner, associated behavior, fire in a crowded theater, threats, etc. You will find these considerations where people actually take speech seriously.
> Ideas are dangerous, people cannot be trusted to argue on the internet because it leads to violence
You seem to be merely summarizing with scorn here rather than actually addressing the situations where this happens.
It's not hard to find stories where distorted worldviews oriented around agentive threats regarding the pandemic have led to people threatening and even assaulting health professionals. I know some of these people.
You probably know families or acquaintances that have banned certain topics from dinner gatherings because they lead to heated conversations or even violence. It's not that they believe no one should ever talk about them. It's that they understand what Wong is talking about here: there's problem behavior and carving out a domain where the related topic isn't carried is one way of fixing it.
And when it's your house that people are yelling or coming to blows at, I'll bet you try the same solution.
Arguing on "the internet" is a freedom that has never been threatened by limitation that Twitter and Reddit have put in place. What's at stake with Twitter and Reddit is what Wong describes well here: they're stewards of the platform where this is taking place, they get to see the effects. They feel an obligation to do something about it.
And you know what? Their right to do so as stewards of the platform is also a freedom of speech right. And it's every bit as important as an individual's right to spout off about whatever it is they want.
The freedoms to watch more strictly are those where the state or other entities impose violence or loss of physical freedom as a consequence for touching a topic. Twitter and Reddit battles are about people's sense of privilege.
In your long, meandering post that reminds me of the long, meandering thread you linked, you claim that anyone who supports free speech is "actually a deeper enemy of discourse" than a censor. That's creepy Orwellian nonsense and anyone "smart" enough to convince themselves that up is down should not be making decisions.
This actually isn't hard. Ban racial slurs, "doxxing," calls to genocide, and low effort provocations. Don't ban ideas because you're convinced they are wrong or dangerous.
> Ban racial slurs, "doxxing," calls to genocide, and low effort provocations.
Hey everyone, look here! We have the answer to the thorny issue of what governs free speech in clear black and white. Twitter, facebook, reddit execs, take note!
> you claim that anyone who supports free speech is "actually a deeper enemy of discourse" than a censor
Not what I said. If you care about speech, try to be careful about parsing, interpreting, and summarizing it. If something still doesn't make sense, try asking questions.
It's exactly what you said. I took your dissembling and accurately reproduced its message in one sentence.
> More precisely: ideas are powerful, which means they can be dangerous.
> Anyone who doesn't understand that is actually a deeper enemy of discourse than a platform owner who says their forum is not a venue for topic X or opinion Y.
In order to have REAL FREE SPEECH (which you call DISCOURSE) we have to CENSOR BAD OPINIONS.
No. Stop playing whack-a-mole with "bad ideas". "X idea leads to Y bad thing" is almost always wrong, the world is chaotic, no one knows the result of a tweet, and people who claim to are just looking for excuse to shut down debates they're afraid to have.
No, "low effort provocations" has nothing to do with "disinformation" or "spreading knowable lies". I am genuinly astonished that you think all those things are synonyms.
news.ycombinator.com does this right -- moderators rarely moderate based on the message or idea in a post and their opinion about its truth-value. Rather, posts are moderated for being provocative, overly rude, including slurs, low effort, and so on.
I'm making the point that deliberate misinformation is provocation. Claims without evidence, baseless contrarian assertions with no semblance of logic, is provocation. Posting snarky one-liner "rebuttals" to a paragraphs-long post is provocation.
Not all of those things deserve the same level of reaction, but they are a disservice to useful conversation and should be moderated/downvoted accordingly.
I agree that HN does it correctly, so I wonder where our disconnect is.
You sir, are ascribing nuance where there is none.
Moderation's place is at the end agent. Period. I.e. it is the responsibility of people and end users to be aware of the actual physical world we share with others. To distort it is to do injustice to everyone.
I assure you. The poisoning of reality for "people's own good" leads to slippery slopes, and complete dysfunction and fraying around the edges which will always start targeted against undesirables, then be weaponized against everyone else by whomever happens to be in a position of power.
Either accept the world unfiltered, or don't try. Half efforts are doomed to abuse.
No I didn't. The twitter thread we're talking about used "lab leak" as an example of something that had to be censored but the author also admitted he thinks the lab leak hypothesis is true. Something that was true had to be censored! (I don't think lab leak is true, I'd give it a ~30% vs ~70% for zoonotic).
I don't care about trolling, it's just a neologism for "making a joke" or "taking the piss". "Bad faith" and "disinformation" are words used by people who want to shut down certain debates.
It's very clever. It redirects of a raft of points Wong makes into a narrative Musk is pushing. It probably represents one of the reasons why he's so successful. :)
It also loses its luster on a bit of reflection -- this particular novella was in fact published on Twitter, and obviously got plenty of attention, including from Musk, so it's not exactly clear that Twitter's an unacceptable venue for novellas. Also, there's other long-form platforms that don't seem to have competed well with Twitter so far.
But maybe someone could pull off making such a thing work. Which is why personally what I'd like to see Musk do is take the assets he was going to use to purchase Twitter and build another platform, one with the features and values he's envisioning from the ground up. He might have the juice to pull it off, and it would help diversify the media landscape and discourse culture rather than just being a tug-of-war.
I mean, if you take it as a case for why moderation is hard, that's fair. But while Elon describes himself (identity politics) as a "free speech absolutist", his concrete proposals seem to include things like an edit button, long-form tweets and some monetization strategies.
I think the fairer critique of modern Twitter is that it prioritizes the needs of media personalities and PR firms over ordinary users, not that it isn't "free" enough. I am blandly optimistic about the prospects of things being shaken up at Twitter, and for who Elon is, it could easily be someone much worse.
That's only from a content moderation point of view. I would argue Twitter is incredibly mismanaged from a product POV. Barely any new features, buff Android app (at least for me), and Twitter Blue being pretty useless.
Read some Matt Levine, he's way more articulate and makes finance quite fun. But if I were to take a stab at it:
The market has been so weird recently that stock splits - which according to previous theoretical belief do not create shareholder value - have in fact increased the share price for extended periods. So issuing stock for whatever reason (high price, poison pill) could be seen as shareholder maximizing.
One could say diluting the stock so that a particular personality cannot buy the whole company could be shareholder maximizing as it would entrench ESG held values -- emboldening new shareholders to purchase the stock (saving the stock price).
And point of information, by diluting rather than selling already owned shares, control is not ceded to the potential acquirer -- unless the potential acquirer doesn't care about the poison pill and will pay the premium for the new issue as well.
IMO, Matt Levine is mostly writing with his tongue firmly in his cheek when he suggests stock splits and meme stock antics are Rational Things Boards Should Do For Value.
Excellent source for financial news though, I agree!
> The market has been so weird recently that stock splits - which according to previous theoretical belief do not create shareholder value - have in fact increased the share price for extended periods
You're right that theoretically, they shouldn't create value, but I think even back to the 80s and 90s it's been shown that companies that go through a split tend to out perform the market for years after the split. The main reason isn't that the split creates value, but rather that companies who go though a stock split are usually successful and already on a trajectory to beat the market, split or not.
I think it still is. I'm going to try to find a source, but I saw an analysis where they measured from a year before the split, the day the split was announced, and the day the split was executed all until one year after the split was executed and the returns on all of them beat the market as a whole.
That being said, holding before the announcement performed the best.
> I'm going to try to find a source, but I saw an analysis where they measured from a year before the split,
There's a bit of time travel / survivor bias with this one. A company that has not beaten the market is much less likely to split its stock. In other words, if I know nothing other than that a company is splitting its stock, I can reasonably guess that it's shown good returns in recent history.
Stock splitting isn't dilution. It is the equivalent of breaking a $10 bill into 2 $5 dollar bills. Dilution is just printing more $10 bills aka inflation.
I'm not. Though I wouldn't have been too upset to pocket a 20+% gain, I bought at the start of 2022, bolstered by Jack's ouster. They need to figure out a paid tier for celebrity accounts, cut the fat from the staff (it's really not that complex a piece of software relatively speaking), and get profitable. Scott Galloway saw the potential well before Musk got involved.
Isn't your sample biased? Distressed companies are more likely to attract takeover attempts (hostile or not) compared to healthy ones; and they are also more likely to tank. As far as I can tell, Twitter is not in financial distress.
Not really, as a counter argument, there is every reason to believe that Musk will make a mockery of twitter and run it into the ground. A social media platform with a lot of responsibility is not for someone as egotistical as Musk. If Zuckerberg is bad, Musk could be catastrophic.
That need not be what the board wants and long term shareholders want. This pressure to accept an offer is for institutional (hedge funds) and short term investors. This thought process is similar to when the company decides to invest in the business at the expense of stock buy backs for example, the way Bezos ran Amazon for a long time.
It’s a completely ridiculous narrative to think that musk is interested in anyones free speech but his own. We should all be more aware of when the narratives billionaires pitch about themselves become perceived to be objective reality.
If Elon was really only concerned by his own free speech he could easily using the small change in his pocket to create elonmusksays.com, have 10 people run it, and his daily quips and insights would be there for all to see and presumably quoted anywhere and everywhere.
Elon always has bigger plans and ability to execute on them then people seem to acknowledge.
While I don't dispute that Elon is first in Elon's mind, I (perhaps in ignorance) have no reason to believe that he wouldn't take a principled stance and apply the standard he wants for himself to all. That's certainly what he's claimed.
I don't find the assertion that billionaires inherently lack integrity a compelling argument. In the spirit of honest inquiry, do you know of any reason specific to Elon that I should not take him at his word?
It’s important to note I didn’t say anything about his integrity.
There’s a pretty significant area of scholarly research in business and entrepreneurship that criticizes “mythicization” of successful individuals.
What those scholars argue, basically, is that media as well as business researchers take the words of successful people as inherently true and important. The result in, say research on entrepreneurs, is that what successful entrepreneurs think is meaningful is reported as de facto true and important. The critique is not of them saying it - it’s of others accepting it as valid based on the heuristic that successful people must be right. It’s a critique of the resulting research for not being objectively defensible, but instead just reinforcing societal norms as reality.
In my comment, my criticism isn’t of musk it’s of others. Believe me, musk, you, me, everyone tells stories about our selves and our beliefs from our own perspectives. It’s how other evaluate and use those stories as objective rather than subjective that can be problematic.
Because it takes a particular kind of person to become that rich and wealthy. When the whole Epstein scandle unraveled, it was eye-opening to me that all these people intent on being wealthy, powerful and influential, were also morally dubious. Elon has clearly sought wealth and power throughout his life. Twitter is the most influential social network on the planet - maybe he thinks that he could transition from the richest person in the world, to the most powerful.
Elon has run several companies immensely more successful than Twitter. He also planned to address some glaring issues on the platform. There is almost no question he would have been better than current management, which is destroying their platform.
I don't think it's run like a public utility. Twitter takes stances that might seem 'centrist' in politically blue areas, but seem biased in red areas.
Personally, I think Musk would run it more fairly.
I'll let you in on a secret: every person who runs a company is egotistical. It's not possible to run a company otherwise. You've got to have confidence in yourself and your ideas.
Of course, some hide it more assiduously than others. I don't mind Musk boasting. He earned it. It's more refreshing than the fake modesty of others.
A CEO friend of mind once called me up all worried because someone called him arrogant. I told him of course you're arrogant. He was shocked. I laughed, and told him to look at his accomplishments - who but an arrogant person would ever have even attempted those things!
Egotistical is quite different to confident. Narcissistic and egotistical people often have a fragile self-image. Prone to destructive rage[1] with the slightest insult.
[1] like calling someone a paedophile without any evidence.
Did I give the impression anyone would? I pointed out that I have a financial stake in Twitter in order to show that I have skin in the game that contributes to my pontifications on the topic. I'm not merely a disinterested observer.
This POV needs to shove it, because even those institutions can have their resources revoked by people waking up and accepting capital allocation is their responsibility.
This is the toxicity that has younger people rightfully angry at how the system works, and how it is "rigged". People just haven't had the info bandwidth previously to even contemplate these problems.
So no. WalterBright should absolutely do with his shares as he wilt, as should everyone else. Frankly, I wish institutional investment was deconstructed to at least get people coordinating with each other from the ground up to accept what it is their institution's manager was actually perpetuating.
Institutional investors are the backbone of municipal bonds that help small towns borrow and build. They back all of the retirement vehicles in the U.S.
They give a financial stability to places that need them.
One of the reasons Twitter is stable is because of those types of investors and is not subject to the whims of individual shareholders.
No corporate leadership wants to be subject to the whims of the stock market if they can avoid it. Twitters board and its institutional investors the firewall against such things.
…what if they board believes they are maximizing shareholder value in the medium or long term? What if they sincerely believe Musk would be a fickle CEO, and would make changes to the platform that would harm ad growth?
The fiduciary obligation is to act in the company's (not shareholders') best interests, not to maximise (short term) shareholder value. If the board has grounds to believe they can increase the value of the company over the long term by more than Musk's present offer is doing, they're right to do this and are legally safe.
I don’t understand how any board can implement a “poison pill”, not just Twitter but Netflix and others, and not be found working against the interest of shareholders. Can anyone help me understand?
You’re categorically changing the profile of the stock. This has a chilling effect on large investors, including but not limited just to Musk, right?
Vanguard, for example, has just had its range of further investment limited arbitrarily. Isn’t that bad for all stockholders, to know that large stakeholders will not drive the price up if they somehow gain substantial belief in the company?
The risk portfolio of Vanguard just went up considerably because in the case that they fully lose faith in the board, they no longer have the option of installing a friendly board, they must simply liquidate their holdings. This, in turn, makes them more skeptical of further smaller (non-takeover) investment because it’s more to liquidate and more risk.
Who does this benefit besides the board? I guess I understand that the board is not beholden to the interests of all shareholders equally, and I’m not suggesting that this doesn’t benefit some shareholders, but where does the line start?
Fiduciary duty, such as it is, only extends to dollar value; and there is no other criteria to sue the board over.
Note that I'm all for companies having much more legal responsibility to other stakeholders, not just shareholders, but that is somewhat irrelevant for a discussion of whether the board could be successfully sued over adopting this decision.
True, but the GP's phrasing of "equate dollar values" implies a sort of cut and dried interpretation. A mechanical calculation of a short-term price snapshot is not the only thing that matters. If the board has good reason to believe that Musk will be bad for the stock price in the long-term then there wouldn't be any breach of fiduciary duty.
That's not exactly true, as Musk's offer is to buy the company outright, making it private (and thus buying out all shareholders), as I understand - so there is no concept of how Musk's ownership would affect the stock price. Still, the board can easily argue "we believe shareholders will be able to achieve higher profits in the future by maintaining their ownership than by selling all stock at Musk's offered price today".
He claims that he wants to “retain as many shareholders as is allowed by the law” [0] which is just as fictional as it was when he pretended to try to take Telsa private.
To be clear, they haven’t actually rejected the offer yet, they’ve simply limited the ability of Musk to acquire a majority stake in the case that they reject.
If North Korea offered $60 billion to buy Twitter would Twitter be forced to sell? Not comparing Musk to NK, but money isn't the only consideration when an offer to sell comes in.
Indeed, what happens when Elon starts his own platform instead and uses some of the ~$40 billion he'd otherwise buy Twitter with instead on paying top users of Twitter to exclusively use his platform instead?
I'm aware, and do you realize nobody of note is using the alternatives? Why would you recommend someone invest time building a presence in yet another loser platform with bleak future prospects? Doesn't seem helpful or all that bright.
For a real alternative to succeed, solid backers focused on dethroning tw are needed to inspire confidence and stability, then we all need to jump at about the same time to get the momentum going and bounce out of the twatterverse.
Your two comments show you’re the perfect audience and user for an Elon social platform. Every failed or failing Twitter esque platform has some number of perfect audience fits. The problem is that those aren’t enough users. There is no reason to believe an Elon venture would fare markedly better.
The amount of users who once used twitter minus still use twitter is greater than current twitter users. You could build off of everyone rejecting twitter.
That only makes sense if everyone who stopped using Twitter is some kind of united cohort. Many people were simply not interested in the format, didn't find content that cared about, didn't have friends using it, drifted off to other social networks etc. Good luck gathering all of these people together on a new platform.
Most people who have “rejected” Twitter did not do so because of Twitter issues but wanting micro blogging sort of social platform.
Most rejected the overall concept. The amt of users that stil want something similar but not Twitter AND who will be appeased by whatever alt Twitter is made is an even smaller number.
He wouldn't bother because it'd be a failure. Twitter's tech stack isn't worth 40 billion, Musk could clone twitter for less than $500m, but just having a platform doesn't accomplish much, the overwhelming majority of twitter users have no reason to leave twitter.
Parler failed because it was never actually able to do and be what the incoming user base thought they were promised —- a free, uncensored bastion. Since that would never work at a bigger size with mainstream attention, there’s no real diff. Parler being a grift makes it all muddied any how.
Do you remember Google Plus? Google had excellent financing and an existing team of excellent software developers and couldn't pull of a credible alternative to facebook.
The world is littered with the expensive corpses of failed software.
Much of Facebook could be cloned by many startups see VK.
Google's product lacked purpose. It died because of a lack of vision and leadership and product mistakes (real names).
It died prematurely. Google treated the product like a pilot a network threw on the first week of September. It had solid numbers and given time it could have found itself if it found a backer in leadership.
> b: You're absolutely expecting a quick short-term gain
To put this in perspective, 20x in 5 years is an 82% CAGR. And five years is far short of the length of an economic cycle. Traditionally, "long term investing" meant across at least one whole business cycle.
Twitter has operated for 16 years and public for about 10, explosive growth of their userbase is in their past and monetization strategies have already been implemented for years. There is no reason to believe it has the potential for such growth.
> If I expect Twitter to 20x in the next 5 years why would I want to sell my share to Elon?
Vote with your dollars: buy shares at a price higher than Elon's. Borrow if you must. If you are not ready to take that risk, then maybe your expectations are more wishful thinking than anything real.
Today's price and the 'expected' future price is all that matters. The 90% lifetime price history is not relevant. All transactions of this nature are based on future value. The offer is only an 18% premium at a time when many tech stocks are being hammered due to extrinsic reasons. It is not a serious offer.
The share price tells you nothing by itself—you also need to know the amount of shares outstanding at both points in time to make an actual comparison.
That is irrelevant. To show a breach of fiduciary duty with this kind of argument, you would basically have to prove that it is objectively impossible for Twitter stock to be worth more than what Musk offered over some horizon. I very much doubt there has ever been a successful case taking this approach.
Guaranteed profit at the point in time is great for speculators. If you're doing long term investment, realizing profit at random point in time, isn't really that attractive.
They should, provided transaction fees and gains taxes don’t exceed their estimation of the difference in value times the number of stocks adjusted for the time value of money.
People with more complicated positions should consider covariance and factor in uncertainty. But if you’re a shareholder in a single stock and estimate that it’s overvalued by a significant margin, the rational choice is to sell your position, invest in a low risk, highly liquid asset, and rebuy.
Maybe - it depends on the growth prospects of the company - if they were high anyway - then it is better from a capital gains tax perspective to just continue holding the stock until you need the money.
I'm sorry that sort of argument makes no sense. Anything could happen in the future, but the price today is what the market judges it to be worth.
The historical price is irrelevant as well. Looking at the historical price is the same sort of thinking that leads to "throwing good money after bad".
And why wouldn't be? He is offering a premium from the current valuation. You either accept it or reject it if you think the premium is low, or am I wrong?
The board’s mandate is to maximize shareholder value. They have an offer that will objectively maximize that value. To scorn it in favor of intangibles is to act against the interest of shareholders.
According to your logic, any offer to go private above market value must be accepted. That's not the case. Stockholders might be interested in owning Twitter stock for a long time. Elon's offer might not make financial sense for them.
No, a board is mandated to act in the best interests of the shareholders. That might be different than just maximizing the share price. They may believe this is a bad idea for the company as a whole, and that long term, it's objectively better for the company to not be owned by Musk.
isn't musks offer to buy out all the shareholders. i.e. lets take a crazy example.
you have a company that is worth $1mil and we only imagine that it can be worth $100mil (based on the size of the market we are addressing). someone comes and offers $200mil but we know he will shut the company down (i.e. liquidate all its assets, or even simply the desire to destroy the company).
While this might be sad for the company, why is it not in the interests of the shareholders to take the offer?
so if Musk is willing to offer more than shareholders expect to see in the forseable future, why does it matter what will happen to the company after that? their interest in the company ends when their shares are purchased.
> willing to offer more than shareholders expect to see in the forseable future
That is your assertion/opinion (yes, shared by many, sure). But it's not the only opinion in this case, and so I don't think the analogy holds.
Sure, I could see in the abstract times where an offer it just unavoidably good, and so it would not be in the best interest of shareholders to take it. But in this specific instance, there is a lot to be said on both sides of the offer (taking vs. rejecting it).
I would also argue that, depending on the purpose and goals of the company, knowing that a person intends to shut it down would be a reason to value existing (in order to continue carrying out their purpose) over money.
Sure - if an offer is greater than the conceivable return then of course you take it, but Musk's offer is less than the stock traded at 6 months ago and 30% below the stock's all-time-high from 14 months ago.
It's also not just about $$. In your scenario, it's just negotiating. It's possible the Twitter board and shareholders are just unwilling to ever sell, regardless of the money involved. (I don't know if that'd ever be the case, just that is is possible, and possible within fiduciary responsibilities.)
Musk is trying to buy everyone out because he wants to influence the direction of Twitter. Why not ascribe a similar set of motivations to the other current shareholders? If that is a motivation for them, then shareholder profit is not the only relevant sense of shareholder value.
