Twitter's board saying the company only has approx. 5% of fake/spam accounts has been publicly criticised in the tech press. I am sure none of us have any idea what Musk's intentions are for Twitter but if he bought Twitter and then was to try and sell services to 3rd party companies, these companies prices would be based on the size of the user database and if Musk tried to claim that the user database only has 5% of fake/spam accounts the 3rd party companies would doubt his claim due to the claims in the tech press that the size of the fake/spam accounts is a lot lot higher than 5% and thus they could argue for a reduced deal price or walk away which does not help Musk at all. Therefore to negate the claims in the tech press Musk must find out what the actual percentage of fake/spam twitter accounts there are and to do that he needs the data from Twitter which he has been requesting and of which Twitter has been refusing to give him.
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Elon Musk Wants to Terminate $44 Billion Twitter Acquisition [Updated]
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You are correct that the issue raised is not about that there are bots on twitter… its the misrepresentation made to its paying advertisers and data brokers as to the extent in which the data being sold to them or pricing for advertising was determined… surely the user data being sold would be significantly less expensive if the buyers knew that 50% of what they were buying was fake as opposed to the 5% they have been representing… this revelation now puts Twitter into an extreme legal liability that was not there when Musk first made his proposal… and thats not to leave without mention the pathetic lack of enforcement of the U.S. securities laws by the SEC and other agencies… so IMHO, Musk has an easy out with all of this… of course if Twitter wants to have all their dirty laundry exposed they can continue to push forward and let the discovery process bury them for good. If they dropped it now, they might, just might, be able to hoodwink enough more greater fools to get back into their game…
Musk can withstand just about anything relating to this… he has no real worries, the legal fees, the length it will take it to go to trial, nothing is going to influence Musk… so it really is all in the Twitter hands going forward. Personally , I hope they just go away… its a cess pool for the propaganda makers and spreaders… like the establishment media outlets.
I read your post and saw you mention the SEC and other agencies and it got me thinking. I wonder if Twitter is refusing to release the data Musk has been asking for because they could be worried it might highlight a discrepancy in the amount of fake/spam accounts the company has in it's userbase and thus show that the company has been falsely representing the value of the company for the past number of years which might bring unwanted attention to the company from government agencies, you know 'cooking the books' kind of thinking, making the company look more valuable than it really is by falsifying figures.
Thats exactly my line of thinking… and if Twitter wants to pursue this, then they will have no choice but to comply as there will be court ordered discovery processes that will require them to turn that type of information over to Musk… once that becomes public knowledge, then the investor lawsuits spigot gets turned on as well as the liability from the SEC… Twitter is in a world of hurt here… and the only option is to abandon the lawsuit stuff and (Apart from Musk actually buying them) to try and survive after the noise dials down.
Twitter has so many bots that just about every human with a substantial influence wants to be on the platform, including Musk who you seem to think is a genius. 🤔
I am not sure what I wrote to give you the impression, that Musk I “think is a genius”? If you would like to elaborate on that I would welcome the opportunity to clarify and clear up any misunderstandings you may have with what I wrote; or more importantly what I personally think of Musk, which is anything but a genius.
In what world does someone signing an agreement explicitly waiving his due diligence, and then breaking it has the upper hand?
You have consistently suggested in this thread that Musk has likely uncovered some huge fraud Twitter has been hiding for years now. You have portrayed him as this smart guy who figured this out and is holding all the cards here.
Well guess what, Twitter just formally filed a lawsuit against Musk for breaching his agreement with them. I guess they’re not too worried about this huge conspiracy you think Musk is going to uncover.
Funny how I posted this in the morning, and later in the evening musk tweeted to confirm this was his intention. Discovery.
We get it, you hate Elon. You want him to lose.
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I'm not understanding your logic.
On 1 side, you say that Twitter is not worried because they filed a lawsuit.
But couldn't you say the same thing for Musk, if Musk is willing to cancel the deal even though he is subject to a lawsuit?
The reality is, almost all people people who have deep hate for Musk tend to show broken logic at some point during their rationale.
The $1B fee Musk stands to lose here (IF he loses the court case) is most likely less than the value Twitter will lose if they go to court and are forced to expose all of their data.
Elon has 2 scenarios if he loses
1. Pay $1B Fine
2. Acquire Twitter
Twitter current choices
1. Do nothing and focus on fixing/growing the platform
2. Go to court and get all of your data exposed which will result in either
a. Winning in court which will result in i. $1b (which is not going to be paid right away, and investors will lose in this scenario) or ii. getting acquired (all investors win)
b. Lose in court and completely put the company in a deep hole.