This isn't an argument for the poison pill clause, but is an answer to the following quoted question. It is funny to see this motivation of most existing shareholders ignored in order to bring into being analogous motivations of another. Especially when Musk's offer for Twitter has been in order to change it promote certain values, but conspicuously, better profits has not been one of those touted values.
> While this might be sad for the company, why is it not in the interests of the shareholders to take the offer?
I will sabotage my own argument somewhat though and say that I believe the economic motive dominates over time and is almost always (in macro and micro) the primary force.
If someone offered to buy your house at a 25% premium, would you sell? A house is a place to live at, in addition to having a dollar value, and so is Twitter - a powerfool tool to control speech, in addition to its dollar value on the market.
> and not be found working against the interest of shareholders.
It depends on what the interests of the shareholders actually is. Monetary only, or are there other considerations they care about?
I assume the boards of such companies have had private discussions with the majority shareholders to find out exactly what their priorities are, and then acted accordingly.
Twitter is not a B-Corp indeed. However any company, not just B-Corps, can have a purpose other than shareholders value maximization. Check this article: https://doi.org/10.1111/joms.12660
>any company, not just B-Corps, can have a purpose other than shareholders value maximization.
It's moving there but I don't think it's there quite yet according to case law. The board motivations at present still have to tie back to maximizing value for shareholders.
Elon's offer is at the same time an hostile offer, and conditional on obtaining financing from banks. This is never heard of in the history of hostile acquisitions, and is a BIG risk for the board to entertain any attempt by anyone to buy Twitter before they know what their loan percentages are.
Of course it does, but we also have no idea what happened behind the scenes and the board does. He turned down joining the board last week basically because he could act like a troll if he did (I’m being facetious). Calling musk the richest man in the world is also kind of silly because he’s not offering to stock swap for Tesla shares…he has a lot of theoretical wealth, which as with many factors would play in the boards decision about whether this is serious.
My point is that the number on the offer is not an objective and singular measure of whether this is a good deal for Twitter. Who is making the offer clearly matters as well to how serious it is.
No it isn't. They key is that management and board are against it and the deal is still pursued by the (potential) acquirer. It is perfectly possible to initiate a conversation regarding an acquisition and this is not a hostile takeover per-se though it could develop into one.
Yes it does, and this is underlined by the fact that they adopted the poison pill proposal. Though, in the past such tactics have been used just to get a better price, in investment banking 'no' doesn't really always mean 'no', it may just mean 'really, no, not at this price'. That said this is already a pretty premium and they might end up regretting that move if they really are after the money and don't have a different motivation.
Musk made an unsolicited, and what seems to be a non-investment choice, purchase of almost 10% of the shares and wanted to join the board. As far as I can tell, the board made his board seat contingent on Musk not buying more than 14.9% and Musk said no, and a few days later offered to buy the company outright. Now Twitter is taking moves to prevent a hostile takeover. That sounds like a hostile takeover to me.
What? This is not just wrong, it's comical to even think of what it would mean if it were true. The board would have to clairvoyantly foresee any possible acquirer who might be interested in the company, or else reach out to every company and individual in the world, stating its willingness - or otherwise - to be acquired. That would be, uh, quite something.
The offer is technically hostile because it was unsolicited, and the offer was made at the same time he indicated he wanted to buy-out the company (usually there's a gap).
A more typical way of doing this would be to make a proposal directly to the board first. The fact that Elon did it in public means he's trying to pressure the board (via the shareholders) into taking an action they wouldn't otherwise want to take which makes it hostile.
What if Tesla stock tanks (it could happen) forcing Elon to sell stock to repay his debt incurred to buy Twitter. He could decide to dump Twitter instead in a fire sale, massively undercutting its value and hurting it in the way Yahoo and AOL were hurt by the constant swaps.
Not necessarily, the offer could be amended and increased that's perfectly normal and still not hostile. Hostile is when you pursue against the wishes of the current owners of the company and their management, so in other words if they have indicated that they are either not for sale or that they are not going to sell their shares to you.
You could then try for a hostile takeover by buying up as much as you can on the open market and possibly to try to get one or two smaller shareholders to sell their shares to get you more than 51% (and in some cases more than 66% aka a supermajority) to be able to call the shots.
Even then, the Twitter board has staggered terms, so it is impossible to do a wholesale replacement of the board and thereby gain control of Twitter. The board voted unanimously to invoke the poison pill provisions in the bylaws so it isn't a matter of swaying a small number of board members.
Tender offers can be hostile - a "hostile tender offer" is an offer directly to shareholders to buy shares at a certain price, without getting the blessing of the board.
Unless I'm missing something, 'leveraged buyout' doesn't specify that it's Twitter's equity which has to be leveraged. Off the top of my head, I think Elon Musk has some other bits and pieces which he could scrounge together for collateral.
Hm, that doesn’t sound right, and Wikipedia agrees with my understanding, that an LBO means the buyer borrows money for it:
>> A leveraged buyout (LBO) is one company's acquisition of another company using a significant amount of borrowed money (leverage) to meet the cost of acquisition. The assets of the company being acquired are often used as collateral for the loans, along with the assets of the acquiring company.
Note how the second sentence says that the assets of the purchased company can be part of the arrangement, but the “L” in LBO means the buyer’s borrowing, however they accomplish that.
Hmm, not sure I understand what you are saying here. If Elon gets a loan using his Tesla stock as a guarantee, the risk is solely his. If he puts together a consortium to do the purchase, then that group is taking the risk. It doesn't matter though, given the Twitter bylaws, if the Board doesn't want it to happen it won't happen.
You can read "Barbarians at the Gate" for some 1980s history of corporate raiding. Back then, it was pure greed and ego. So unlike today [smile emoji].
The "poison pill" defense is very old. I'm not going to defend or attack it; it is what it is.
I WILL observe that, once a stock is "in play" it usually gets acquired, or at least gets a bunch of new board members.
I'm pretty sure a majority of shares of Twitter care about making the most money ahead of everything else.
But just offering a 50% premium might not be enough. They'll need to pay taxes on the realized gains and they'll need to find other places to put their money.
That’s been it though. If the board of Twitter isn’t concerned about what is best for the share folders, a direct violation of their fiduciary responsibility, then what is their interest?
If Twitter isn’t a business to make money to them, what is it, and who is it for?
A parameter in assessing the relative value of the offer to shareholders is the time horizon.
Perhaps the board believes the value of the shares over the next year or two is substantially higher than Musk's offer, such that they should reject the buyout so that shareholders can reap that gain.
I’d make them publish their content moderation policies, and have all decisions documented and filtered through those public rules.
The speech is made in public and should be adjudicated in public. Today’s Twitter hides its moderation policies and decisions. Even though they are a private company (albeit publicly traded and the effective public square), this is wrong.
Not OP but Elon has stated explicitly that all speech legal in the USA, so if I had the choice it would include parties left, right, and center: Occupy Wall Street, the AntiMedia project, Global Revolution Live, President Trump, Milo Yiannopoulus (sp?) Alex Jones, Robert Stacy McCain, Laura Loomer.
I'm not the OP but Twitter has at various times suppressed information about covid and covid vaccines. They are well intentioned but they occasionally overreach.
As a quick example, [1] lists some categories of tweets which they will delete. Twitter seems to have overreached with category 2:
> Claims that specific groups or people (or other demographically-identifiable identity) are more or less prone to be infected or to develop adverse symptoms on the basis of their membership in that group;
This is nonsense. Your risk increases with your age. Your risk increases with your BMI. Men are at higher risk than women. Those working in customer-facing roles are at higher risk than those who can work from home. Each of those statements are apparently banned on twitter.
The example that people use, would be any speech that legal within the US.
If it is illegal, then most anti-censorship advocates are still fine with it being banned. But generally speaking, the best case scenario for them would be all legal speech in the US.
Don’t have one. Let’s go with Trump or Alex Jones. People who say a lot of things people don’t like but aren’t illegal or their illegality hasn’t been proven in court yet.
Instead this is how I’d moderate twitter, when a court orders a tweet to be banned or a judge rules that a user should be banned that is when the moderation team would step in.
I’d also make it easier for people to filter content themselves. So if there’s POVs they don’t want to ever see they don’t have to see it.
Essentially this would reverse 99% of the mod teams decisions.
The interesting thing about Twitter is that people are banned arbitrarily and politically.
Take the case of Megan Murphy, a woman who is in a lawsuit against Twitter. Rules were added to Twitter that were used as a justification for her ban retroactively:
How many people were banned or blocked by Twitter for COVID misinformation, when it turned out that those spreading “misinformation” were actually the CDC, WHO, and government institutions, and when said institutions blatantly lied to the public about masking, vaccines, lab leak theory, and lockdowns, Twitter did absolutely nothing, except punish the people who criticized said institutions.
Recently there have been many accounts getting banned for being critical of US foreign policy in Ukraine conflict, disagreeing with western media propaganda around specific events. Also many got banned for posting "conspiracy theories" around COVID that eventually became conventional wisdom like its origin in the Wuhan Institute of Virology.
If one disagrees with liberal establishment rhetoric on gender issues, you also get banned very quickly. There are a bunch of these consensus political issues that are off limits for debate.
What value does a platform have when people are fed up with those who complain about "I want free speech" and leave for greener pastures?
Just look at Facebook. It's widely seen as "boomer garbage" that's only used as a least-common-denominator resort for communication by the target group these days, and conspiracy crap groups and peddlers of propaganda are a huge part of the reason.
Platforms and societies that fail to maintain some basic social order all eventually disintegrate into chaos.
Platforms should be able to censor and ban whoever they want for whatever reason. Any other stance violates the platforms free speech.
If Trump was on the mod team of a platform, I simply wouldn't use that platform.
No one needs to use Twitter. Most people's life wouldn't change the slightest bit if Twitter disappeared tomorrow. There's no serious argument that the platform has a monopoly on anything.
Because they are taxed on annual profit, not capital gains. If they sell a stock and buy a different one, there is no profit.
The private analogy is a professional gambler. You don't pay taxes for winnings on each bet. You pay taxes on what you have cashed out at the end of the year.
Tax on individual sales is only a thing for individuals.
I don’t understand how any board can implement a “poison pill”, not just Twitter but Netflix and others, and not be found working against the interest of shareholders. Can anyone help me understand?
You’re categorically changing the profile of the stock. This has a chilling effect on large investors, including but not limited just to Musk, right?
Correct. Hence the term poison pill. Now nobody else will be interested in buying them either and Elon selling out will tank the stock. As a reminder their stock steadily dropped all the way to $14 after the initial IPO pop and they've been losing money since before Covid.
Woke means broke I guess. I think his plan B will be to start a competitor. I'm very tempted to heavily short as soon as he walks away definitively.
As to your question of, won't the other shareholders get mad at the board and potentially sue them - I think the board is drinking their own koolaid.
He can buy one of those other competitors used by right-wing folks. Hell, if "free speech" is so important to him and to everyone else he wants to rescue he can just tweet to use those other platforms. It's certainly cheaper.
Twitter is "losing hundreds of millions of dollars every year" (I don't know if that's how we're using air quotes now, just following your lead), it is already circling the drain. No need to buy anything, it would be trivial for him to setup a clone and fund it indefinitely while it tears itself apart.
Spoiler alert: other platforms are not in any way more "free speech". Gab for example bans porn, which is both free speech protected by the First Amendment, and allowed on Twitter. TRUTH Social seems to forbid a lot of things, such as depictions of violence, lewd content, libelous/slanderous content and lying (true to their name, I guess?).
Twitter is where the network effect and users are, so no it makes more sense to take over Twitter and shape it to your own views if you are a billionaire who wants to make an impact on public discourse and free speech.
That sentence alone means you weren't even discussing this in good faith.
It's very well possible that the Twitter board believes that they can achieve higher value for the shareholders than what Elon offered. It's also very well possible that after talking to Elon through private conversations that you were not part of, they fundamentally disagree with his value and the direction he wants to take the company.
>I think his plan B will be to start a competitor.
Hey, maybe he would buy Parler, that would sure get him all the attention he desperately craves for. /s but maybe not.
> That sentence alone means you weren't even discussing this in good faith.
Is that what good faith means now? Being religiously part of Camp A or B?
The balance sheet speaks for itself. Incidentally Parler or his potential Twitter clone will also end up a toxic internet community. Who cares? I personally wouldn't use either one.
Certainly with Twitter already doing a great job losing money and alienating most people (almost nobody actually tweets and usage is falling) an alternative would split the user base and accelerate their demise and the inane concept of web micro-forums being worth tens of billions of dollars. Companies will simply decide advertising on Parler/Twitter is not worth the hassle.
>Is that what good faith means now? Being religiously part of Camp A or B?
No. But you immediately made this into a Camp A vs. Camp B problem when in reality there could be a million different reasons for the Twitter board to not want to get acquired means you weren't trying to discuss this specific situation, you were looking to turn this into a debate on "wokeness". That's why I said you weren't discussing in good faith.
>The balance sheet speaks for itself.
Does it? Elon has seen the same balance sheet and he thinks the true value of the company is higher than what it is now as well. So obviously he thinks Twitter has the potential to achieve much higher value through implementing XYZ. The board agrees too but just disagree on what that XYZ is.
> Elon has seen the same balance sheet and he thinks the true value of the company is higher than what it is now as well.
Up to you to take him at his word however he has stated otherwise.
"It's important to the function of democracy, it's important to the function of the united states as a free country and on many other countries and actually to help freedom in the world more broadly than the US.
You know I think this there's the risk, civilizational risk, uh is decreased if twitter, the more we can increase the trust of twitter as a public platform and so I do think this will be somewhat painful and I'm not sure that I will actually be able to to acquire it.
I mean I could technically afford it um what I'm saying is this is not a way to sort of make money you know..
It's just that I think, my strong intuitive sense is that having a public platform that is maximally trusted and broadly inclusive is extremely important to the future of civilization"
His net worth is over a quarter trillion dollars. Flipping twitter for profit is very far from a sure thing and seems like a waste of his time.
Why out of everything that he could invest in would he bother with twitter specifically? Whatever his intentions are it seems plausible that this isn't about money.
I get that you don't like him but this attitude of "I am right, you are wrong, and if you disagree you are drunk" is.. not a good look.
>Whatever his intentions are it seems plausible that this isn't about money.
It's very plausible that this isn't about money, and I never said it's about money. However it's far more plausible that this is about a narcissist buying media and social influence and he wants to be able to shape public discourse that paints him in a positive light. He really cares what people thinks of him.
All of that would seem far more likely (and suits his past track record) than him doing this to "save democracy".
> Elon has seen the same balance sheet and he thinks the true value of the company is higher than what it is now as well.
Also I'm pretty sure a narcissist is exactly the sort of person to genuinely think he is saving democracy by buying a website.
Do you know him personally? Are you a trained psychiatrist? Narcissistic personality disorder can be a serious affliction, tell him I hope he gets the help he needs and that I wish him the best.
I personally just want to know what will happen to the stock.
He is already an influencer and owning a social network where he gets to set his own rules would be the best way to ensure his influence increases further.
Free speech on social media is an oxymoron. SM is designed to give you power in proportion to the number of connections you hold. Its a popularity contest of twisted, faked, carefully crafted viral thought - most real, true and meaningful things get lost in the sea of professional influencers.
You will find more real free speech with a single visit of a subreddit than you will within a week of being on social media.
elon wants to save us from woke people, and sees that this is a trillion dollar opportunity.
have you seen the matrix? they powered a cluster the size of the planet using humans for batteries! this is the same scale problem, that and pedophilia.
> Elon has seen the same balance sheet and he thinks the true value of the company is higher than what it is now as well. So obviously he thinks Twitter has the potential to achieve much higher value through implementing XYZ. The board agrees too but just disagree on what that XYZ is.
Yes, but one version of XYZ (the board's) has been tried while the other (Elon's) has not. Elon's plan might lead to even worse results than the board's, but he doesn't think it would, hence his optimism if they adopt his plan.
> c) Profit of $273m in 2021 when you exclude once-off litigation expense.
The once-off litigation expense might soon be recuring in 2022, after this move. The former was a shareholder class action lawsuit, and the latter will most likely be the same.
Not having value is a value in itself. It takes a crazy amount of effort to be completely neutral.
>that my communication-medium
Twitter is first and foremost a publishing platform, you should not rely on it as a private communication medium. None of the chat apps I know censor stuff, so use them instead.
Use Twitter for public communication if you want, but since it's in the public domain you can't complain too much if there is content moderation.
I dunno man. My email software seems to accomplish that feat quite easily.
Sure I can complain. When it's the defacto public forum any administrative conversation-tweaking is pure poison to our society.
And also, yes, there is an implicit promise that the conversation between you and me is not getting fucked with by an invisible rat in the middle. So when I smell one of those rats, heck yes I'll complain. That's objectively ratty.
> Not having value is a value in itself. It takes a crazy amount of effort to be completely neutral.
The phone company does a pretty good job of it, and we have regulations that force them to be mostly "neutral".
Those regulations have worked out quite well. Perhaps it time to expand our existing, and working regulations to other platforms, given that they work so well on existing platforms.
> It's very well possible that the Twitter board believes that they can achieve higher value for the shareholders than what Elon offered
Who would believe that? They’ve had years to prove it and as they stock market has doubled in value their stock has been cut in half.
Share holders should sue. It’s time to trick their world and either drive the stock price to a few bucks or force then board to do their fiduciary responsibility and sell the company.
All of this is possible, but the reality is: Twitter is a 16 year old company that has changed imperceptibly since its inception. Elon has several polls over the past month, voted on by literally over 3M people, vehemently disagreeing with some of the policies Twitter holds dear. Their revenue is flat and down. They literally had a chokehold on global politics during the Trump era, and did nothing with it toward building a better business, or even a better social network.
Their board can believe all they want. But they're failing, miserably. Elon isn't perfect, but at least he doesn't have a demonstrated history of driving his companies' value into the basement, like Twitter's leadership does. This move by their board serves no-one but them; it doesn't serve Twitter's users, it doesn't serve their customers (advertisers), it doesn't even serve the vast majority of shareholders (which will be evidenced by an unprecedented sell-off on Monday).
Goldman advised them to block the purchase, because $52/share was too high, while simultaneously holding a $30 sell benchmark on TWTR. Its not even ironic that this is where Twitter's stock is going; its what they predicted, and then caused. The idiots in the room are the Twitter board, who actually believed the advice was given in good faith.
> Elon has several polls over the past month, voted on by literally over 3M people,
Oh sh*t i don't follow him and didn't care about those votes ... should I write a bot to make my voice heard? Is that how it goes? (Or in other words: such a vote has no statistical significance aside from pleasing Musk's ego or whatever is driving him and his need for attention)
This makes me wary of your post. You could have easily fact checked this and you would have seen that this is incorrect. It's up 37% compared to the year before that. [0] I checked the last 3 years and the growth has been positive during all 3 years. [1]
This implies American culture is pro-fascism, and while there are elements of that I don't believe that encapsulates American ideas - the gamut of ideologies have been part of the nation since its founding, though the ideas and what that means have shifted over time
Poison Pills are rarely exercised, this is a positional move. Unlikely Elon is the only interested party at this point. If the board can use a pill to force a slower buy-out discussion and negotiation it is very much beneficial to shareholders.
Their stock price was over $70 in the trailing 12 months.
Even with Elon's offer they are still worth 10 NFL teams combined.
I can find zero credible evidence to support your position. Please short the stock :)
I wasn't aware NFL teams was a unit of measurement. One has to wonder if you think I am wrong why you wish for me to short the stock and lose my shirt.
a) The poison pill only affects those who are looking to control the company in some way. Which isn't most large investors at all. So I doubt you will find any who will be concerned by this.
b) Twitter's stock price is now $45, peaked at $77 only last year and is profitable. Not sure where you get this ridiculous idea the company is unsellable.
c) There are plenty of free speech competitors to Twitter. None are even remotely successful. Because as Reddit also showed far more people want a moderated experience more than those that don't. And Twitter is a business first and foremost.
d) Musk is offering shareholders a premium as the stock is today. But as I mentioned even just last year it was significantly higher. And so I can't imagine shareholders would have an issue about them turning it down if they believed Twitter was still continuing to head in the right direction as it is now.
>The poison pill only affects those who are looking to control the company in some way. Which isn't most large investors at all. So I doubt you will find any who will be concerned by this.
That's not the right way to think about it. Anything that scares off ambitious, optimistic activists from buying big stakes, will then suppress the stock value in general, which hurts all shareholders, including the smaller ones.
More broadly, going public is a tradeoff. You potentially give up control to outsiders, in return for greater share value (and the cash infusion). Moves like this go the opposite direction: decrease the potential for outside control, and with it, the upward pressure on the stock's value.
> I think his plan B will be to start a competitor
I hope it isnt: I think that starting a top down, meaning "look I built this, everyone move over from twitter", competitor has a very low probability of success, regardless of who starts it. There is too much of an attack surface, there will be too much drama on real Twitter about it, early adopters will be gun nuts or some other out group and that will be how they get characterized, etc etc.
The real chance at a competitor would be something that grew organically, that people wanted to move to because it offered something valuable before it reaches scale. This is how actual businesses start. The top down approach is how massive flops happen.
Incidentally, the same holds true for the Facebook metaverse and imo suggests it will certainly fail
Remember that this IS Musk; not very predictable. But I'm going to try...
Since Musk has stated that this was NOT to make money, I imagine that triggering the poison pill, and THEN dumping the shares would tank the stock. Musk did say "final offer, and if rejected, re-evaluate". The poison pill trigger? Not something talked about.
I hold some shares of TWTR, and would continue. For the lulz.
You're probably right. On the other hand he is one of their biggest users and has a lot of celebrity friends.
There's too much drama on real twitter about it anyway. They might be stupid enough to ban him too soon, and if they keep on doing that nobody will want to use it. A lot of the top users haven't tweeted in over a year.
They're doing it on purpose so people will sell off TWTR, then they will secretly buy and approve the acquisition offer. It's a blatant insider trading scheme.
>I don’t understand how any board can implement a “poison pill”, not just Twitter but Netflix and others, and not be found working against the interest of shareholders. Can anyone help me understand?
So let's say you put in a shareholder rights plan that allows all current shareholders to buy 10 new, discounted shares whenever a new shareholder reaches 20% ownership and for every share they buy from then on. That effectively dilutes that one owner without anyone else, and if they continue to buy it makes all the other shareholders much more money.
That's not always legal, but it would help the interests of shareholders.
> That's not always legal, but it would help the interests of shareholders.
Except the guy at 19.9% trying to move up. Considering he has already invested quite a lot of money on the company, shouldn't the board also work for him ?
Why should he be treated differently and his share give him different "rights" than others people share ?
The poison pill was mostly developed at a time when the alternative was him selling all the company assets and leveraging the company to load it with as much debt as possible then give out as large a dividend as he could before selling off the stock leaving the company insolvent and everyone out of work.
So imagine a company taking $100 million in debt, giving all that out as a dividend then the stock price tanking through quick sales. Poison pill keeps the company going and avoids that fate.
...Companies do not warrant immortality. I fail to see how a corporate vehicle being able to persist against those that have bought in sufficient stake to move policy makes any sense whatsoever.
Wait, if some ETF accidentally exceeds 15%, then what? First of all, that'll screw over a bunch of small investors, right?
Second, could Elon swoop in at that point?
Edit: Also, if Elon is reading this, I'll happily buy 14.9% of twitter, and vote as part of your block. Just pay me enough to cover the sale and taxes, plus 1%.
Don't think that's true. ETF fund managers, when faced with a corporate action decision, will always vote for whatever maximizes their shareholders value.
Courts have upheld poison pills that treat 13D and 13G filers differently. I'd wager most ETFs that hold 5% of major public companies are 13G filers. Vanguard files a 13G for twitter. To be fair idk what the twitter pill will do - maybe it will be more aggressive.
An ETF isn’t going to “accidentally” exceed 15% ownership of Twitter.
Seriously, do you think funds playing with the kind of money to buy 15% of twitter often make careless purchases?
>Edit: Also, if Elon is reading this, I'll happily buy 14.9% of twitter, and vote as part of your block. Just pay me enough to cover the sale and taxes, plus 1%.
Such an arrangement would make Elon the beneficial owner of your shares.
Barclay's literally forgot to register with the SEC to be allowed to issue securities, then issued $15bn of them over the course of years, and lost $600m as a result. If you think "funds with this kind of money" are any better than a pack of chimps, then you should direct that "seriously" back at yourself.
Just because one tiny fund screwed up once does not mean that it is anywhere near likely that any ETF would screw up in a manner that would trigger this poison pill.
$15bn is tiny, presumably we’re talking about big ETFs like SPY here.
And anyway, you’re pretty much agreeing with me. It’s absolutely possible for a big fund to make a huge and hilariously stupid mistake, but this twitter poison pill does not meaningfully affect the chances of that happening.
In a world where you can shoot yourself in the foot in a million ways, it is utterly pointless to speculate about this one extraordinarily unlikely situation.
What? Barclays is one of the largest financial institutions in the world with $1.9tn in assets.
I think we're in agreement that this Twitter thing isn't worth the attention, but we are far from agreeing that large financial institutions are inherently competent because they're large.
I was literally wondering what would happen. ETFs are supposed to be algorithmically traded right?
There's a race condition between the poison pill being instated and the ETF updating their strategy. I wonder if a board could maliciously take advantage of that somehow.
ETFs generally aren’t managed without human involvement, and this poison pill isn’t software either. You’re taking concepts that exist in worlds like Ethereum and applying it to normal finance. That’s not how it works.
> but we are far from agreeing that large financial institutions are inherently competent because they're large.
I don’t see anyone making that argument.
Speculating on an ETF “accidentally” acquiring more than 15% of Twitter implies a whole different level of incompetence than a big ETF ever fucking up big.
Good luck with that perspective in life. I'll stick with writing clearly. You stick with writing poorly and flipping out whenever people misunderstand your intentions.
You broke the site guidelines badly in this thread. Please don't do that, regardless of how bad another comment is or you feel it is. We ban accounts that do that because it's so destructive of what this site is supposed to be for.
Could you please stop breaking the site guidelines, regardless of how bad another comment is or you feel it is? You've been doing it a lot, unfortunately, and we've already warned you several times. If it keeps up we're going to end up having to ban you.
What’s the problem with my comment? The word “fuck”? The fact that the other commenter got offended because I pointed out their very real struggles with reading comprehension?
I did not call kolbes comments bad, but patiently explained where they got it wrong.
I think you’re seeing fighting where there’s none, at least not on my side.
For starters, "Yeah, I’m sorry that you can’t understand English" was obviously an egregious violation of the site guidelines.
We don't care about people saying "fuck". We care about the things that are in the guidelines, such as being kind, not being snarky, not calling names, and so on.
What you wrote would be taken by most readers as an obvious personal attack. If you say you didn't intend it that way, ok, but we still have to ban accounts that post like that, because such comments are indistinguishable from garden-variety personal attacks.
I’m curious what happens in that case, then - let’s say hypothetically that SPY has enough cash come into the fund that they’ll cross that threshold if they follow their stated investment policy (“buy the S&P”) - what’s the move, then?
How far can you go with that strategy? The derivative assets aren’t going to fully move with the price, and can have much higher volatility than the asset you’re trying to avoid buying.
They will talk to Twitter board and make an agreement with them to not trigger the poison pill, and continue buying shares.
Such an agreement would be reached incredibly quickly, there would be no need for stopgap measures.
From the article:
> Under the new structure, if any person or group acquires beneficial ownership of at least 15% of Twitter’s outstanding common stock without the board’s approval
Index funds do, that's pretty much the definition of an index fund.
ETFs are a different concept, but a good index fund will be structured as an ETF, and it looks like this thread is using "ETF" to mean "index fund"? If so, then the answer to your question is an unambiguous yes.
> Edit: Also, if Elon is reading this, I'll happily buy 14.9% of twitter, and vote as part of your block. Just pay me enough to cover the sale and taxes, plus 1%.
You might want to speak with a lawyer who is familiar with inchoate crime.
What you publicly proposed to Elon is a crime, since you intend to conceal beneficial ownership of shares.
Yeah, there's no concealment and no beneficial ownership. "I'll vote as part of your bloc" isn't beneficial ownership. (At most it's delegating the 'control' aspect of the equity, but even that is a stretch - in context, it's clearly a statement of incidental agreement with his opinion on this point, not a total delegation of control no matter what he should choose to do in future.)
Agreed, but there'd be no attempt at concealment (I didn't know beneficial ownership of shares was a thing), so, while it would be dumb to hand me and the IRS a large pile of cash, it sounds like it would probably still trigger the poison pill, and not be illegal.
If doing it above board wouldn't make sense anyway, that means the idea is to do something illegal. You'd know who controls the board, how many shares the person currently buying it has secured, which way votes are going to go before they happen, etc. The rest of the shareholders, the rest of the whole market, wouldn't. You'd claim (and would probably have to in sworn testimony) that billion dollar gifts to you from Elon Musk, including your stock itself, were incidental.
It’s pretty fundamental to investment / mutual funds. Vanguard, Blackrock, etc. None of them are the beneficial owners of Tesla, but all of them are coordinating the activities of millions of investors they represent.
That's what I mean. If it were the case that coordination can't be done, it violates every normative expectation.
Keep in mind, I lump in people's behavior with normative restrictions of the First Amendment. If the Government can't do it, and the Government is us, we shouldn't be doing it. So businesses doing it because business doesn't hold for me either. Especially if it happens as a method of indirection to work around literal interpretation.
So if there is a restriction on shareholder coordination, I don't see how our legal system in this case can be taken seriously as anything but a tool utilized by those in positions of influence capable of more tightly coupling to other people of influence.
I agree with your conclusion but not really your reasoning. There are countless things the government can’t do, which individual people can do. I can respect an establishment of religion. I can spend money without a transparent and disinterested tender process. Etc etc. You seem to be taking a very literalistic, almost theological reading of “the government is the people” - yes, the people choose and appoint a government to represent them, but hopefully you understand that the government isn’t metaphysically the same thing as the people.
Saying “the government is the people” is much like saying “the shareholders are the managers of the company”: yes, that’s true in an oblique, ideal sense, but you’re going to run into trouble if you start trying to literally substitute the one for the other in random sentences.
They all register and file disclosures though. A private fund of this size concealing its existence, its structure, and its objectives, is immoral and bad for the stock.
And inchoate crimes don't require the person to do as you commanded them. Just the statement above would probably be enough to charge someone. And even if the crime you are encouraging someone to commit is impossible (for instance, asking Musk to buy 110% of Twitter through you), it is *still* a crime for you to have asked him.
I’m not sure how the second part of your claim holds up if you treat your first contention (with which I agree) as a precondition. In particular, I think it wouldn’t be possible to prove mens rea, which you’d have to do if no crime ended up being perpetrated and you’re charging someone only for the alleged solicitation of an inchoate crime?
It's not a crime to publicly finance someone else's stock purchases, or even to publicly solicit others to finance your stock purchases (it's not "solicitation" in the inchoate sense, since the inducement is not towards a crime).
> What you publicly proposed to Elon is a crime, since you intend to conceal beneficial ownership of shares.
Not really.
Setting aside the other issues, first and foremost this is obviously a joke. Prosecution would have to establish mens rea for this to rise to a criminal act. Do you think anyone could prove true intent for these events to unfold, based on this comment?
> since you intend to conceal beneficial ownership of shares
Promising voting rights doesn't change beneficial ownership. Twitter would have precedent, however, to find "conscious parallelism" and thus "a de facto control bloc" between the commenter and Musk, and thus bundle them for purposes of the poison pill's activation [1].
Still, not a crime. Civil dispute under corporate law.
As of January 2021 there is a whole bunch of new reporting requirements for beneficial ownership to combat money laundering and hiding assets. Structuring a stock trade to conceal the actual owner of securities (note the parent poster didn't offer to vote HIS shares) and failing to file disclosures is absolutely criminal.
The Yale Law article you cite is just about groups of investors working together, which is within their rights.
I imagine if an ETF accidentally exceeded 15% then the board would go talk to the fund managers and maybe get them to sign some documents. This isn't a computer program that will automatically trigger armageddon. It is just some new rules that mean if you turn up at a board meeting saying 'haha, I just bought your company and you are all fired', the board gets to say 'nope, we just issued a bazillion shares and gave them to all the existing holders except you, and you now own just 14.9%, sorry not sorry for your loss'.
This happened with SKT (Tanger outlets) which is a high dividend paying stock in SDY ETF. The ETF was approaching 50% ownership stake.
The fund needs to report their holdings. Not all companies have a poison pill provision. Not all companies that do have a poison pill will activate it. In the case of an ETF there's usually a discussion between the portfolio manager and the company. They know where they stand. Plus it's not really in a passive fund mandate to go activist.
"they" if there is such a they, depend far more on social media hypnotizing us and controlling what we perceive and believe. its not the absence of free speech that is the problem, its that truth about our situation cannot make a dent in our psyches while we are hypnotized with a firehose of propaganda and marketing.
> You’re categorically changing the profile of the stock.
Mechanically, it's not much different than an issue of new shares. From Twitter's announcement:
>> each right will entitle its holder [...] to purchase, at the then-current exercise price, additional shares of common stock having a then-current market value of twice the exercise price of the right.
There's no obvious breach of fiduciary duty through this plan. Existing (non-Musk) investors get new shares, but Twitter also raises capital at the current market price.
I think the answer is that "the interests of shareholders" can be interpreted in a much broader fashion than some people, including board members, like to pretend.
If I was a member of Twitter's board, Musk's history of erratic public behavior, SEC settlement, and openly hostile attitude towards the company's employees would be more than sufficient to justify my belief that his controlling ownership would not be in the interest of the current average shareholder.
That opinion would also be consistent with how "fiduciary duty" is interpreted by US regulators: companies are not required to perform any particular action that might reasonably be in the interests of shareholders; they must merely show that the company's actions were intended to be in the best interests of the shareholders.
However, I think it's a harder case to argue when twitter stock closed at $.18 above the price they went public at in 2013. Sounds like whatever it is they have been doing hasn't been in the interest of the average shareholder either.
> fate of the company after it has been taken private doesn't matter as far as "fiduciary duty" is concerned
If it goes private. As always, Matt Levine says it better than I can:
"...the financing seems to be made up of cobwebs and phlogiston. But also Musk has joked about taking companies private before, and he generally changes his mind a lot. (He agreed to join Twitter’s board last week! And then changed his mind four days later!) If you are a well-advised professional public company board, it is just catastrophic to imagine that you might say 'okay Elon $54.20 it is' and then he’d say 'ha no I was kidding, psych!' That would be crippling for a public company. Also that is basically what he did to Twitter’s board last weekend!"
Levine is being disingenuous, as usual. Obviously he would have banks and investors fighting to finance the deal. Wouldn't a breakup penalty address the breakup problem?
Not to mention he is being disingenuous by implying there was no material change between getting offered a seat at the board, and hearing what accepting that seat would entail.
It sounds like Musk received the offer, accepted it and changed his mind afterwards. That is, after accepting the terms, not after receiving them. If that’s the sequence of events, I don’t think Levine is being disingenuous.
> Wouldn't a breakup penalty address the breakup problem?
No. If you’re at a table negotiating a break-up penalty, you’ve already crossed the Rubicon. You have indicated that the price was at the very least worth considering.
If that buyer then walks before agreeing to the break-up penalty, the damage has been done. Board seats have been lost for less.
One can equally argue that opens sourcing Twitter algorithm and building trust would bring incalculable number of new users, have a profound impact on their ad business and not to mention, cut down their competitor's moat. People will flock to Twitter like bees. Ad revenue + subscription would skyrocket.
So, it can go either way and can be argued either way.
Also genuine, why would a person believe that would happen? The foremost thing that comes to mind is they'd be giving something of great value and receiving nothing in return.
which part do you want open sourced? timelines are generated after going through machine learning and then multiple services. even then, some of the infrastructure limits what you see in the end.
> Unfortunately, Haplo has its limits. Since we try to pull every single Tweet ID in a conversation every time a conversation is loaded in real-time, this is potentially an unbounded amount of data. We’ve found that if our platform tries to load more than a certain number of entries from our cache at once, our cache request latency will spike, and we begin to time-out on a significant fraction of read requests. Because of this, there is a limit of thousands of Tweets per conversation tree in this cache.
even just showing an ad is a ton work has a bunch of services involved
Transparency i can agree with, i think twitter does a horrible job at that. especially explaining the rumored shadow bans and stuff. But i think thats different then open source code
Yishan Wong , the CEO of Reddit until 2012 have tweeted a long thread about how Musk doesn't understand the current state of moderation necessary because he was much more involved with an earlier Internet. But I am of opinion that Yishan is also behind as one half of the debaters simply left facts and reality behind. This post here is an example.
Shareholding is not democratic. It is one-dollar-one-vote and therefore plutocratic rather than democratic.
(I was going to say it also involves too much money to be lefty, but then I realise that just might be my Overton window and isn’t necessarily related to what you think “lefty” means).
The massive and immediate shift from "It's a private company and they can do what they want" to chanting in unison "This is a danger to our democracy" has been horrifying to watch.
I don't own a TV, and yet I can tell you what the chiron said this morning, nearly verbatim. Ask anyone who watched it.
> If I was a member of Twitter's board, Musk's history of erratic public behavior, SEC settlement, and openly hostile attitude towards the company's employees would be more than sufficient to justify my belief that his controlling ownership would not be in the interest of the current average shareholder.
That... makes absolutely no sense. The interest of the current average shareholder ends when they sell their stock. There is no point in time at which both (1) the current average shareholder owns more than zero shares, and (2) Musk has a controlling interest. So it's impossible for those two things to conflict.
If you were a member of Twitters board, would it be in the interest of the current average shareholder to sell their shares at well above the market price?
It depends on how you define fiduciary responsibility. If it’s a point in time, transactional view, yes. If it’s a long term view of maximizing share holder value over time, not necessarily.
> If you were a member of Twitters board, would it be in the interest of the current average shareholder to sell their shares at well above the market price?
That definitionally depends on whether you, as that hypothetical board member, believe that Twitter has the potential to reach a share price higher than $54.20 if it stays public.
Also, remember there is nothing that binds the board of a company to solely consider potential shareholder value in the actions they take. There's a widespread belief that "fiduciary duty" overrides all other concerns, but from a regulatory/legal standpoint, that's simply not so. The board obviously needs to take it into account, but if they believe a merger or takeover is not in the best interest of the company, they don't have to take it.
> If I was a member of Twitter's board, Musk's history of erratic public behavior, SEC settlement, and openly hostile attitude towards the company's employees would be more than sufficient to justify my belief that his controlling ownership would not be in the interest of the current average shareholder.
But all that is irrelevant because he wants to take the company private- no shareholders. The impact to shareholders is the massive bailout he would give them on their shares.
If they cared about shareholders best interests they would bring it to vote.
As a Netflix shareholder at the time they adopted their poison pill, I feel like the subsequent ~40x increase in share price has been very much in my interest. :-)
Of course hindsight is 20/20, but even at the time, it seemed like the company was prioritizing long-term growth, whereas if they were taken over by Carl Icahn, they'd certainly not be.
Twitter definitely isn’t Netflix. It’s been a dog since IPO, languished under a part time disinterested CEO, and only peaked because of the pandemic meme stock era.
As an individual and index shareholder I’d love for Musk to take it away at a premium, I have zero faith management will do anything positive.
Strong agree, Twitter hasn't grown their user base more than 10% since 2015, they might be making more revenue per user but annual revenue is likely ready to plateau if it hasn't already. Getting a premium on your stock is a good option if you can get it and a natural outcome of investing.
It isn't just the shareholders they have a fiduciary duty to: they also have the duty of care, the duty of loyalty, and the duty of good faith. Selling to an adderall-addled toddler just because he happens to have accumulated more money than any person should have could be argued to violate all three.
The fiduciary duty of the board is to protect the company as an ongoing concern that seeks to increase its enterprise value, and also to protect the interests of shareholders, including minority shareholders.
This is to prevent say a majority shareholder and/or group of employees from raiding the business of its value.
So a case for a poison pill might be well made to prevent a person from taking a controlling stake to then expose the company’s IP (code base) because they have some agenda, or prevent them running the company into the ground by causing a flight of talent, or by breaking some success formula.
Isn’t it still possible for Musk to make a tender offer which then would have to go to a shareholder vote, or for the board to accept (or put to shareholder vote) the offer he did make? The point of the poison pill is that it prevents a certain type of hostile takeover and you may have reasonable opinions about whether or not such clauses are good/should be allowed, but I don’t think they stop takeovers in general, right?
> The risk portfolio of Vanguard just went up considerably because in the case that they fully lose faith in the board, they no longer have the option of installing a friendly board, they must simply liquidate their holdings. This, in turn, makes them more skeptical of further smaller (non-takeover) investment because it’s more to liquidate and more risk.
It sounds like your interpretation Vanguard's risk profile / likelihood and their interpretation differ. And given that I trust Vanguard's assessment.
Frankly, if I were an institutional investor, I'd probably prefer the poison pill than have Twitter become a toy subject to Elon Musk's random political fight.
Wasn't he all in on Doge coin, except he wasn't, and all in on bitcoin but then not fully, then some other random alt coin, oh and then he's back in on Doge again and how to improve it.
It sounds like sound fiduciary duty to not let your company be subject to those whims.
> Vanguard, for example, has just had its range of further investment limited arbitrarily.
As I understand vanguards structure, they have no beneficial ownership of any company and therefore never trigger the poison pill.
> Who does this benefit besides the board?
This benefits anyone who is concerned that a rich person will buy 50%+1 of a company and use their equity to make decisions they are opposed to. Now if a rich person accumulate 20%, the other shareholders can dilute that rich person. That means the rich person has to convince other shareholders that decision is correct.
In most other countries, such a poison pill would be illegal as it violates the principle of equal treatment of all shareholders. Also, in most other countries, the decision to issue new shares requires a shareholder vote and cannot be done by the board alone.
A poison pill adopted up front before there were any third parties that could claim to be prejudiced by it or adopted with a shareholder vote is one thing ... this seems to be begging for a successful lawsuit, and I can think of one 10% level investor who would be likely to file one.
Anyone care to speculate what his plan B would look like? Could he make a twitter clone/replacement then offer existing members $50 for their username and password plus x amount of engagement on his new site?
Anyone can make a Twitter clone/replacement. Getting hundreds of millions of users to switch over is more complicated than just handing them $50, and even that is logistically impossible to do.
Backup 1: Make a huge show of dumping 9% of the company at the lowest possible share price (that does not trigger any SEC scrut6). Deride the current board as inept and having no vision for the future of the company. Watch the price plummet and acquire the injured version for less than his initial offer. Admittedly that doesn't work as well with a 1 year poison pill delay the board just triggered.
Backup 2: Continue making Twitter polls that potentially steer/force the current management's hand into the changes he wants to see implemented regardless.
People are overlooking the fact that a poison pill will likely increase the price of Musk's final offer, and in doing so will maximize shareholder value.
Put another way, Musk may be willing to pay a lot more than a 25% premium for Twitter (he already said he doesn't care about price). Without this poison pill, Musk can force a takeover by accumulating shares. With this poison pill, the board has leverage to maximize his final offer.
He said it's not an economic decision, that doesn't mean price he pays isn't considered; he also said it's his final offer, whether that's just presenting a firm stance as a negotiating tactic or not, I don't know; ~$40 billion investment (far less) could create a better platform than Twitter with mass but it wouldn't be a head start that it looks like he's wanting to buy.
or the stock can be dumped with public fanfare, bringing it to a fantastically low price. Then, it can be purchased back, even with the 25% premium, likely for the same total price.
I don't think its possible for Musk to ever attain 51%, everytime the price sinks and he accrues shares, they would just choose to issue more shares diluting his equity.
really think Musk knew this ahead of time...but what's his end goal i can't figure out. is it to profit off his purchase? because if he wanted to acquire 51% this is the worst way to do it (creating a hostile board who can at will issue infinite amount of shares)
Twitter’s speech moderation policies should be public, and all decisions pertaining to speech should be public, and there should be a public appeals process before a jury of the speaker’s peers.
That's a lot to ask when each user account is free.
You're basically replicating the US Courts Legal System, except those on trial pay 0% taxes. Not viable.
Keep thinking though, we need a hero of an idea to make forward progress on the question of what strategy is best for US-based public companies, and what their role is in showing the world what the gold standard for "freedom of speech" online looks like.
This is why Twitter needs to go private. The current management has no idea how to run a public square without falling back to an authoritarian censorship regime.
EDIT: Arguably, much of what I am suggesting can be automated cheaply.
Private companies have less transparency than public companies. You're hoping the owner will be benevolent and okay with losing money indefinitely for the sake of transparency, or if that turns out to be the case - that ownership will not change (e.g. bought out by Murdoch or Carlos Slim)
You misunderstand, it’s true that a private company can be opaque, but a public company cannot be altruistic due to the composition of the shareholders. No one was able to prevent the Saudis from buying a major stake in Twitter, and the Kingdom is historically opposed to free speech.
A publicly traded company cannot solve this problem but a private company might be able to.
I understand you just fine - I was just pointing out that a private company can also choose to be opaque in a way public companies can't. It probably would have been easier for the KSA to buy a stake had Twitter been private. Incidentally, the infamous "Funding secured" tweet was predicated on funding from the Saudis[1]; so Elon taking money from the Saudi's isn't unfathomable, should he hypothetically choose to sell to them.
1. According to Elon, who now insists the tweet was true.
I like this description of the problem and the suggestion:
> Today on Twitter, as on most social media, justice works in a roughly Stalinist style. The normal penalty is permanent execution. There is no transparent explanation for why an account is executed, before or after the execution. It has simply “violated the Twitter rules.” The public rules are extremely abstract and could theoretically justify almost any execution. The private rulebook by which the secret police, or “Ministry of Trust and Safety,” operates, is of course as secret as everything about the secret police.
> Of course, it is easy to observe that a two-day-old spam account does not deserve a six-month trial, with lawyers, before getting the bullet it needs in the back of the neck. Due process in this context must not be a clone of the IRL judicial system, which is more broken than anyone can possibly imagine.
> And there is a simple solution to the problem of scaling due process: *scale the level of due process to the size of the account*. An account with a million (real) followers might well deserve a six-week public trial, perhaps even with some kind of counsel. The spammer with 20 followers? Any cop can shoot him, as at present, and leave the body by the side of the road as a warning to others.
> There is a use for online Stalinist justice—it is only an injustice when it is disproportional to the user’s investment in the service. When Twitter is your career and any cop can just shoot you, an eerie atmosphere of terror pervades everything.
Fair amount of irony in the exhange at the end. Twitter needs to be privately owned, so it can help usher in an age of cryptocurrency when everyone can own a piece of everything...
“Even before Friday, Twitter had bylaws that "could have the effect of rendering more difficult, delaying, or preventing an acquisition deemed undesirable by our board of directors," the company said in a February 2022 SEC filing. That includes "a classified board of directors whose members serve staggered three-year terms," and the ability to "authoriz[e] 'blank check' preferred stock, which could be issued by our board of directors without stockholder approval and may contain voting, liquidation, dividend and other rights superior to our common stock."
Sounds like the board can do pretty much anything they want with Twitter’s stock. I find it incredible that a regulated public company can issue abitrary shares with any terms they want.
They made these rules before Friday. but it also sounds like they could have made them today if they wanted to.
That is insane. Was never a holder of $TWTR and never will be given these insane bylaws which allow the board to issue preferred stock without any accountability.
So, I'm not very corporate savvy and this might be a very stupid question. Is there a NON-culture/political reason for all the push back against Musk buying Twitter? From the read, this just seem to be opening the door for someone else to try and take majority control and pining away for the days of Dorsey (which, if looked at objectively, weren't great... just filling an opportunity).
As a shareholder, either you are happy with the price Musk is offering you, or you think the company can do even better long term. Twitter is clearly a very valuable asset, considering this fight is happening in the first place, so it is not inconceivable that >50% of shareholders will want a larger buyout. Heck even if you are completely happy with the terms, pushing back and asking for more is a standard negotiation tactic. They'd be foolish not to try.
The pushback is simple: Twitter stock price was higher than Musk’s offer for most of 2021. We are in a downturn affecting the entire tech industry, and it’s likely that prices will return to previous levels at some point. Elon’s offer is a lowball and Twitter can bring more value to shareholders with or without Elon.
Counterpoint: it's not a downturn, just a return to reality. Tech stock valuations were sky high in late 2020 / early 2021, and even considering recent drops most are still above their pre-pandemic levels.
Totally possible, but the original question was "Is there a NON-culture/political reason for all the push back" and "Twitter stock price was higher than Musk’s offer for most of 2021" is definitely a non-cultural/political reason to push back on the offer.
Again, you might be right that Twitter's price was over-inflated in 2021, but "it was worth more" is certainly a non-cultural/political reason to push back on the offer - even if they're wrong about Twitter's long-term value.
Their stock dropped along with Facebook and other media platforms the second Apple stopped them from tracking users everywhere. That's without mentioning the crazy overvalue problem such companies already have.
> We are in a downturn affecting the entire tech industry, and it’s likely that prices will return to previous levels at some point.
So why not take the offer (which is 20% higher than the current market price for the stock) and put the received cashed into other tech stocks? Is Twitter uniquely/excessively down compared to other tech stocks, and due for a bigger rebound?
Twitter wouldn't exist in this scenario from the stock holder's perspective. They would get cash and then put that cash into other investments of their choosing.
The only way this makes sense is if there is a bigger offer incoming OR if the Twitter board has a plan to make twitter much more successful in the near term and succeeds at that plan.
I think the "not a hedge fund" part is referring to the fact that this would be a taxable event for the average stockholder. You can't just presto move that same amount into another tax stock.
No, they meant that Twitter is a specific business that shareholders believe in, not just a financial vehicle. Like part of the value of your house is that it is your home, not just a liquid investment.
Taxation is only a concern for folks who have big unrealized gains and lack harvestable unrealized losses.
I don't immediately buy the logic of "Stock A hit a peak of $X last year, therefore that is the correct price/valuation, and not the lower price it is right now"
If Twitter was worth more, it'd be worth more.
With that logic, you should put a huge chunk of your savings into Twitter to benefit from the insight, as it's currently trading at 39% below its 52-week high.
The argument is not that is worth more, it is that it can be worth more in the future than Musk offer. No one can predict the future, but it is a legitimate reason to believe it can be worth more than $54 in the future and pointing that it was worth more last year is just an argument for the belief. Which makes sense to me.
As legitimate as it is to believe that the stock price will never again reach $54.
The disconnect between you two seems to be an understanding of what the price of a stock means.
The stock price today represents what investors think the future value might be. The speculation that the dip will bounce back is built into today's price.
The reduced price over the high represents the perceived risk that it won't return.
Musk values the stock higher than the mean investor.
I think we have to tolerate a certain amount of irrationality from shareholders.
If you bought a $100k home which then dipped to $80k during Covid, would you accept an unsolicited bid of $90k?
It's reasonable for some people to take the bid, since you could arguably buy another comparable house for $80k and pocket the $10k difference, but I think a lot of other people would reasonably choose not to.
(I'm not totally sure if this logic scales to board rooms / billions of dollars, but curious to hear thoughts.)
I don't think the logical disconnect here is about whether it scales to billions of dollars. The problem is that people live in their homes and there are many frictional costs associated with moving. You need to pick something much more fungible.
I own several stocks that have dropped in the last few months. If someone offered me a 20% premium to sell them today, I would do so in a heartbeat. I would even do so if it meant the company would go private and I couldn't buy that stock again.
Indeed, note that the only rational reason not to buy TWTR right now is the simultaneous belief that (a) it's not underpriced but also (b) Musk will never [be allowed to] make the purchase. If you disagreed with either of those statements, then it would be irrational not to buy TWTR, because either way you'd profit.
In 2016 Microsoft acquired LinkedIn at a $26 billion valuation, which was at the time a premium of ~40% or so over the current price, but still lower than their valuation was the previous year. So it isn't unprecedented to accept an offer for an amount lower than your all time high Elon's offer is a 38% premium over the price it was prior to him disclosing his position in the company.
> We are in a downturn affecting the entire tech industry
Some companies are down more than others, and some are doing fine. Twitter revenue is largely driven by ads and they are likely also going to be hit by Apple's privacy changes like all other ad based businesses. Meta (Facebook) has already said they expect ~$10 billion revenue hit from the changes. It's feasible to think that Twitter revenue for the year may actually drop and the stock price may not recover to the 2021 levels any time soon.
IIRC The Apple privacy changes hit a very specific kind of targeted advertising that Facebook was great at monetizing. I’m not familiar with Twitters ad platform but it’s unlikely to have affected them as hard as they hit FB.
>Twitter stock price was higher than Musk’s offer for most of 2021.
That's cute but the past is gone. Twitter is clearly going downhill, both with their product and with their management (good thing they got rid of Dorsey, but perhaps that was too little too late), the stock just follows on that. If anything, people like Musk are the ones who still attract interest to the platform.
>Twitter can bring more value to shareholders with or without Elon
Twitter is on a very dangerous spot right now, their MAUs peaked long ago as young people go to other platforms, and overall, everyone is a bit of tired of the kind of discourse that predominates there, for instance, Trump was banned and I STILL find out everything about him because the people there (left and right-wing) are absolutely obsessed with him.
Honestly, Twitter is the one social media platform that I wouldn't really mind if it just disappeared. At least Facebook has some family members in there and some pictures from my earlier years. Twitter brings nothing of value to my life and I'm sure I'm not the only one who feels like that.
It seems a little funny to me that people flock to the idea that Twitter's market cap in a fed-fueled stock market when literally everything was moving up is some kind of true valuation for Tiwtter. If anything Twitter is likely trading at or very close to its fair value now then it was last year when retail was throwing money into anything.
I think the argument is that if long term holders wanted to sell at this sort of valuation then they would have last year when it was way higher. If there was a bunch of retail money fuelling it then they could have took advantage and got out but they didn’t. So why would they sell now for a smaller upside?
GME is a bit weird because it was essentially a crowdsourced fundraising round for Ryan Cohen SPAC, expecting an NFT play. (Which I expect will fail spectacularly)
> and it’s likely that prices will return to previous levels at some point
Wow, that's great news for Velodyne Lidar -- currently trading around $2 and was $28 less than 2 years ago. (Why bother with paltry 2x return on Twitter when you could get a 14x return?)
Surely there is both a status quo and survival bias going on with the existing leadership/management team. When you have an outside person who wants to change some fundamental things about the company, it seems natural that there would be resistance.
As an outsider, I'm personally intrigued by the prospect. There are two things he's mentioned that I think could be very beneficial (outside of freedom of expression) to society:
1. Transparency - open sourced algorithms for what shows when and transparency about moderation decisions
2. Reduced short-term financial incentives - Given it'd be bank-rolled by someone with a lot of money and private, they wouldn't need to play the gray area game of increasing advertising & data sharing that other sites do.
The sad truth is that this is an intense political battle. I would personally favor Elon Musk taking over and shaking things up, any other position is untenable. And, I am saying this as a progressive. I think an open and transparent social platform would be great for the society.
The issue is that managerial class of America, both in private and public sector, are in bed with each other. The government cannot suppress free speech using the frontdoor, but these social media companies (Meta, Twitter) as well as Big Tech machinery (Google, Apple, Microsoft, Amazon) act as a proxy for supressing political speech through opaque algorithms and straight up censorship.
We, liberals, used to be exceptionally devoted to free speech. Just look up ACLU's cases from the 90's and prior. We were against the establishment. Against the managerial class crushing labor. Against the fucking 3 letter agencies.
Now, my own party wants to turn America into an authoritarian censorship dystopia. It's hard to stand by that.
Just as the Republican Party has been taken over by neocons, the Democrat Party has been taken over by neolibs. They both have the same ideas and are never on the oposite sides. That is why you see endless and meanilingless wars, media conglomerates, censorship, billionaire-class, 3-letter-agencies off the leash, workers in diapers.
> Now, my own party wants to turn America into an authoritarian censorship dystopia
You could start by lobbying to force tech companies over a certain size to disclose reasons for users or content being removed from the platform. The legislation would have to have teeth, naturally.
There's nothing conspiratorial about pointing out the close ties between organisations like the ACLU and HRC and the Democratic party, if that's what you mean.
Sad truth is, the moment an advocacy group and a political party become too close, the advocacy group ceases to be effective. This has nothing to do with Democrats in particular; cozying up to the Republicans is no different (e.g. the NRA).
I'm heartened by the emergence of organisations like FIRE that are picking up the baton for free speech in some of the contexts where the ACLU has completely dropped the ball, but still feel a pang of sadness at the hollowing out of the old, bad-ass ACLU.
Against this specific bid: the price is arguably low and holders aren’t likely to want to sell at that price. From Money Stuff:
> problem with Musk’s offer is that it is pretty low. Musk points out that $54.20 “represents a 54% premium” over where he started investing in Twitter, and a 38% premium over where the stock was before he announced his position. But Twitter was in the $60s in October, and a lot of its big long-term holders seem unlikely to be sellers at $54.20. “‘No board in America is going to take that number,’ said Jefferies analyst Brent Thill.”
Against the bid coming from him:
- He famously pretended he was going to take Tesla private and got in trouble because he was pretending. Takeover offers usually don’t have that history I guess.
- He doesn’t have financing, not even pretend financing like when he said he was going to take Tesla private
First off, I should say I think Elon is the man. What he's been doing at "engineering" companies is of course absolutely incredible (go Starship!). But not so sure he should be mucking around with a social-networking/media company, in which messy social and legal rules are even more important than the technologies themselves. Yeah, his idea that free speech should be the overriding principle is at it's heart true, but tell that to Mark Zuckerberg and FB (as many of us here know, he originally was saying something similar years ago, that it wasn't FB responsibility to moderate content, but then it became known that many organizations and states are using bots and companies dedicated to promoting their own agendas. How do you stop something like this??). Free speech is an ideal that must be balanced with other ideals like protecting individual people & groups against defamation and libel amongst other things. Not sure an intense, engineering mind like Elon is the right person to wade into these very murky waters. And, have a feeling Elon wouldn't even enjoy working on a problem like this (as a software engineer myself, don't think I would either!)
I don't believe in nor really care about his points regarding "free speech" (whatever that even means, considering everyone has a different concept of it).
However I believe the current model of social media being funded by "engagement" has peaked, is hard to grow in a world already saturated by advertising, and is at risk from privacy & pro-consumer legislation slowly being enacted around the world.
I just don't see a future in the current model, yet the social media industry seems to be stuck in this local maximum without an easy way out. A hostile takeover of a large existing player by a risk-taker is the "kick in the butt" that the industry needs. It may go well, it may go wrong, but IMO it's at least worth a try.
Good point, Twitter is a bit of a mess. hmm... But a huge worry is that Twitter has become such an important mass-media tool, and if he messes it up, it could become even more the goto outlet for politicians, autocrats, or even just businessmen with bad intentions to sway public opinion.
Yeah, as mentioned, Elon is a god, but in my humble opinion, his talents are in engineering (and Twitter just seem like a problem an engineer wouldn't even want to solve).
You would be surprised, Instagram is showing pretty dramatic revenue growth over the past 4 years and it doesn't seem to be slowing down. Global expansion into developing markets will continue to fuel that 'funding' for social media companies. On the ad side, humans seem to be pretty ok with buying more and more and more stuff.
Agree, he's used to regulations. But, it's not just the legal rules, but the unspoken social rules we have as well as groups and factions he'll have to deal with. I could totally be wrong, but at least for me, I don't see him being good at or even enjoying fixing the problems of social-networking companies. Seems like a distraction from SpaceX and Tesla (which is more than enough)
Media politics are just as bad as they always were. Typically TV and newspapers are ran at a loss by people who carry out political favors. I wonder how twitter users feel about being herded around like this
Even before the poison pill was adopted, the evidence is the market wasn't taking Musk's offer seriously. That's because he was offering $54.20 per share (ha ha, 420), but the stock price never closed higher than $48.36. So almost $6/share was left on the table.
Part of it is that Musk doesn't have $43B in cash, he'd have to raise it or borrow it. He's worth more than that but it isn't liquid; as an officer of Tesla there are some restrictions on when he can trade. Another part is that many doubt whether Musk is serious or if he is playing games again, like the last time "420" appeared in a financial announcement from him.
Interesting. As a point of comparison, when Microsoft bid a 62% premium for Yahoo back in '08, Yahoo stock spiked about 48%.
Doing the math, the market placed the likelihood at 48÷62=77%.
It means the market doesn't think it's likely but it doesn't mean it's 75%. To illustrate why that makes no sense, if Musk had offered $35 instead of $54, the buyout would be much less likely, since the price would be way lower and the board and shareholders less likely to accept it, yet under your model the likelihood would go up.
Estimating probability from price action is something you can do, but not like you did it.
Why would the likelihood go up under his model? If Musk had only offered $35 and people thought that was only 20% likely to happen (for the reasons you listed) then the market price would have only gone up to $31.
Say I offer to buy Apple for a penny/share. The price for their shares won’t move because of my offer but may move from normal market conditions. If the shares increased a dollar the day after my offer, would you say there’s a greater than 100% chance of my offer being accepted?
There of course the implicit assumption here that Musk's offer is causally related to Twitter's stock price. OPs comment make sense if you keep that in mind.
Where does the $30 come from? The last time Twitter was that low was May 2020. There’s no evidence that the market values Twitter at $30 without Musk’s bid.
That fair value valuation is subjective. The $35 number was arbitrarily chosen and is unknown, so the derived probability is meaningless as well.
The possibility of a take over changes the potential long term valuation of a company and thereby changes the demand for the stock. Basically, if enough people think the buyout would happen, or would just make Twitter more valuable (as a stock) than it is now, that increases the number of buyers and hence drives the price of the stock up.
If a buyout is certain, then the demand for free money is 100%, and demand for a sure loser is 0% of potential buyers. Hence the share price would quickly converge to a buyout price in that situation.
The whole thing seems like a stunt by Elon. I don't care either way, but it would have been interesting for the board to call Elon's bluff and watch him back out at the last minute.
Elon should really focus on his unfulfilled promises to folks he already took money from, not playing immature games to keep himself on the front page. I don't know what drugs he did with his ex-girlfriend, but they don't appear to have had a positive effect on his well being.
It’s definitely just a stunt… he doesn’t have the money, and said he expects larger shareholders to sign on to the deal… so he can take the company private and do great profit-maximizing ideas like turning their office into a homeless shelter. He’s presented no ideas that would increase twitters profits or market share. What shareholder would sign up for this?
Went through a similar situation where a company was taken back private. The RSUs converted to cash value day of deal close and had a staggered payout with roughly the same vesting schedule.
The parent believes, based on Elon's own claims, that part of his plan of raising the money is to get some existing shareholders on board, essentially having them finance the deal, obviously by promising them a stake in the future private company.
They are also assuming an existing shareholder would only do this if they believe the future private Twitter would be a more profitable endeavor for them, which Musk's comments really shouldn't inspire confidence in.
Ah, thanks for clarifying. I misread the parent's comment. Looks like they were referring specifically to the shareholders that choose to stay on as investors.
That does make it seem less serious IMO, given he made the same claim about somehow keeping shareholders when he pretended he was going to take Tesla private
They wouldn't be divested. He's said he intends to allow the maximum number of shareholders legally allowed to continue as shareholders, that is, the biggest investors get to not divest if they want.
GP is implying that since Musk is relying on this in order to finance it since he doesn't have 43B in cash.
>He's said he intends to allow the maximum number of shareholders legally allowed to continue as shareholders, that is, the biggest investors get to not divest if they want
If this is a plausible scenario, and I don't know that it isn't, do you think it's what he means or is trying to express?
Because it seems to me that the way he says he'll keep the shareholders, it's intended to communicate to his countless groupies that they will somehow still be able to own Tesla in their Robinhood accounts. Which would be nonsense, right?
The real question is why would shareholders that care about profits own Twitter stock? In its entire history there have been 2 years it didn’t lose money and actually recorded a profit.
It's all about potential future profits. Not everyone agrees on what those profits could be, and hence why there is a market for shares, and is the reason why share prices are not stable.
Essentially, the holders believe that past performance is not reflective of possible future performance. The shorts and sellers and non buyers believe that us the case or that there are more efficient allocations of their money.
Tesla has a rule that you can only borrow 25% of the value against the shares. From Money Stuff:
> Or Musk could borrow more against his Tesla stake. Tesla’s own policies prohibit Musk from borrowing more than 25% of the value of his shares, which is barely enough to buy Twitter, even ignoring the fact that he has already used at least some of that capacity. Of course he’s in charge of Tesla and its board is famously deferential to him, so I guess he could change those policies, but that still requires finding a bank to lend him $40 billion against his Tesla stake to finance this lark. Tesla’s stock has quadrupled since mid-2020; if it fell back to mid-2020 levels — say because its charismatic attention-seeking CEO found a new toy — then the loan would be underwater, and selling out of a gigantic Tesla margin loan does not seem like a lot of fun for a bank.
He also does not need to fund all of it; just enough that a bank would be willing to consider the Twitter shares he is purchasing as collateral for the rest of the loan.
I don't see this deal happening. He can't afford it (without exposing himself to unnecessary risk). If it does go through in the ways described here, he's an idiot ... and I don't believe that, despite my personal opinions about him.
Of course it's a lot of money and a lot of risk, but like him or hate him one thing Musk has consistently showed is that he's willing to take huge risks.
This deal likely won't haooen, but due to the poison pill, not due to the risk.
But in any case, my point was merely exactly what I wrote: he does not need to raise anywhere near the full amount, because he can utilize the shares he buy as part of the collateral.
This makes no sense because if the market was 100% confident in Elon’s offer, but saw a 25% chance of a poison pill you would end up at the same place. The market was in fact incorrect in the likelihood of a poison pill, not Elon’s wealth or ability to raise funds.
It’s important to also note that one of Musks strengths is marketing. He makes bold claims that makes headlines. We should be all used to his charade by now.
A lot of the stuff he claims that actually works has teams of people supporting him. Those weren’t one man efforts like this.
I don’t deny that, but it is not what he is doing here.
I am not sure why people shy away from the obvious: another of Musk’s strengths is market manipulation.
On 4 April, the announcement[0] of his becoming the largest shareholder jumped his Twitter stock[1] from a 73486938×33.03 = $2.4B purchase to a $3.7B asset, a $1.2B gain.
He sold 371900 stocks, for a $6M gain.
His 14 April announcement[2] of his offer to purchase Twitter was likely intended to boost the price further before the expected poison pill would justify him divesting everything as he stated he would do in the SEC filing[3], thus netting an even bigger gain.
It didn’t boost as he expected, but the value has remained higher than it started at. He will still make half a billion and his actions, this time, are hard to sue, since he did not lie on anything but intent, which is impossible to prove.
> On 4 April, the announcement of his becoming the largest shareholder jumped his Twitter stock[0] from a $2.9B purchase to a $3.7B asset, a $779K gain.
These paper profits are hard for him to realise, since he has to sell 9.2% of Twitter's stock without the price falling. Given the current price depends on his claimed intent to takeover, the market will react swiftly to any evidence that he is in fact reducing his stake.
I would upvote this as insightful if we were still on Slashdot. These one-man pioneers like to further the impression that they are the sole reasons for their success, but the reality is that we all build on the shoulders if giants. I am not shitting on his ability to make his endeavours successful - I am just saying that the proportion of his responsibility for it is much lower than most people think.
I'm not sure what it is about some societies that like to make a single person out to be an idol. We see it in team sports, scientists who work in large teams, businesses where CEOs are deemed several thousand times more of a factor than other workers, medicine where doctors are placed on pedestals. I guess people like a hero, and the alternative explanation, that hundreds of hard working and bright people came together to make something happen, is less compelling.
I would also mod your comment insightful ;) Egocentric individualism makes people forget that everyone, absolutely everyone, is indebted to people past and present, from his current fellow co-inhabitants of earth to the past generations all over the world that bequeathed him the world and the culture he inherited.
Ad hom is pushed by the media because “small minds talk about people,” and that sells ads/clicks. Another example beyond personal fanboyism is the vilification of a person which surpasses rationality. Or the vilification of other groups of people. In all of these you will see fundamental attribution error, ignoring the situational factors and placing all perceived agency on the individual, like most all of our media were doing from 2016-2020. The reality is, few humans are all that important in and of themselves, and those that are often have become so as the result of external factors like the quality of the people that surround them, or “luck.”
This rings so true for Elon Musk fanboys. I also like the full quote, "Small minds talk about people. Average minds talk about events. Great minds talk about ideas."
As you can see yourself, he's saying "great job team!" not "great job me!".
I just don't get all these olympic level contortions around denying the achievements of an immigrant who made good on the American dream, and has done more for climate change than literally anyone. This is to be celebrated and embraced!
FSD, Starlink never being jammed in Ukraine, Tesla Solar Roofs, and other such things are all things Musk has hyped up that are somewhat counter factual.
Very interesting editing to your original post, when making such drastic edits that change the tone as much as you did it would be useful to make note of them so everyone knows.
You asked about things he had said/promoted, or something like that, which I listed in the first sentence of my response, care to respond to them?
He was a RICH immigrant that made good on the American Dream. Having a truckload of money ready for you before you venture out in the world would be inspiring for anyone, believe me.
Exactly! Many people underestimate the value of privileges'. Privileges' give "unfair" advantage. Anyway, there are many people like these and Elon is few among them that have successful ventures like Tesla or SpaceX.
He may have started with less than the median American when he emigrated. Rich parent doesn't always equal rich kids. The ones that are mostly just consume. It's plainly obvious he's not some rich trust fund kid.
Which is why so many people are threatened by Elon's success and project their own insecurity onto him. Unresolved personal insecurity and envy are a potent combination. I promise this is unhelpful and it's better to resolve one's own insecurity than to spend time projecting it.
> He may have started with less than the median American when he emigrated
Except it is known that he didn’t. There is no need to speculate on the facts.
Elon Musk is far more successful than anyone else who started with his financial resources. He has outperformed everyone in his wealth bracket. There’s no need to pretend he was abandoned by his family and came to the US destitute.
There are internet rumors vs what he, his mom and brother say about him showering at the YMCA and only being able to afford one computer when starting Zip2.
That's why I said "may have", because his mom and brother aren't non-bias sources, and nor are insecure people on the Internet who want to explain away why they have achieved little despite having relatively the same or more privilege. The latter project this discomfort the most aggressively.
"After two years at Queen's University, Musk transferred to the University of Pennsylvania. He took on two majors, but his time there wasn’t all work and no play. With a fellow student, he bought a 10-bedroom fraternity house, which they used as an ad hoc nightclub."
The idea that his success is due to that is another olympic level contortion. He wasn't given millions of dollars to start, let alone billions. Even if he was, it would still be impressive converting that into Tesla and SpaceX, as opposed to a yacht.
Realize that most people born to well off parents don't do shit. If insecurity needs an outlet, maybe redirect it to the rich kids of Instagram, not the guy who is helping solve climate change and get us back into space.
I was not really commenting on how he achieved his success.
I was commenting on the appeal to the "American Dream(tm)".
Though if you want to follow it to the root if he was born black in the townships he likely would not have amounted to much, no matter how hard he worked it is unlikely he would have ever made it out of the country.
I don't understand why there would be something ironic, postmodern, satirical, or unexpected about a relatively privileged white South African who grew up in the era of apartheid being associated with space travel or other technology that is considered futuristic.
Nothing has changed. It is still as it has always been.
The US space program and the Moon landings can be traced directly back to Wernher Magnus Maximilian Freiherr von Braun and his work at Peenemünde, utilizing slave labor to build rockets for Nazi Germany.
"More people died building the V-2 rockets than were killed by it as a weapon"
The course of history was shaped by Von Braun being terrified of the Soviets and choosing to surrender to Americans.
Some people see this sort of historical note as extremely relevant to everything today, and some don't. I see nobody trying to bridge that gap.
Okay i explain the joke to you: First and foremost note how the comments upthread used the term "the american dream". Second note that "the american dream" is a media trope, a literary device and story we tell people to inspire them to follow certain ethics.
The traditional american dream is about social upwards mobility from rags to riches, about a promise that all that is needed to become wealthy is hard work, determination, a bit of ingenuity and puritan virtues. In its classic version it often features an immigrant family who comes to america with nothing but worn out clothes, works hard jobs and long hours to create a livelihood, overcomes hardships and struggles so their kids can get an education and better jobs. It often also calls out oppression, poverty and war in the old world as reasons for migration and to further highlight the ideals of liberal society in america.
The modern version ignored the generational aspect and instead focused on individuals becoming millionaires. Entertainment loves extremes, the lower the start and higher the end, the better. The quicker the journey, the better. And this became accelerated to the absurd. Be poor, wash dishes, millionaire. Since this is so very unlikely, and real people who fit it, like Rockefeller, became so unpresentable, media turned more and more towards fictitious comedies. Yet this version is still very dominant in culture, because it calls out a truth: when asked what the american dream is, many will say it is about becoming very rich. That is, what the modern american dreams of.
Now in contemporary media we see a return to the original idea, but with twist lampshading its problems. Migration is no longer a central topic, america no longer the beacon of hope for the tired, poor, huddled masses. Instead we see a focus on the disenfranchised and marginalized within american society. The post-modern MTV generations version of the american dream is B-Rabbit living in a trailer park with his alcoholic mom, making it as a rapper despite his peers attacking him for having the wrong skin color. It plays the core straight about making it with hard work and being virtuous, but it doesn't only look at materialism and individualism, as it also expects society to hold its promise of being liberal. The postmodern loves to play with dualities and reversing structures.
Lastly the post-modern satire version instead picks up the part that got dropped, the dream of becoming very rich. It teasers a protagonist from an african minority and reveals a wealthy and well educated white man from south africa. It shows upwards social movement from upper class to ultra rich, subverting the idealistic to instead highlight the reality that those who start well have more opportunities to venture and do even better. It holds up "being born rich" like Diogenes holds a plucked chicken, and calls out "behold: the american dream"
The pattern that I pointed out, that includes Von Braun, and Musk, is of people who, whatever their advantages and sins, were not privileged enough to be born in the US, and they then found unimaginably more opportunity in the US than in their homeland.
Is that how some people conceive of the "American dream"? I don't know, but I think it's the easiest to find factual evidence of happening over a long period of time.
The only version of the "American dream" I've ever heard was getting a small house on a ~1 acre lot and starting a family. I don't know what all this about becoming a millionaire is from.
-- a idk probably 10th generation American living on the East Coast.
> and has done more for climate change than literally anyone
What a sensationalist claim! What is the carbon offset of one rocket launch? If Elon stopped focusing on Mars, and instead bought every coal plant to then shutter and replace them (could be done for under 40b), then maybe. Until then, the few percentage of market share for EVs does not justify this claim. You also have to assume that every purchaser of a Tesla would have bought a gas car instead, which is seemingly not a safe assumption. So, citation needed!
Maybe if elon purchased a train system and made public transit exceptional and widely used could a person start to make this claim.
I thunk the sad reality is that elon is bored and us focused in sci fi that is more possible 500 to 100p years in the future (ie mars), at the expense of actually solving present day problems.
Any regulation reducing coal emissions has an out-sized impact compared to a few percentage of emissions from non-commercial transport, the claim "more than anyone else" seems hyperbolic and just flat out wrong
1) It's not a Trumpian charade because many of the things he says actually work out. He'd already be done otherwise.
That's what makes it so interesting. I suggest he would buy Twitter if he could - and - he benefits from the free PR either way.
Yes, it's a bit cynical of him, but the PR is worth it, and, it's not like he's playing with election outcomes, or starting wars.
2) We know he's not 'doing it himself' and I suggest his Eng. knowledge is way overstated, at the same time he is very 'detail / hands on / insightful at that level' and with the big vision stuff he gets people motivated. I disagree with almost everything he says publicly and loathe is fanboys, but he still deserves enormous credit.
A few when ago when Microsoft announced it was buying LinkedIn, the shares were trading around $10-$15 less than the announced acquisition price for months. I wouldn't put too much weight into any sort of imputed probability from the price.
> I wouldn't put too much weight into any sort of imputed probability from the price.
It's absolutely fair to impute a rough probability of deal closure from the stock price. The whole "merger arbitrage" industry works around that premise.
That's not the same as saying the market wasn't taking the offer seriously.
> The whole "merger arbitrage" industry works around that premise.
If the market price reflected the probability, then an arbitrage strategy should not be profitable.
Usually, these folks have better experience/skills/knowledge about M&A, antitrust, etc than the market average. In other words, the market doesn't reflect the probability of an event happening.
Yes, I wasn't commenting on the original "taking it seriously" language.
> If the market price reflected the probability, then an arbitrage strategy should not be profitable
> The market doesn't reflect the probability of an event happening.
No, the market's implied probability could be right, on average, across all deals...and the top merger arb funds could absolutely still be profitable by selecting deals when they think the market is mispricing the probability (for the reasons you mention: better experience, knowledge, etc.)
It's like the sports betting market: you can roughly impute a team's win probability from the (opening) betting line...and even if that's right on average, the top gamblers are still profitable.
And, of course, sometimes things with a say, 40% chance of happening do happen...so that doesn't mean the market was "wrong" about the chance (i.e. your LinkedIn mispricing exmaple).
But sounds like we're in full agreement you can't look at the implied probability from the market price and draw some conclusion about it definitely happening, or definitely not happening (e.g. the market not taking it seriously).
Are you saying that if a share is destined to be sold for 54.20 people will buy it for 54 prior to that? its only reasonable to think it will be somewhat lower.
Not well versed in any of this, but could this be Musk just toying around with Twitter and/or him bluffing to get a reaction? Does he have any legal obligation to go through with the purchase if Twitter was open to it?
Well (1) you can be sure Musk is paying lawyers $$$ to make sure he doesn't deeply fuck up on any securities rules given his contentious relationship with the SEC [though fairly that might be de minimus to him] (2) there is an opportunity cost to putting money so much money in twitter just for laughs [he could be doing other things] and (3) there is risk that the twitter stock could fall out from under him. (3) is really only a cost relative to having the money in a diversified portfolio - but it is a real cost nonetheless.
I think Elon just wants to destroy Twitter and he's just baiting them into tanking themselves, I have a hard time believing actually wants to own and run it.
If he did own it, I wonder if he would unban Donald Trump?
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[ 3.6 ms ] story [ 356 ms ] threadBillions is a great show by the way.
My whole point is, Musk made a series of public actions that made a stir. One action had the board make a knee-jerk decision that seems somewhat logical. He's jabbing with his left and the Twitter board seems to have hopped to their left and he's maybe going to uppercut, right hook, maybe go for a knee or do nothing at all and get hammered on martinis or mojitos or whatever a rich super villian likes to drink.
This is all a public side show for some greater end down the road or Musk made a drunk filing with the SEC. I dont know... well, all I do know is what's publicly available is pure propaganda to sway the public towards some greater play by someone who's going to profit off of this. I'm done with my poop now, find someone smarter to figure it out.
People like to pretend.
He even ran the (now famous) poll: https://twitter.com/elonmusk/status/1507259709224632344
*sigh*
The notional value is at best the NPV of future profit streams. However Twitter's track record on profits are dismal so the claim is dubious legally.
You can’t just multiply the current price and expect everyone to be willing to sell for that amount.
I think the board is right to reject the offer. Twitter could be worth more. Twitter in Elon’s control would be a more valuable company.
If I were a shareholder, I’d want them to reject 52.40. Maybe not 92.40. The ideal outcome would be if Elon gets 51% control and I got to remain a shareholder.
Heck, Tiktok could add a timeline just like twitter and decimate them since Gen Z and millenials (26 and younger) are basically there. Facebook is old school and will start slowing down going forward. IG is for business since the appeal (sharing photos with friends) has been lost. Snap has its niche and Gab, Gettir, etc... are catering to the right.
People like controversy and that's the main reason twitter is relevant. Left and Right like to expose each other. That's the main reason alt-tech is not mainstream.
"Twitter’s management wouldn’t have to worry about being kicked to the curb and they can continue doing what they do best, restricting conversation and censoring whatever they don’t like."
Would the naysayers say a site was "biased" if it claimed "this is a direct threat to our democracy"?
As a Twitter shareholder myself, the board is making a big mistake.
As a legal matter, I don't understand how a board could sell shares to other shareholders at a lower price than to the entity wanting to buy shares to gain control.
The board has a lot of leeway into how they achieve profit for the shareholders, but all decisions they make must be nominally in the interest of that goal (assuming we're discussing a for-profit company such as Twitter). They can basically claim anything they do is done in the interest of shareholder value and be safe, but if they said "we know the company will lose money on this, but we really like X so we'll spend company money on it", they would pretty clearly be in breach of their fiduciary duty.
All of this would need to be litigated on a case-by-case basis, but many modern cases have found that companies can freely act to maximize the wages of their employees at the expense of dividends or act charitably even when there aren't tax breaks.
That said, I'm not sure this really even applies in the case of Twitter---I think its not unreasonable to argue that the innate value of Twitter is so much higher than what Musk is offering that its better for the shareholders to wait even thinking purely in terms of profits (I would probably personally disagree with that, but I don't think its any more unreasonable than plenty of other valuations I see)
As long as they are not egregiously and obviously acting against that goal, or taking decisions without deliberation, the law would favor them in any trial that only hinged on whether the price offered by Musk was better than the market. Basically the burden of proof to show that it could not have been a good business decision would lie with the plaintiff, and I very much doubt that you could build a solid case of that.
On the other hand, the board can easily say "we don't beleive this deal offered by a person who isn't allowed to be a public officer of a company anymore will ever go through, either because he will retract it or because he will be unable to secure funding; and we beleive attempting the deal will hurt stock prices and profits for current shareholders" and then I agree, it would probably be a slam dunk in court.
Now, providing profit/share-holder value need not mean maximizing said profit - it just means that profit must always be considered in any business decision, it can never be entirely ignored in favor of other things.
Note that not even shareholders get to decide what kind of value they expect their board to offer them. That definition of value is set in stone by the type of corporation. The board of a for-profit company has a fiduciary duty to the shareholders of the company as pertains to profits.
If 100% of the shareholders of Twitter voted to ask the board to sacrifice profit for free speech; and the board decided to ignore this request entirely and publicly announced they would limit free speech at every trun to focus on profits, the shareholders would have no chance of winning a breach of fiduciary duty trial against the board. The board has no legal duty to uphold some abstract values that shareholders hold dear, they only have a legal duty to act in the interest of company profit as they see fit.
The word "entirely" is doing a lot of work there.
> The board of a for-profit company has a fiduciary duty to the shareholders of the company as pertains to profits.
This is a dramatic oversimplification that borders on falsehood, as you noted yourself in your previous paragraph. As a trivial example, the board would be entirely entitled to claim that their goal is very long term profit maximization, and that this will result in decades of losses (effectively Amazon's strategy).
We also now have "Public Benefit Corporation" as a codification of a for-profit corporation that does not have profit as its primary motivation (at least in 35 states & DC), but obviously that does not apply in the case of Twitter.
Yes, but that's still a profit based motivation. My point was that the board of a for-profit company doesn't have a fiduciary duty to represent non-financial interests of the company or shareholders.
That is, you can't sue the board of a for-profit company because they didn't uphold their fiduciary duty to represent your interest of having a free-speech platform, even if you had made it very clear that to you this is much more important than profits, and even if you owned 100% of shares [well, you can sue, but the case will be quickly thrown out]
Conversely, the board can always claim that they made free speech a priority because they believe that will help drive long term profits, even if shareholders asked them to focus on profits to the detriment of free speech, and even if profits immediately tanked after this decision; and they will likely win in a trial.
The famous Dodge v Ford was about Ford increasing employee wages and reducing prices, at the cost of profits. One of his main motivations was to avoid paying out dividends to the Dodge brothers, who were using said dividends to bootstrap their own car company. The trial found that Ford has ample leeway in running the company as he sees fit, but can't simply ignore profit completely or do things with the sole purpose of avoiding profit.
Instead, we poisoned the system knowing that the stock is all but guaranteed to tank massively reducing our market cap and hurting our ability to take out still more loans to continue our unprofitable venture.
But we're holding true to our other nebulous values.
They'll have a very compelling argument.
Otherwise, the business judgement rule is applied, where the presumption is that the directors acted in good faith, and you would essentially have to prove that it is impossible for Twitter stock to grow beyond the current offer.
Do you really think that discovery would show that this was all in good faith?
I'd bet heavily that a lot of ideological discussions would be disclosed. As that is completely contradictory to what Twitter claims is their goal, bad faith would be the only remaining option.
Instead, it is easy to expect they would discuss the sincerity of Musk's offer (the chance that they may accept it only for it to be retracted, as happened with the board membership offer), the plausibility of him having the required financing, the stock price today vs 6 months ago compared to the offer, and similar business discussions.
I also don't personally believe this is an ideological battle at all - it's much more likely to be a financial manouever or simple ego-driven ambition by Musk.
That's his publically stated claim. Whether that's what is really going on is another question.
Boards do have a duty to maximize shareholder value. THAT SAID, the business judgement rule provides that judges will not second guess the board absent evidence of gross negligence or total disregard of duty. This is because the Delaware court has decided that judges are not better than boards at evaluating business decisions.
BUT! Overcoming the BJR is very difficult unless management stupidly says the quiet part out loud.
Dodge v. Ford is a celebrated case in this regard because Ford basically said at trial "Yeah my main consideration in taking [specific action] is not maximizing shareholder value" and the judge was like "Haha no, that's not how any of this works - you can't do [specific thing] now." But if Ford was like "Yeah [specific thing] would be GREAT for shareholders" under the BJR the judge would have been like "Okay, great, keep doing what you are doing. How could I possibly know better than you?"
Also there is no "need to do right by the company" - squeezing value out of the company and all of its stakeholders is completely consistent with the duties of the board members. How else would the private equity industry exist? (jk!)
Not to maximize profits. Courts give companies a wide berth in defining shareholder value.
It's not, particularly in the context of takeover defenses. There were cases in the 80s where Delaware ruled that only shareholder interests--not all stakeholders'--can be considered when a Board uses its "business judgment" to deploy a poison pill. But shareholders can have aims other than maximizing profit, and companies are free to respond to them.
A case that stands out more to me (being both more modern as well as at the federal level) is Burwell v. Hobby Lobby: "While it is certainly true that a central objective of for-profit corporations is to make money, modern corporate law does not require for-profit corporations to pursue profit at the expense of everything else, and many do not do so." in reference to furthering religious goals instead of profit. (https://supreme.justia.com/cases/federal/us/573/682/#tab-opi...)
I read that quote from Hobby Lobby as saying "Sure, where you own the whole thing you can do what you want, whatever, it's not like you are hurting any other shareholders" but I would hesitate in relying on getting that type of language in other fact patterns.
Note that the plaintiff in Hobby Lobby was the secretary health - not a disgruntled shareholder.
Edit: a word
History should be a lesson here, it's almost Deja Vu with Twitter
https://youtu.be/XM7_eqtljUg
https://www.tesla.com/support/dogecoin
https://shop.tesla.com/product/s3xy-mug
Even if you think Twitter stock will go up 20% next year, you'd want to take this offer. If you think it will go up 50% next year, you might still take the offer because of the risk:reward ratio.
Technical Analysis is madness, but there is method to it.
https://www.bbc.co.uk/news/business-20214401
https://www.upi.com/amp/Archives/1984/06/11/Walt-Disney-Prod...
Elon is arguing that Twitter is mismanaged. He already probably pushed them on the edit button, even though they claimed he didn't. If he's right — and Goldman Sachs seems to agree — he could have an easier go of it next year.
Anyone who thinks this is manifestly true should read this take from an ex-CEO of Reddit:
https://twitter.com/yishan/status/1514938507407421440
tl;dr: managing human interaction in any environment with limited accountability is a lot harder than it looks
Also, there's the question of by what metrics one would argue it's mismanaged. Revenue and engagement trends? Profitability trends?
> It is because at Certain Times, given Certain Circumstances, humans will Behave Badly when confronted with Certain Ideas, and if you are The Main Platform Where That Idea is Being Discussed, you cannot do NOTHING, because otherwise humans will continue behaving badly.
To paraphrase: "Ideas are dangerous, people cannot be trusted to argue on the internet because it leads to violence, therefore people have to be censored, even if the things they're saying are true".
First, the idea that lab-leak theory was related to violence against East Asians is highly, highly dubious. Second, again and again, I see people arguing that we have to dispense with our ideals because they are Too Dangerous. At some point you have to realize that these people are just cowards.
We don’t have to dispense with the ideal. But that’s what it is, an ideal. We have to remain pragmatic.
More precisely: ideas are powerful, which means they can be dangerous.
Anyone who doesn't understand that is actually a deeper enemy of discourse than a platform owner who says their forum is not a venue for topic X or opinion Y.
Some stop here at a dichotomy: "you want to ban ideas, I will be oppressed!" or "I must literally be allowed to put my words in your speech vehicle and be given full access to its audience without any abrogation of that privilege or I am being oppressed!"
Others start to understand what the legal system has with both weapons and speech: perhaps there are some activities or forms it takes that need nuanced consideration. Time, place, manner, associated behavior, fire in a crowded theater, threats, etc. You will find these considerations where people actually take speech seriously.
> Ideas are dangerous, people cannot be trusted to argue on the internet because it leads to violence
You seem to be merely summarizing with scorn here rather than actually addressing the situations where this happens.
It's not hard to find stories where distorted worldviews oriented around agentive threats regarding the pandemic have led to people threatening and even assaulting health professionals. I know some of these people.
You probably know families or acquaintances that have banned certain topics from dinner gatherings because they lead to heated conversations or even violence. It's not that they believe no one should ever talk about them. It's that they understand what Wong is talking about here: there's problem behavior and carving out a domain where the related topic isn't carried is one way of fixing it.
And when it's your house that people are yelling or coming to blows at, I'll bet you try the same solution.
Arguing on "the internet" is a freedom that has never been threatened by limitation that Twitter and Reddit have put in place. What's at stake with Twitter and Reddit is what Wong describes well here: they're stewards of the platform where this is taking place, they get to see the effects. They feel an obligation to do something about it.
And you know what? Their right to do so as stewards of the platform is also a freedom of speech right. And it's every bit as important as an individual's right to spout off about whatever it is they want.
The freedoms to watch more strictly are those where the state or other entities impose violence or loss of physical freedom as a consequence for touching a topic. Twitter and Reddit battles are about people's sense of privilege.
This actually isn't hard. Ban racial slurs, "doxxing," calls to genocide, and low effort provocations. Don't ban ideas because you're convinced they are wrong or dangerous.
Hey everyone, look here! We have the answer to the thorny issue of what governs free speech in clear black and white. Twitter, facebook, reddit execs, take note!
But my rate is quite high.
Not what I said. If you care about speech, try to be careful about parsing, interpreting, and summarizing it. If something still doesn't make sense, try asking questions.
> More precisely: ideas are powerful, which means they can be dangerous.
> Anyone who doesn't understand that is actually a deeper enemy of discourse than a platform owner who says their forum is not a venue for topic X or opinion Y.
In order to have REAL FREE SPEECH (which you call DISCOURSE) we have to CENSOR BAD OPINIONS.
No. Stop playing whack-a-mole with "bad ideas". "X idea leads to Y bad thing" is almost always wrong, the world is chaotic, no one knows the result of a tweet, and people who claim to are just looking for excuse to shut down debates they're afraid to have.
news.ycombinator.com does this right -- moderators rarely moderate based on the message or idea in a post and their opinion about its truth-value. Rather, posts are moderated for being provocative, overly rude, including slurs, low effort, and so on.
Not all of those things deserve the same level of reaction, but they are a disservice to useful conversation and should be moderated/downvoted accordingly.
I agree that HN does it correctly, so I wonder where our disconnect is.
How about lies like the Earth revolves around the Sun?
Moderation's place is at the end agent. Period. I.e. it is the responsibility of people and end users to be aware of the actual physical world we share with others. To distort it is to do injustice to everyone.
I assure you. The poisoning of reality for "people's own good" leads to slippery slopes, and complete dysfunction and fraying around the edges which will always start targeted against undesirables, then be weaponized against everyone else by whomever happens to be in a position of power.
Either accept the world unfiltered, or don't try. Half efforts are doomed to abuse.
You added that part in yourself. You seem to be ignoring the concepts of disinformation, trolling, and bad faith actors.
I don't care about trolling, it's just a neologism for "making a joke" or "taking the piss". "Bad faith" and "disinformation" are words used by people who want to shut down certain debates.
> My most immediate takeaway from this novella of a thread is that Twitter is way overdue for long form tweets!
It also loses its luster on a bit of reflection -- this particular novella was in fact published on Twitter, and obviously got plenty of attention, including from Musk, so it's not exactly clear that Twitter's an unacceptable venue for novellas. Also, there's other long-form platforms that don't seem to have competed well with Twitter so far.
But maybe someone could pull off making such a thing work. Which is why personally what I'd like to see Musk do is take the assets he was going to use to purchase Twitter and build another platform, one with the features and values he's envisioning from the ground up. He might have the juice to pull it off, and it would help diversify the media landscape and discourse culture rather than just being a tug-of-war.
I think the fairer critique of modern Twitter is that it prioritizes the needs of media personalities and PR firms over ordinary users, not that it isn't "free" enough. I am blandly optimistic about the prospects of things being shaken up at Twitter, and for who Elon is, it could easily be someone much worse.
This sounds like an opportunity to diversify the media (and discourse) landscape with a different product.
The market has been so weird recently that stock splits - which according to previous theoretical belief do not create shareholder value - have in fact increased the share price for extended periods. So issuing stock for whatever reason (high price, poison pill) could be seen as shareholder maximizing.
One could say diluting the stock so that a particular personality cannot buy the whole company could be shareholder maximizing as it would entrench ESG held values -- emboldening new shareholders to purchase the stock (saving the stock price).
And point of information, by diluting rather than selling already owned shares, control is not ceded to the potential acquirer -- unless the potential acquirer doesn't care about the poison pill and will pay the premium for the new issue as well.
This is quite fun to watch.
Excellent source for financial news though, I agree!
You're right that theoretically, they shouldn't create value, but I think even back to the 80s and 90s it's been shown that companies that go through a split tend to out perform the market for years after the split. The main reason isn't that the split creates value, but rather that companies who go though a stock split are usually successful and already on a trajectory to beat the market, split or not.
That being said, holding before the announcement performed the best.
There's a bit of time travel / survivor bias with this one. A company that has not beaten the market is much less likely to split its stock. In other words, if I know nothing other than that a company is splitting its stock, I can reasonably guess that it's shown good returns in recent history.
Going back to the late 60s [1].
[1] https://www.researchgate.net/profile/Hemang-Desai-2/publicat...
From Twitter's 2021 10K:
"FY 2021 Highlights Total revenue was $5.08 billion, an increase of 37%, compared to 2020."
2021 net losses were $221M, which is a big improvement on $1.135B in 2020.
Honestly seems like things are really shaping up @ Twitter.
Elon always has bigger plans and ability to execute on them then people seem to acknowledge.
I don't find the assertion that billionaires inherently lack integrity a compelling argument. In the spirit of honest inquiry, do you know of any reason specific to Elon that I should not take him at his word?
There’s a pretty significant area of scholarly research in business and entrepreneurship that criticizes “mythicization” of successful individuals.
What those scholars argue, basically, is that media as well as business researchers take the words of successful people as inherently true and important. The result in, say research on entrepreneurs, is that what successful entrepreneurs think is meaningful is reported as de facto true and important. The critique is not of them saying it - it’s of others accepting it as valid based on the heuristic that successful people must be right. It’s a critique of the resulting research for not being objectively defensible, but instead just reinforcing societal norms as reality.
In my comment, my criticism isn’t of musk it’s of others. Believe me, musk, you, me, everyone tells stories about our selves and our beliefs from our own perspectives. It’s how other evaluate and use those stories as objective rather than subjective that can be problematic.
C.f,, the other comment replies I got
But it would certainly be interesting to watch.
Like all things, it depends how you count. The problem I see vis a vis Twitter is it's private company and a public utility at the same time.
Personally, I think Musk would run it more fairly.
how do you make a mockery of something whose only purpose is to manufacture consent for war profiteering?
Of course, some hide it more assiduously than others. I don't mind Musk boasting. He earned it. It's more refreshing than the fake modesty of others.
A CEO friend of mind once called me up all worried because someone called him arrogant. I told him of course you're arrogant. He was shocked. I laughed, and told him to look at his accomplishments - who but an arrogant person would ever have even attempted those things!
[1] like calling someone a paedophile without any evidence.
This is the toxicity that has younger people rightfully angry at how the system works, and how it is "rigged". People just haven't had the info bandwidth previously to even contemplate these problems.
So no. WalterBright should absolutely do with his shares as he wilt, as should everyone else. Frankly, I wish institutional investment was deconstructed to at least get people coordinating with each other from the ground up to accept what it is their institution's manager was actually perpetuating.
They give a financial stability to places that need them.
One of the reasons Twitter is stable is because of those types of investors and is not subject to the whims of individual shareholders.
No corporate leadership wants to be subject to the whims of the stock market if they can avoid it. Twitters board and its institutional investors the firewall against such things.
Which companies are these?
…what if they board believes they are maximizing shareholder value in the medium or long term? What if they sincerely believe Musk would be a fickle CEO, and would make changes to the platform that would harm ad growth?
You’re categorically changing the profile of the stock. This has a chilling effect on large investors, including but not limited just to Musk, right?
Vanguard, for example, has just had its range of further investment limited arbitrarily. Isn’t that bad for all stockholders, to know that large stakeholders will not drive the price up if they somehow gain substantial belief in the company?
The risk portfolio of Vanguard just went up considerably because in the case that they fully lose faith in the board, they no longer have the option of installing a friendly board, they must simply liquidate their holdings. This, in turn, makes them more skeptical of further smaller (non-takeover) investment because it’s more to liquidate and more risk.
Who does this benefit besides the board? I guess I understand that the board is not beholden to the interests of all shareholders equally, and I’m not suggesting that this doesn’t benefit some shareholders, but where does the line start?
One of my favorite books: "Small giants, companies that choose to be great instead of big"
Note that I'm all for companies having much more legal responsibility to other stakeholders, not just shareholders, but that is somewhat irrelevant for a discussion of whether the board could be successfully sued over adopting this decision.
[0] https://www.bloomberg.com/opinion/articles/2022-04-15/sure-e...
https://www.investor.gov/introduction-investing/general-reso...
For a real alternative to succeed, solid backers focused on dethroning tw are needed to inspire confidence and stability, then we all need to jump at about the same time to get the momentum going and bounce out of the twatterverse.
As it stands now, there is no real competition.
That's exactly the point - there is no reason to believe this would change if Musk created his own social network.
Most rejected the overall concept. The amt of users that stil want something similar but not Twitter AND who will be appeased by whatever alt Twitter is made is an even smaller number.
He wouldn't bother because it'd be a failure. Twitter's tech stack isn't worth 40 billion, Musk could clone twitter for less than $500m, but just having a platform doesn't accomplish much, the overwhelming majority of twitter users have no reason to leave twitter.
The world is littered with the expensive corpses of failed software.
Google's product lacked purpose. It died because of a lack of vision and leadership and product mistakes (real names).
It died prematurely. Google treated the product like a pilot a network threw on the first week of September. It had solid numbers and given time it could have found itself if it found a backer in leadership.
But if France put a bid on twitter, they would be forced to entertain the offer.
And existing investors all have the option to cash out today for just 17% less than Musk's final offer.
a: You're dreaming.
b: You're absolutely expecting a quick short-term gain.
To put this in perspective, 20x in 5 years is an 82% CAGR. And five years is far short of the length of an economic cycle. Traditionally, "long term investing" meant across at least one whole business cycle.
Vote with your dollars: buy shares at a price higher than Elon's. Borrow if you must. If you are not ready to take that risk, then maybe your expectations are more wishful thinking than anything real.
People with more complicated positions should consider covariance and factor in uncertainty. But if you’re a shareholder in a single stock and estimate that it’s overvalued by a significant margin, the rational choice is to sell your position, invest in a low risk, highly liquid asset, and rebuy.
The historical price is irrelevant as well. Looking at the historical price is the same sort of thinking that leads to "throwing good money after bad".
They do not have an offer that will maximize shareholder value - they have an offer that will increase it.
Words have meaning and concepts have definitions. They are not arbitrary of flexible for the sake of making the argument you want.
The BOD's responsibility is to the company, a public company's responsibility is to the shareholders - this difference matters.
Cornell's legal information institute provides a nice and cited set of definitions (albeit in legalese) - https://www.law.cornell.edu/wex/fiduciary_duty
you have a company that is worth $1mil and we only imagine that it can be worth $100mil (based on the size of the market we are addressing). someone comes and offers $200mil but we know he will shut the company down (i.e. liquidate all its assets, or even simply the desire to destroy the company).
While this might be sad for the company, why is it not in the interests of the shareholders to take the offer?
so if Musk is willing to offer more than shareholders expect to see in the forseable future, why does it matter what will happen to the company after that? their interest in the company ends when their shares are purchased.
That is your assertion/opinion (yes, shared by many, sure). But it's not the only opinion in this case, and so I don't think the analogy holds.
Sure, I could see in the abstract times where an offer it just unavoidably good, and so it would not be in the best interest of shareholders to take it. But in this specific instance, there is a lot to be said on both sides of the offer (taking vs. rejecting it).
I would also argue that, depending on the purpose and goals of the company, knowing that a person intends to shut it down would be a reason to value existing (in order to continue carrying out their purpose) over money.
This isn't an argument for the poison pill clause, but is an answer to the following quoted question. It is funny to see this motivation of most existing shareholders ignored in order to bring into being analogous motivations of another. Especially when Musk's offer for Twitter has been in order to change it promote certain values, but conspicuously, better profits has not been one of those touted values.
> While this might be sad for the company, why is it not in the interests of the shareholders to take the offer?
I will sabotage my own argument somewhat though and say that I believe the economic motive dominates over time and is almost always (in macro and micro) the primary force.
It depends on what the interests of the shareholders actually is. Monetary only, or are there other considerations they care about?
I assume the boards of such companies have had private discussions with the majority shareholders to find out exactly what their priorities are, and then acted accordingly.
Is a board allowed to consider anything but?
https://www.reddit.com/r/law/comments/3pv8bh/comment/cw9t52d...
There's an easily searchable index of B-Corps: https://www.bcorporation.net/en-us/find-a-b-corp
It's moving there but I don't think it's there quite yet according to case law. The board motivations at present still have to tie back to maximizing value for shareholders.
I could offer them $150 a share tomorrow, contingent on financing and would get laughed out of the room.
My point is that the number on the offer is not an objective and singular measure of whether this is a good deal for Twitter. Who is making the offer clearly matters as well to how serious it is.
If the offer is rejected and Elon continues to attempt to gain control of the company, that would be an attempt at a hostile takeover.
https://www.investopedia.com/terms/h/hostiletakeover.asp
A more typical way of doing this would be to make a proposal directly to the board first. The fact that Elon did it in public means he's trying to pressure the board (via the shareholders) into taking an action they wouldn't otherwise want to take which makes it hostile.
You could then try for a hostile takeover by buying up as much as you can on the open market and possibly to try to get one or two smaller shareholders to sell their shares to get you more than 51% (and in some cases more than 66% aka a supermajority) to be able to call the shots.
If you borrow from somewhere else it’s just a buyout.
>> A leveraged buyout (LBO) is one company's acquisition of another company using a significant amount of borrowed money (leverage) to meet the cost of acquisition. The assets of the company being acquired are often used as collateral for the loans, along with the assets of the acquiring company.
Note how the second sentence says that the assets of the purchased company can be part of the arrangement, but the “L” in LBO means the buyer’s borrowing, however they accomplish that.
https://en.wikipedia.org/wiki/Leveraged_buyout
The "poison pill" defense is very old. I'm not going to defend or attack it; it is what it is.
I WILL observe that, once a stock is "in play" it usually gets acquired, or at least gets a bunch of new board members.
But just offering a 50% premium might not be enough. They'll need to pay taxes on the realized gains and they'll need to find other places to put their money.
If Twitter isn’t a business to make money to them, what is it, and who is it for?
Perhaps the board believes the value of the shares over the next year or two is substantially higher than Musk's offer, such that they should reject the buyout so that shareholders can reap that gain.
A platform that makes money and has free speech would be wonderful. Maybe he can steal Rogan from Spotify too.
The speech is made in public and should be adjudicated in public. Today’s Twitter hides its moderation policies and decisions. Even though they are a private company (albeit publicly traded and the effective public square), this is wrong.
As a quick example, [1] lists some categories of tweets which they will delete. Twitter seems to have overreached with category 2:
> Claims that specific groups or people (or other demographically-identifiable identity) are more or less prone to be infected or to develop adverse symptoms on the basis of their membership in that group;
This is nonsense. Your risk increases with your age. Your risk increases with your BMI. Men are at higher risk than women. Those working in customer-facing roles are at higher risk than those who can work from home. Each of those statements are apparently banned on twitter.
[1]: https://help.twitter.com/en/rules-and-policies/medical-misin...
The example that people use, would be any speech that legal within the US.
If it is illegal, then most anti-censorship advocates are still fine with it being banned. But generally speaking, the best case scenario for them would be all legal speech in the US.
Instead this is how I’d moderate twitter, when a court orders a tweet to be banned or a judge rules that a user should be banned that is when the moderation team would step in.
I’d also make it easier for people to filter content themselves. So if there’s POVs they don’t want to ever see they don’t have to see it.
Essentially this would reverse 99% of the mod teams decisions.
Take the case of Megan Murphy, a woman who is in a lawsuit against Twitter. Rules were added to Twitter that were used as a justification for her ban retroactively:
https://www.dhillonlaw.com/lawsuits/meghan-murphy-twitter/
How many people were banned or blocked by Twitter for COVID misinformation, when it turned out that those spreading “misinformation” were actually the CDC, WHO, and government institutions, and when said institutions blatantly lied to the public about masking, vaccines, lab leak theory, and lockdowns, Twitter did absolutely nothing, except punish the people who criticized said institutions.
If one disagrees with liberal establishment rhetoric on gender issues, you also get banned very quickly. There are a bunch of these consensus political issues that are off limits for debate.
Just look at Facebook. It's widely seen as "boomer garbage" that's only used as a least-common-denominator resort for communication by the target group these days, and conspiracy crap groups and peddlers of propaganda are a huge part of the reason.
Platforms and societies that fail to maintain some basic social order all eventually disintegrate into chaos.
Like is this a we need a speech dictator even people I disagree with is better than chaos point of view?
Or is this a my point of view should be enforced on everyone and platforms should not be allowed to publish things I disagree with point of view?
If Trump was on the mod team of a platform, I simply wouldn't use that platform.
No one needs to use Twitter. Most people's life wouldn't change the slightest bit if Twitter disappeared tomorrow. There's no serious argument that the platform has a monopoly on anything.
The bulk of the holders of stock in most public companies are institutional investors that don't need to pay taxes on the realized gains.
The private analogy is a professional gambler. You don't pay taxes for winnings on each bet. You pay taxes on what you have cashed out at the end of the year.
Tax on individual sales is only a thing for individuals.
Elaborate
Correct. Hence the term poison pill. Now nobody else will be interested in buying them either and Elon selling out will tank the stock. As a reminder their stock steadily dropped all the way to $14 after the initial IPO pop and they've been losing money since before Covid.
Woke means broke I guess. I think his plan B will be to start a competitor. I'm very tempted to heavily short as soon as he walks away definitively.
As to your question of, won't the other shareholders get mad at the board and potentially sue them - I think the board is drinking their own koolaid.
And they were profitable when you exclude their once off litigation expense.
Not sure about your definition of circling the drain but Twitter definitely isn't.
That sentence alone means you weren't even discussing this in good faith.
It's very well possible that the Twitter board believes that they can achieve higher value for the shareholders than what Elon offered. It's also very well possible that after talking to Elon through private conversations that you were not part of, they fundamentally disagree with his value and the direction he wants to take the company.
>I think his plan B will be to start a competitor.
Hey, maybe he would buy Parler, that would sure get him all the attention he desperately craves for. /s but maybe not.
Is that what good faith means now? Being religiously part of Camp A or B?
The balance sheet speaks for itself. Incidentally Parler or his potential Twitter clone will also end up a toxic internet community. Who cares? I personally wouldn't use either one.
Certainly with Twitter already doing a great job losing money and alienating most people (almost nobody actually tweets and usage is falling) an alternative would split the user base and accelerate their demise and the inane concept of web micro-forums being worth tens of billions of dollars. Companies will simply decide advertising on Parler/Twitter is not worth the hassle.
No. But you immediately made this into a Camp A vs. Camp B problem when in reality there could be a million different reasons for the Twitter board to not want to get acquired means you weren't trying to discuss this specific situation, you were looking to turn this into a debate on "wokeness". That's why I said you weren't discussing in good faith.
>The balance sheet speaks for itself.
Does it? Elon has seen the same balance sheet and he thinks the true value of the company is higher than what it is now as well. So obviously he thinks Twitter has the potential to achieve much higher value through implementing XYZ. The board agrees too but just disagree on what that XYZ is.
Up to you to take him at his word however he has stated otherwise.
"It's important to the function of democracy, it's important to the function of the united states as a free country and on many other countries and actually to help freedom in the world more broadly than the US.
You know I think this there's the risk, civilizational risk, uh is decreased if twitter, the more we can increase the trust of twitter as a public platform and so I do think this will be somewhat painful and I'm not sure that I will actually be able to to acquire it.
I mean I could technically afford it um what I'm saying is this is not a way to sort of make money you know..
It's just that I think, my strong intuitive sense is that having a public platform that is maximally trusted and broadly inclusive is extremely important to the future of civilization"
- https://www.youtube.com/watch?v=yDfqwTBHah8
Jesus I know it's Friday but some of you guys start drinking early man.
Why out of everything that he could invest in would he bother with twitter specifically? Whatever his intentions are it seems plausible that this isn't about money.
I get that you don't like him but this attitude of "I am right, you are wrong, and if you disagree you are drunk" is.. not a good look.
It's very plausible that this isn't about money, and I never said it's about money. However it's far more plausible that this is about a narcissist buying media and social influence and he wants to be able to shape public discourse that paints him in a positive light. He really cares what people thinks of him.
All of that would seem far more likely (and suits his past track record) than him doing this to "save democracy".
> Elon has seen the same balance sheet and he thinks the true value of the company is higher than what it is now as well.
Also I'm pretty sure a narcissist is exactly the sort of person to genuinely think he is saving democracy by buying a website.
Do you know him personally? Are you a trained psychiatrist? Narcissistic personality disorder can be a serious affliction, tell him I hope he gets the help he needs and that I wish him the best.
I personally just want to know what will happen to the stock.
He is already an influencer and owning a social network where he gets to set his own rules would be the best way to ensure his influence increases further.
Free speech on social media is an oxymoron. SM is designed to give you power in proportion to the number of connections you hold. Its a popularity contest of twisted, faked, carefully crafted viral thought - most real, true and meaningful things get lost in the sea of professional influencers.
You will find more real free speech with a single visit of a subreddit than you will within a week of being on social media.
have you seen the matrix? they powered a cluster the size of the planet using humans for batteries! this is the same scale problem, that and pedophilia.
Yes, but one version of XYZ (the board's) has been tried while the other (Elon's) has not. Elon's plan might lead to even worse results than the board's, but he doesn't think it would, hence his optimism if they adopt his plan.
a) Revenue increased 37% y/y.
b) User count growing at 2% y/y.
c) Profit of $273m in 2021 when you exclude once-off litigation expense.
https://www.prnewswire.com/news-releases/twitter-announces-f...
The once-off litigation expense might soon be recuring in 2022, after this move. The former was a shareholder class action lawsuit, and the latter will most likely be the same.
So even if the lawsuit is recurring (neither of us know) they are still managing to reign in their losses.
By any definition the company is heading in the right direction.
(Sorry, unable to resist.)
>that my communication-medium
Twitter is first and foremost a publishing platform, you should not rely on it as a private communication medium. None of the chat apps I know censor stuff, so use them instead.
Use Twitter for public communication if you want, but since it's in the public domain you can't complain too much if there is content moderation.
Sure I can complain. When it's the defacto public forum any administrative conversation-tweaking is pure poison to our society.
And also, yes, there is an implicit promise that the conversation between you and me is not getting fucked with by an invisible rat in the middle. So when I smell one of those rats, heck yes I'll complain. That's objectively ratty.
The phone company does a pretty good job of it, and we have regulations that force them to be mostly "neutral".
Those regulations have worked out quite well. Perhaps it time to expand our existing, and working regulations to other platforms, given that they work so well on existing platforms.
The various messenger apps are closer analogs to phone companies and they have no or very light content moderation.
So they could be extended to other things, and the world would also not collapse if that happened.
Who would believe that? They’ve had years to prove it and as they stock market has doubled in value their stock has been cut in half.
Share holders should sue. It’s time to trick their world and either drive the stock price to a few bucks or force then board to do their fiduciary responsibility and sell the company.
It’s a great offer.
Their board can believe all they want. But they're failing, miserably. Elon isn't perfect, but at least he doesn't have a demonstrated history of driving his companies' value into the basement, like Twitter's leadership does. This move by their board serves no-one but them; it doesn't serve Twitter's users, it doesn't serve their customers (advertisers), it doesn't even serve the vast majority of shareholders (which will be evidenced by an unprecedented sell-off on Monday).
Goldman advised them to block the purchase, because $52/share was too high, while simultaneously holding a $30 sell benchmark on TWTR. Its not even ironic that this is where Twitter's stock is going; its what they predicted, and then caused. The idiots in the room are the Twitter board, who actually believed the advice was given in good faith.
How are SolarCity and Boring doing these days ?
Oh sh*t i don't follow him and didn't care about those votes ... should I write a bot to make my voice heard? Is that how it goes? (Or in other words: such a vote has no statistical significance aside from pleasing Musk's ego or whatever is driving him and his need for attention)
This makes me wary of your post. You could have easily fact checked this and you would have seen that this is incorrect. It's up 37% compared to the year before that. [0] I checked the last 3 years and the growth has been positive during all 3 years. [1]
[0] https://www.prnewswire.com/news-releases/twitter-announces-f... [1] https://www.macrotrends.net/stocks/charts/TWTR/twitter/reven...
Their stock price was over $70 in the trailing 12 months.
Even with Elon's offer they are still worth 10 NFL teams combined.
I can find zero credible evidence to support your position. Please short the stock :)
b) Twitter's stock price is now $45, peaked at $77 only last year and is profitable. Not sure where you get this ridiculous idea the company is unsellable.
c) There are plenty of free speech competitors to Twitter. None are even remotely successful. Because as Reddit also showed far more people want a moderated experience more than those that don't. And Twitter is a business first and foremost.
d) Musk is offering shareholders a premium as the stock is today. But as I mentioned even just last year it was significantly higher. And so I can't imagine shareholders would have an issue about them turning it down if they believed Twitter was still continuing to head in the right direction as it is now.
That's not the right way to think about it. Anything that scares off ambitious, optimistic activists from buying big stakes, will then suppress the stock value in general, which hurts all shareholders, including the smaller ones.
More broadly, going public is a tradeoff. You potentially give up control to outsiders, in return for greater share value (and the cash infusion). Moves like this go the opposite direction: decrease the potential for outside control, and with it, the upward pressure on the stock's value.
I hope it isnt: I think that starting a top down, meaning "look I built this, everyone move over from twitter", competitor has a very low probability of success, regardless of who starts it. There is too much of an attack surface, there will be too much drama on real Twitter about it, early adopters will be gun nuts or some other out group and that will be how they get characterized, etc etc.
The real chance at a competitor would be something that grew organically, that people wanted to move to because it offered something valuable before it reaches scale. This is how actual businesses start. The top down approach is how massive flops happen.
Incidentally, the same holds true for the Facebook metaverse and imo suggests it will certainly fail
I hold some shares of TWTR, and would continue. For the lulz.
There's too much drama on real twitter about it anyway. They might be stupid enough to ban him too soon, and if they keep on doing that nobody will want to use it. A lot of the top users haven't tweeted in over a year.
So let's say you put in a shareholder rights plan that allows all current shareholders to buy 10 new, discounted shares whenever a new shareholder reaches 20% ownership and for every share they buy from then on. That effectively dilutes that one owner without anyone else, and if they continue to buy it makes all the other shareholders much more money.
That's not always legal, but it would help the interests of shareholders.
Except the guy at 19.9% trying to move up. Considering he has already invested quite a lot of money on the company, shouldn't the board also work for him ?
Why should he be treated differently and his share give him different "rights" than others people share ?
So imagine a company taking $100 million in debt, giving all that out as a dividend then the stock price tanking through quick sales. Poison pill keeps the company going and avoids that fate.
Second, could Elon swoop in at that point?
Edit: Also, if Elon is reading this, I'll happily buy 14.9% of twitter, and vote as part of your block. Just pay me enough to cover the sale and taxes, plus 1%.
Seriously, do you think funds playing with the kind of money to buy 15% of twitter often make careless purchases?
>Edit: Also, if Elon is reading this, I'll happily buy 14.9% of twitter, and vote as part of your block. Just pay me enough to cover the sale and taxes, plus 1%.
Such an arrangement would make Elon the beneficial owner of your shares.
https://www.bloomberg.com/opinion/articles/2022-03-28/barcla...
$15bn is tiny, presumably we’re talking about big ETFs like SPY here.
And anyway, you’re pretty much agreeing with me. It’s absolutely possible for a big fund to make a huge and hilariously stupid mistake, but this twitter poison pill does not meaningfully affect the chances of that happening.
In a world where you can shoot yourself in the foot in a million ways, it is utterly pointless to speculate about this one extraordinarily unlikely situation.
I think we're in agreement that this Twitter thing isn't worth the attention, but we are far from agreeing that large financial institutions are inherently competent because they're large.
There's a race condition between the poison pill being instated and the ETF updating their strategy. I wonder if a board could maliciously take advantage of that somehow.
I don’t see anyone making that argument.
Speculating on an ETF “accidentally” acquiring more than 15% of Twitter implies a whole different level of incompetence than a big ETF ever fucking up big.
- You
https://news.ycombinator.com/newsguidelines.html
https://news.ycombinator.com/newsguidelines.html
I did not call kolbes comments bad, but patiently explained where they got it wrong.
I think you’re seeing fighting where there’s none, at least not on my side.
We don't care about people saying "fuck". We care about the things that are in the guidelines, such as being kind, not being snarky, not calling names, and so on.
https://news.ycombinator.com/newsguidelines.html
It’s really not unkind to point out when someone is aggressively misinterpreting really simple words.
Thanks for explaining why that won't work.
Presumably, if Elon has a few rich friends, they could use their own money, vote as a block, and the board would still be screwed.
I wonder what other schemes would work. B corp, maybe?
But that’s just playing along with the spirit of the rules, not a loophole.
No, but an ETF has a defined investment strategy, and if enough money comes into the ETF, it could potentially trigger this.
The stated investment goal isn't "buy the S&P", it's "match the price of the S&P".
Such an agreement would be reached incredibly quickly, there would be no need for stopgap measures.
From the article:
> Under the new structure, if any person or group acquires beneficial ownership of at least 15% of Twitter’s outstanding common stock without the board’s approval
ETFs are a different concept, but a good index fund will be structured as an ETF, and it looks like this thread is using "ETF" to mean "index fund"? If so, then the answer to your question is an unambiguous yes.
For example in the case of SPY, that would go against their stated investment objective.
They also clearly state
> the Trust may fail to own certain Index Securities at any particular time, the Trust generally will be substantially invested in Index Securities
The poison pill just requires prior approval from the board, which they would happily grant in this kind of a case.
You might want to speak with a lawyer who is familiar with inchoate crime.
What you publicly proposed to Elon is a crime, since you intend to conceal beneficial ownership of shares.
Oh so Mr. Musk incidentally wired you billions of dollars before the share purchase?
(Assembly into blocs of financing, dpeech as the action of capital allocation)
Honestly I'd lose faith in the U.S. in it's entirety if it was the case that the answer to your question was even remotely "yes".
Keep in mind, I lump in people's behavior with normative restrictions of the First Amendment. If the Government can't do it, and the Government is us, we shouldn't be doing it. So businesses doing it because business doesn't hold for me either. Especially if it happens as a method of indirection to work around literal interpretation.
So if there is a restriction on shareholder coordination, I don't see how our legal system in this case can be taken seriously as anything but a tool utilized by those in positions of influence capable of more tightly coupling to other people of influence.
Saying “the government is the people” is much like saying “the shareholders are the managers of the company”: yes, that’s true in an oblique, ideal sense, but you’re going to run into trouble if you start trying to literally substitute the one for the other in random sentences.
If you admit that he is the beneficial owner and you are just an intermediary, then the poison pill provision is not skirted.
https://en.wikipedia.org/wiki/Inchoate_offense
It's not a crime to publicly finance someone else's stock purchases, or even to publicly solicit others to finance your stock purchases (it's not "solicitation" in the inchoate sense, since the inducement is not towards a crime).
Not really.
Setting aside the other issues, first and foremost this is obviously a joke. Prosecution would have to establish mens rea for this to rise to a criminal act. Do you think anyone could prove true intent for these events to unfold, based on this comment?
Promising voting rights doesn't change beneficial ownership. Twitter would have precedent, however, to find "conscious parallelism" and thus "a de facto control bloc" between the commenter and Musk, and thus bundle them for purposes of the poison pill's activation [1].
Still, not a crime. Civil dispute under corporate law.
[1] https://www.yalelawjournal.org/comment/unpacking-wolf-packs
The Yale Law article you cite is just about groups of investors working together, which is within their rights.
The fund needs to report their holdings. Not all companies have a poison pill provision. Not all companies that do have a poison pill will activate it. In the case of an ETF there's usually a discussion between the portfolio manager and the company. They know where they stand. Plus it's not really in a passive fund mandate to go activist.
the people who run the US/world who depend on censorship to maintain their power
Mechanically, it's not much different than an issue of new shares. From Twitter's announcement:
>> each right will entitle its holder [...] to purchase, at the then-current exercise price, additional shares of common stock having a then-current market value of twice the exercise price of the right.
There's no obvious breach of fiduciary duty through this plan. Existing (non-Musk) investors get new shares, but Twitter also raises capital at the current market price.
That opinion would also be consistent with how "fiduciary duty" is interpreted by US regulators: companies are not required to perform any particular action that might reasonably be in the interests of shareholders; they must merely show that the company's actions were intended to be in the best interests of the shareholders.
The stock is toast regardless after this.
If it goes private. As always, Matt Levine says it better than I can:
"...the financing seems to be made up of cobwebs and phlogiston. But also Musk has joked about taking companies private before, and he generally changes his mind a lot. (He agreed to join Twitter’s board last week! And then changed his mind four days later!) If you are a well-advised professional public company board, it is just catastrophic to imagine that you might say 'okay Elon $54.20 it is' and then he’d say 'ha no I was kidding, psych!' That would be crippling for a public company. Also that is basically what he did to Twitter’s board last weekend!"
https://www.bloomberg.com/opinion/articles/2022-04-15/sure-e...
No. If you’re at a table negotiating a break-up penalty, you’ve already crossed the Rubicon. You have indicated that the price was at the very least worth considering.
If that buyer then walks before agreeing to the break-up penalty, the damage has been done. Board seats have been lost for less.
So, it can go either way and can be argued either way.
People need to stop saying this. It's nonsense. Or maybe keep saying it so we know your clueless about how anything works that your commenting on
Why? (Honest question.)
https://blog.twitter.com/engineering/en_us/topics/infrastruc...
> Unfortunately, Haplo has its limits. Since we try to pull every single Tweet ID in a conversation every time a conversation is loaded in real-time, this is potentially an unbounded amount of data. We’ve found that if our platform tries to load more than a certain number of entries from our cache at once, our cache request latency will spike, and we begin to time-out on a significant fraction of read requests. Because of this, there is a limit of thousands of Tweets per conversation tree in this cache.
even just showing an ad is a ton work has a bunch of services involved
https://blog.twitter.com/engineering/en_us/topics/infrastruc...
Other stuff that I think explains the complexity
https://blog.twitter.com/engineering/en_us/topics/insights/2...
https://blog.twitter.com/engineering/en_us/topics/insights/2...
https://blog.twitter.com/engineering/en_us/topics/insights/2...
there's no single algorithm, its a bunch of parts coming together from hundreds of engineers and multiple services.
(I was going to say it also involves too much money to be lefty, but then I realise that just might be my Overton window and isn’t necessarily related to what you think “lefty” means).
I don't own a TV, and yet I can tell you what the chiron said this morning, nearly verbatim. Ask anyone who watched it.
That... makes absolutely no sense. The interest of the current average shareholder ends when they sell their stock. There is no point in time at which both (1) the current average shareholder owns more than zero shares, and (2) Musk has a controlling interest. So it's impossible for those two things to conflict.
If you were a member of Twitters board, would it be in the interest of the current average shareholder to sell their shares at well above the market price?
That definitionally depends on whether you, as that hypothetical board member, believe that Twitter has the potential to reach a share price higher than $54.20 if it stays public.
Also, remember there is nothing that binds the board of a company to solely consider potential shareholder value in the actions they take. There's a widespread belief that "fiduciary duty" overrides all other concerns, but from a regulatory/legal standpoint, that's simply not so. The board obviously needs to take it into account, but if they believe a merger or takeover is not in the best interest of the company, they don't have to take it.
Don't like the bid, fine, say no -- but don't prevent your peers from selling out.
But all that is irrelevant because he wants to take the company private- no shareholders. The impact to shareholders is the massive bailout he would give them on their shares.
If they cared about shareholders best interests they would bring it to vote.
Of course hindsight is 20/20, but even at the time, it seemed like the company was prioritizing long-term growth, whereas if they were taken over by Carl Icahn, they'd certainly not be.
As an individual and index shareholder I’d love for Musk to take it away at a premium, I have zero faith management will do anything positive.
This is to prevent say a majority shareholder and/or group of employees from raiding the business of its value.
So a case for a poison pill might be well made to prevent a person from taking a controlling stake to then expose the company’s IP (code base) because they have some agenda, or prevent them running the company into the ground by causing a flight of talent, or by breaking some success formula.
It sounds like your interpretation Vanguard's risk profile / likelihood and their interpretation differ. And given that I trust Vanguard's assessment.
Frankly, if I were an institutional investor, I'd probably prefer the poison pill than have Twitter become a toy subject to Elon Musk's random political fight.
Wasn't he all in on Doge coin, except he wasn't, and all in on bitcoin but then not fully, then some other random alt coin, oh and then he's back in on Doge again and how to improve it.
It sounds like sound fiduciary duty to not let your company be subject to those whims.
Or they could benefit because they believe the new owners would be bad for the business.
As I understand vanguards structure, they have no beneficial ownership of any company and therefore never trigger the poison pill.
> Who does this benefit besides the board?
This benefits anyone who is concerned that a rich person will buy 50%+1 of a company and use their equity to make decisions they are opposed to. Now if a rich person accumulate 20%, the other shareholders can dilute that rich person. That means the rich person has to convince other shareholders that decision is correct.
Backup 2: Continue making Twitter polls that potentially steer/force the current management's hand into the changes he wants to see implemented regardless.
Put another way, Musk may be willing to pay a lot more than a 25% premium for Twitter (he already said he doesn't care about price). Without this poison pill, Musk can force a takeover by accumulating shares. With this poison pill, the board has leverage to maximize his final offer.
really think Musk knew this ahead of time...but what's his end goal i can't figure out. is it to profit off his purchase? because if he wanted to acquire 51% this is the worst way to do it (creating a hostile board who can at will issue infinite amount of shares)
You're basically replicating the US Courts Legal System, except those on trial pay 0% taxes. Not viable.
Keep thinking though, we need a hero of an idea to make forward progress on the question of what strategy is best for US-based public companies, and what their role is in showing the world what the gold standard for "freedom of speech" online looks like.
EDIT: Arguably, much of what I am suggesting can be automated cheaply.
A publicly traded company cannot solve this problem but a private company might be able to.
1. According to Elon, who now insists the tweet was true.
> Today on Twitter, as on most social media, justice works in a roughly Stalinist style. The normal penalty is permanent execution. There is no transparent explanation for why an account is executed, before or after the execution. It has simply “violated the Twitter rules.” The public rules are extremely abstract and could theoretically justify almost any execution. The private rulebook by which the secret police, or “Ministry of Trust and Safety,” operates, is of course as secret as everything about the secret police.
> Of course, it is easy to observe that a two-day-old spam account does not deserve a six-month trial, with lawyers, before getting the bullet it needs in the back of the neck. Due process in this context must not be a clone of the IRL judicial system, which is more broken than anyone can possibly imagine.
> And there is a simple solution to the problem of scaling due process: *scale the level of due process to the size of the account*. An account with a million (real) followers might well deserve a six-week public trial, perhaps even with some kind of counsel. The spammer with 20 followers? Any cop can shoot him, as at present, and leave the body by the side of the road as a warning to others.
> There is a use for online Stalinist justice—it is only an injustice when it is disproportional to the user’s investment in the service. When Twitter is your career and any cop can just shoot you, an eerie atmosphere of terror pervades everything.
Source: https://graymirror.substack.com/p/the-twitter-coup
Or say “Anyone with the last name of Musk now owns type D share with 1/100th ownership value”.
Poison pills seems pretty close to doing just that.
“Even before Friday, Twitter had bylaws that "could have the effect of rendering more difficult, delaying, or preventing an acquisition deemed undesirable by our board of directors," the company said in a February 2022 SEC filing. That includes "a classified board of directors whose members serve staggered three-year terms," and the ability to "authoriz[e] 'blank check' preferred stock, which could be issued by our board of directors without stockholder approval and may contain voting, liquidation, dividend and other rights superior to our common stock."
Sounds like the board can do pretty much anything they want with Twitter’s stock. I find it incredible that a regulated public company can issue abitrary shares with any terms they want.
They made these rules before Friday. but it also sounds like they could have made them today if they wanted to.
Again, you might be right that Twitter's price was over-inflated in 2021, but "it was worth more" is certainly a non-cultural/political reason to push back on the offer - even if they're wrong about Twitter's long-term value.
So why not take the offer (which is 20% higher than the current market price for the stock) and put the received cashed into other tech stocks? Is Twitter uniquely/excessively down compared to other tech stocks, and due for a bigger rebound?
The only way this makes sense is if there is a bigger offer incoming OR if the Twitter board has a plan to make twitter much more successful in the near term and succeeds at that plan.
Taxation is only a concern for folks who have big unrealized gains and lack harvestable unrealized losses.
At that point, they'll need a good lawyer to explain why Twitter chose to omit that information from their SEC filings.
If Twitter was worth more, it'd be worth more.
With that logic, you should put a huge chunk of your savings into Twitter to benefit from the insight, as it's currently trading at 39% below its 52-week high.
As legitimate as it is to believe that the stock price will never again reach $54.
Then it should be priced for discounted future cash flow and value.
The stock price today represents what investors think the future value might be. The speculation that the dip will bounce back is built into today's price.
The reduced price over the high represents the perceived risk that it won't return.
Musk values the stock higher than the mean investor.
If you bought a $100k home which then dipped to $80k during Covid, would you accept an unsolicited bid of $90k?
It's reasonable for some people to take the bid, since you could arguably buy another comparable house for $80k and pocket the $10k difference, but I think a lot of other people would reasonably choose not to.
(I'm not totally sure if this logic scales to board rooms / billions of dollars, but curious to hear thoughts.)
I own several stocks that have dropped in the last few months. If someone offered me a 20% premium to sell them today, I would do so in a heartbeat. I would even do so if it meant the company would go private and I couldn't buy that stock again.
I have not bought TWTR.
In that case I would be terrified as a board member, I've basically lost about $15bn of shareholder value for my shareholders.
> We are in a downturn affecting the entire tech industry Some companies are down more than others, and some are doing fine. Twitter revenue is largely driven by ads and they are likely also going to be hit by Apple's privacy changes like all other ad based businesses. Meta (Facebook) has already said they expect ~$10 billion revenue hit from the changes. It's feasible to think that Twitter revenue for the year may actually drop and the stock price may not recover to the 2021 levels any time soon.
That's cute but the past is gone. Twitter is clearly going downhill, both with their product and with their management (good thing they got rid of Dorsey, but perhaps that was too little too late), the stock just follows on that. If anything, people like Musk are the ones who still attract interest to the platform.
>Twitter can bring more value to shareholders with or without Elon
Twitter is on a very dangerous spot right now, their MAUs peaked long ago as young people go to other platforms, and overall, everyone is a bit of tired of the kind of discourse that predominates there, for instance, Trump was banned and I STILL find out everything about him because the people there (left and right-wing) are absolutely obsessed with him.
Honestly, Twitter is the one social media platform that I wouldn't really mind if it just disappeared. At least Facebook has some family members in there and some pictures from my earlier years. Twitter brings nothing of value to my life and I'm sure I'm not the only one who feels like that.
Trump is mainstream. MSM covers him, as do Reddit and Facebook posters.
This bear market is returning to reality and paying the price for those profits.
Wow, that's great news for Velodyne Lidar -- currently trading around $2 and was $28 less than 2 years ago. (Why bother with paltry 2x return on Twitter when you could get a 14x return?)
As an outsider, I'm personally intrigued by the prospect. There are two things he's mentioned that I think could be very beneficial (outside of freedom of expression) to society:
1. Transparency - open sourced algorithms for what shows when and transparency about moderation decisions
2. Reduced short-term financial incentives - Given it'd be bank-rolled by someone with a lot of money and private, they wouldn't need to play the gray area game of increasing advertising & data sharing that other sites do.
The issue is that managerial class of America, both in private and public sector, are in bed with each other. The government cannot suppress free speech using the frontdoor, but these social media companies (Meta, Twitter) as well as Big Tech machinery (Google, Apple, Microsoft, Amazon) act as a proxy for supressing political speech through opaque algorithms and straight up censorship.
We, liberals, used to be exceptionally devoted to free speech. Just look up ACLU's cases from the 90's and prior. We were against the establishment. Against the managerial class crushing labor. Against the fucking 3 letter agencies.
Now, my own party wants to turn America into an authoritarian censorship dystopia. It's hard to stand by that.
You could start by lobbying to force tech companies over a certain size to disclose reasons for users or content being removed from the platform. The legislation would have to have teeth, naturally.
Btw, I've never seen my comment go from 6 votes to 0 in a matter of 30 mins. Insane.
Sad truth is, the moment an advocacy group and a political party become too close, the advocacy group ceases to be effective. This has nothing to do with Democrats in particular; cozying up to the Republicans is no different (e.g. the NRA).
I'm heartened by the emergence of organisations like FIRE that are picking up the baton for free speech in some of the contexts where the ACLU has completely dropped the ball, but still feel a pang of sadness at the hollowing out of the old, bad-ass ACLU.
> FIRE
What's going to be its immunity against the pests that took over ACLU/NRA?
The same happens with the other team.
It's disappointing but predictable.
> problem with Musk’s offer is that it is pretty low. Musk points out that $54.20 “represents a 54% premium” over where he started investing in Twitter, and a 38% premium over where the stock was before he announced his position. But Twitter was in the $60s in October, and a lot of its big long-term holders seem unlikely to be sellers at $54.20. “‘No board in America is going to take that number,’ said Jefferies analyst Brent Thill.”
Against the bid coming from him:
- He famously pretended he was going to take Tesla private and got in trouble because he was pretending. Takeover offers usually don’t have that history I guess.
- He doesn’t have financing, not even pretend financing like when he said he was going to take Tesla private
Power. One side wants to have a safe garden where all their thoughts are heard with the other side silenced.
However I believe the current model of social media being funded by "engagement" has peaked, is hard to grow in a world already saturated by advertising, and is at risk from privacy & pro-consumer legislation slowly being enacted around the world.
I just don't see a future in the current model, yet the social media industry seems to be stuck in this local maximum without an easy way out. A hostile takeover of a large existing player by a risk-taker is the "kick in the butt" that the industry needs. It may go well, it may go wrong, but IMO it's at least worth a try.
Yeah, as mentioned, Elon is a god, but in my humble opinion, his talents are in engineering (and Twitter just seem like a problem an engineer wouldn't even want to solve).
I don’t think claiming that because social spaces involve legal decisions, that he’s out of his element.
Part of it is that Musk doesn't have $43B in cash, he'd have to raise it or borrow it. He's worth more than that but it isn't liquid; as an officer of Tesla there are some restrictions on when he can trade. Another part is that many doubt whether Musk is serious or if he is playing games again, like the last time "420" appeared in a financial announcement from him.
This is only true if the there is no uncertainty.
If you think the value without the takeover is $30, and it is trading at 48, and buyout is $54, that means the market thinks it 75% likely.
downside -$18, upside +$6 = 75% likely
In other words, the market is wildly optimistic.
Estimating probability from price action is something you can do, but not like you did it.
If a buyout is certain, then the demand for free money is 100%, and demand for a sure loser is 0% of potential buyers. Hence the share price would quickly converge to a buyout price in that situation.
Elon should really focus on his unfulfilled promises to folks he already took money from, not playing immature games to keep himself on the front page. I don't know what drugs he did with his ex-girlfriend, but they don't appear to have had a positive effect on his well being.
They are also assuming an existing shareholder would only do this if they believe the future private Twitter would be a more profitable endeavor for them, which Musk's comments really shouldn't inspire confidence in.
GP is implying that since Musk is relying on this in order to finance it since he doesn't have 43B in cash.
If this is a plausible scenario, and I don't know that it isn't, do you think it's what he means or is trying to express?
Because it seems to me that the way he says he'll keep the shareholders, it's intended to communicate to his countless groupies that they will somehow still be able to own Tesla in their Robinhood accounts. Which would be nonsense, right?
Currently, Twitter userbase is ripe for monetization.
Essentially, the holders believe that past performance is not reflective of possible future performance. The shorts and sellers and non buyers believe that us the case or that there are more efficient allocations of their money.
> Or Musk could borrow more against his Tesla stake. Tesla’s own policies prohibit Musk from borrowing more than 25% of the value of his shares, which is barely enough to buy Twitter, even ignoring the fact that he has already used at least some of that capacity. Of course he’s in charge of Tesla and its board is famously deferential to him, so I guess he could change those policies, but that still requires finding a bank to lend him $40 billion against his Tesla stake to finance this lark. Tesla’s stock has quadrupled since mid-2020; if it fell back to mid-2020 levels — say because its charismatic attention-seeking CEO found a new toy — then the loan would be underwater, and selling out of a gigantic Tesla margin loan does not seem like a lot of fun for a bank.
I'm sure he could manage to finance this just fine.
This is a lot of money, even for Musk.
I don't see this deal happening. He can't afford it (without exposing himself to unnecessary risk). If it does go through in the ways described here, he's an idiot ... and I don't believe that, despite my personal opinions about him.
This deal likely won't haooen, but due to the poison pill, not due to the risk.
But in any case, my point was merely exactly what I wrote: he does not need to raise anywhere near the full amount, because he can utilize the shares he buy as part of the collateral.
A lot of the stuff he claims that actually works has teams of people supporting him. Those weren’t one man efforts like this.
I don’t deny that, but it is not what he is doing here.
I am not sure why people shy away from the obvious: another of Musk’s strengths is market manipulation.
On 4 April, the announcement[0] of his becoming the largest shareholder jumped his Twitter stock[1] from a 73486938×33.03 = $2.4B purchase to a $3.7B asset, a $1.2B gain.
He sold 371900 stocks, for a $6M gain.
His 14 April announcement[2] of his offer to purchase Twitter was likely intended to boost the price further before the expected poison pill would justify him divesting everything as he stated he would do in the SEC filing[3], thus netting an even bigger gain.
It didn’t boost as he expected, but the value has remained higher than it started at. He will still make half a billion and his actions, this time, are hard to sue, since he did not lie on anything but intent, which is impossible to prove.
[0]: https://www.cnbc.com/2022/04/04/twitter-shares-soar-more-tha...
[1]: https://www.sec.gov/Archives/edgar/data/1418091/000110465922...
[2]: https://twitter.com/elonmusk/status/1514564966564651008
[3]: https://www.sec.gov/Archives/edgar/data/0001418091/000110465...
You mean a $779m gain
These paper profits are hard for him to realise, since he has to sell 9.2% of Twitter's stock without the price falling. Given the current price depends on his claimed intent to takeover, the market will react swiftly to any evidence that he is in fact reducing his stake.
Does it? Others have argued there has been no effective "pricing in" of this "intent", due to...nobody thinking it'll happen.
I'm not sure what it is about some societies that like to make a single person out to be an idol. We see it in team sports, scientists who work in large teams, businesses where CEOs are deemed several thousand times more of a factor than other workers, medicine where doctors are placed on pedestals. I guess people like a hero, and the alternative explanation, that hundreds of hard working and bright people came together to make something happen, is less compelling.
This rings so true for Elon Musk fanboys. I also like the full quote, "Small minds talk about people. Average minds talk about events. Great minds talk about ideas."
Just look at his totally fully autonomous autopilot(TM), coming ~2014~ ~2016~ ~2017~ ~2018~ ~in 6 months~ any day now this time I swear.
What charade?
Also he often publicly thanks, congratulates and credits the Tesla and SpaceX teams. Here's a sample:
https://twitter.com/search?q=from%3A%40elonmusk%20%22team%22...
As you can see yourself, he's saying "great job team!" not "great job me!".
I just don't get all these olympic level contortions around denying the achievements of an immigrant who made good on the American dream, and has done more for climate change than literally anyone. This is to be celebrated and embraced!
Why does it matter where he came from?
I realize he’s white, so it doesn’t count, but it should.
You asked about things he had said/promoted, or something like that, which I listed in the first sentence of my response, care to respond to them?
Which is why so many people are threatened by Elon's success and project their own insecurity onto him. Unresolved personal insecurity and envy are a potent combination. I promise this is unhelpful and it's better to resolve one's own insecurity than to spend time projecting it.
Except it is known that he didn’t. There is no need to speculate on the facts.
Elon Musk is far more successful than anyone else who started with his financial resources. He has outperformed everyone in his wealth bracket. There’s no need to pretend he was abandoned by his family and came to the US destitute.
There are internet rumors vs what he, his mom and brother say about him showering at the YMCA and only being able to afford one computer when starting Zip2.
That's why I said "may have", because his mom and brother aren't non-bias sources, and nor are insecure people on the Internet who want to explain away why they have achieved little despite having relatively the same or more privilege. The latter project this discomfort the most aggressively.
https://www.investopedia.com.cach3.com/university/elon-musk-...
"After two years at Queen's University, Musk transferred to the University of Pennsylvania. He took on two majors, but his time there wasn’t all work and no play. With a fellow student, he bought a 10-bedroom fraternity house, which they used as an ad hoc nightclub."
Realize that most people born to well off parents don't do shit. If insecurity needs an outlet, maybe redirect it to the rich kids of Instagram, not the guy who is helping solve climate change and get us back into space.
I was commenting on the appeal to the "American Dream(tm)".
Though if you want to follow it to the root if he was born black in the townships he likely would not have amounted to much, no matter how hard he worked it is unlikely he would have ever made it out of the country.
Nothing has changed. It is still as it has always been.
The US space program and the Moon landings can be traced directly back to Wernher Magnus Maximilian Freiherr von Braun and his work at Peenemünde, utilizing slave labor to build rockets for Nazi Germany.
"More people died building the V-2 rockets than were killed by it as a weapon"
The course of history was shaped by Von Braun being terrified of the Soviets and choosing to surrender to Americans.
Some people see this sort of historical note as extremely relevant to everything today, and some don't. I see nobody trying to bridge that gap.
The traditional american dream is about social upwards mobility from rags to riches, about a promise that all that is needed to become wealthy is hard work, determination, a bit of ingenuity and puritan virtues. In its classic version it often features an immigrant family who comes to america with nothing but worn out clothes, works hard jobs and long hours to create a livelihood, overcomes hardships and struggles so their kids can get an education and better jobs. It often also calls out oppression, poverty and war in the old world as reasons for migration and to further highlight the ideals of liberal society in america.
The modern version ignored the generational aspect and instead focused on individuals becoming millionaires. Entertainment loves extremes, the lower the start and higher the end, the better. The quicker the journey, the better. And this became accelerated to the absurd. Be poor, wash dishes, millionaire. Since this is so very unlikely, and real people who fit it, like Rockefeller, became so unpresentable, media turned more and more towards fictitious comedies. Yet this version is still very dominant in culture, because it calls out a truth: when asked what the american dream is, many will say it is about becoming very rich. That is, what the modern american dreams of.
Now in contemporary media we see a return to the original idea, but with twist lampshading its problems. Migration is no longer a central topic, america no longer the beacon of hope for the tired, poor, huddled masses. Instead we see a focus on the disenfranchised and marginalized within american society. The post-modern MTV generations version of the american dream is B-Rabbit living in a trailer park with his alcoholic mom, making it as a rapper despite his peers attacking him for having the wrong skin color. It plays the core straight about making it with hard work and being virtuous, but it doesn't only look at materialism and individualism, as it also expects society to hold its promise of being liberal. The postmodern loves to play with dualities and reversing structures.
Lastly the post-modern satire version instead picks up the part that got dropped, the dream of becoming very rich. It teasers a protagonist from an african minority and reveals a wealthy and well educated white man from south africa. It shows upwards social movement from upper class to ultra rich, subverting the idealistic to instead highlight the reality that those who start well have more opportunities to venture and do even better. It holds up "being born rich" like Diogenes holds a plucked chicken, and calls out "behold: the american dream"
Is that how some people conceive of the "American dream"? I don't know, but I think it's the easiest to find factual evidence of happening over a long period of time.
-- a idk probably 10th generation American living on the East Coast.
Neither your modest scenario nor becoming a millionaire are specific to the US. And neither can possibly happen for all Americans.
So if that's really what the American dream is defined as, I think it inherently defines the US as a failure.
What a sensationalist claim! What is the carbon offset of one rocket launch? If Elon stopped focusing on Mars, and instead bought every coal plant to then shutter and replace them (could be done for under 40b), then maybe. Until then, the few percentage of market share for EVs does not justify this claim. You also have to assume that every purchaser of a Tesla would have bought a gas car instead, which is seemingly not a safe assumption. So, citation needed! Maybe if elon purchased a train system and made public transit exceptional and widely used could a person start to make this claim. I thunk the sad reality is that elon is bored and us focused in sci fi that is more possible 500 to 100p years in the future (ie mars), at the expense of actually solving present day problems. Any regulation reducing coal emissions has an out-sized impact compared to a few percentage of emissions from non-commercial transport, the claim "more than anyone else" seems hyperbolic and just flat out wrong
1) It's not a Trumpian charade because many of the things he says actually work out. He'd already be done otherwise.
That's what makes it so interesting. I suggest he would buy Twitter if he could - and - he benefits from the free PR either way.
Yes, it's a bit cynical of him, but the PR is worth it, and, it's not like he's playing with election outcomes, or starting wars.
2) We know he's not 'doing it himself' and I suggest his Eng. knowledge is way overstated, at the same time he is very 'detail / hands on / insightful at that level' and with the big vision stuff he gets people motivated. I disagree with almost everything he says publicly and loathe is fanboys, but he still deserves enormous credit.
A few when ago when Microsoft announced it was buying LinkedIn, the shares were trading around $10-$15 less than the announced acquisition price for months. I wouldn't put too much weight into any sort of imputed probability from the price.
It's absolutely fair to impute a rough probability of deal closure from the stock price. The whole "merger arbitrage" industry works around that premise.
Sometimes the market doesn't think a deal has a 100% chance of closing (like MSFT and LinkedIn) and it still closes. There were valid antitrust concerns circling that deal, e.g. https://thehill.com/policy/technology/298573-salesforce-rais...
> The whole "merger arbitrage" industry works around that premise.
If the market price reflected the probability, then an arbitrage strategy should not be profitable.
Usually, these folks have better experience/skills/knowledge about M&A, antitrust, etc than the market average. In other words, the market doesn't reflect the probability of an event happening.
> If the market price reflected the probability, then an arbitrage strategy should not be profitable > The market doesn't reflect the probability of an event happening.
No, the market's implied probability could be right, on average, across all deals...and the top merger arb funds could absolutely still be profitable by selecting deals when they think the market is mispricing the probability (for the reasons you mention: better experience, knowledge, etc.)
It's like the sports betting market: you can roughly impute a team's win probability from the (opening) betting line...and even if that's right on average, the top gamblers are still profitable.
And, of course, sometimes things with a say, 40% chance of happening do happen...so that doesn't mean the market was "wrong" about the chance (i.e. your LinkedIn mispricing exmaple).
But sounds like we're in full agreement you can't look at the implied probability from the market price and draw some conclusion about it definitely happening, or definitely not happening (e.g. the market not taking it seriously).
Another point however, about the market voting that the Musk takeover won't happen - we can only speculate as to why they predict it won't happen.
It doesn't necessarily mean they think he can't line up the financing. It could just mean they don't think the board will accept his offer.
If he did own it, I wonder if he would unban Donald Trump?