So, there is only 1 scenario where Twitter wins, and that is if Elon loses in court AND he DECIDES to acquire.
EVERY other scenario Twitter will be facing some serious heat.
So if anyone thinks Twitter has any sort of leverage relative to what they stand to lose, you really don't understand game theory.
Elon has 2 scenarios if he loses
1. Pay $1B Fine
2. Acquire Twitter
Twitter current choices
1. Do nothing and focus on fixing/growing the platform
2. Go to court and get all of your data exposed which will result in either
a. Winning in court which will result in i. $1b (which is not going to be paid right away, and investors will lose in this scenario) or ii. getting acquired (all investors win)
b. Lose in court and completely put the company in a deep hole.
So, there is only 1 scenario where Twitter wins, and that is if Elon loses in court AND he DECIDES to acquire.
EVERY other scenario Twitter will be facing some serious heat.
So if anyone thinks Twitter has any sort of leverage relative to what they stand to lose, you really don't understand game theory.
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If Mr. Musk loses this suit, he doesn't get a choice between paying the $1 billion termination fee or acquiring Twitter. (Though, of course, Twitter could at some point - e.g., if it believed it didn't have much chance to win the suit - decide to settle for a payment of $1 billion or some other amount.) This is a suit to compel specific performance.
The $1 billion termination fee only applies under certain circumstances. It isn't a get-out-of-the-deal-for-$1-billion provision. And, when it comes to Mr. Musk paying, the $1 billion termination fee only applies if Twitter decides to terminate the deal (because, e.g., Mr. Musk failed to fulfill certain conditions). There are no circumstances where it applies (i.e. where Mr. Musk has to pay it) if Mr. Musk decides to terminate the deal.
If Mr. Musk is determined to have (actionably) breached the contact, the remedy would be compelling him to fulfill his obligation under the merger agreement or, perhaps, ordering him to pay some as-yet-undetermined amount in damages.
You can check the lawsuit Twitter filed today for long and detailed documents.
You are right to a degree, but it appears you’re ignoring practicality, or just simply ignoring details in order to support your strength on twitter.
One of the circumstances that the $1b fine would apply to is if he is unable to secure debt financing.
As this has played out - there are plenty of reasons for investors to pull out as you can imagine.
This lawsuit itself can simply be seen as an indirect function to prevent the financing Musk needs for twitter.
I repeat - Twitter is not in a good spot.
I do need adjust the scenarios -
Twitters winning scenarios all involve Musk acquiring twitter via 2 methods.
1. Through legal action (unlikely).
2. Through renegotiating.
We all know the data that’s will come out if this goes to trial - and we all know it won’t be good for Twitter.
Their primary argument will be the contract - and they will differ from the data as much as possible.
Twitter has already made passive tweets against the bot claims - tweets that lack confidence. If they were truly confident in their data, they would make it crystal clear in public - as it would only help their value and argument.
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If you take it at face value that may be the case, but if you look at what he really did my original assertion holds. He didn't pay his tax liability directly from a cashless transaction of vesting options as normal rich dudes would - or anyone who has ever exercised options would. He paid a good chunk of his tax liability by selling preferred stock in which he had a much higher basis. Many people were confused at the time as this would create double taxation, but it would be the most optimal way to extract the most money from his shares if one were betting that the stock price was going to tank in the future. This allowed him to keep his much more profitable options that could still be worth something even after a massive stock correction as well as use them to maintain a control percentage in the company.
Effectively, he is shorting his own stock and using the pretext of complicated, but justifiably necessary, personal transactions to not spook investors while he does it. Things like paying personal tax liabilities or buying Twitter don't signal a lack of faith in the future of Tesla and are less likely to raise concern among investors than him directly cashing out to pump money into SpaceX or other ventures that are hemorrhaging, or whatever else he is going to do with the cash. Everyone that says he had to sell in order to settle liabilities ignore the fact that he has personally amassed billions of dollars in cash by doing it.
At the end of the day, Musk will pay a lot more in taxes as he moves to extract as much value as he can while convincing shareholders that everything is fine, but make no mistake he is converting equity to cash. Mostly by pumping and slowly offloading the stock every chance he can on the way down until it can no longer be sustained. This should be plainly obvious to anyone. It's should be no mystery that a guy so obsessed with defending his company's stock against short-sellers when the company is doing very little (and really can't do much) to capitalize on its extreme valuation is doing it for personal reasons.
EDIT: If I was entirely cynical I'd add that since it looks like Musk has sold almost his entire allotment of non-collateralized stock he is doing so ahead of the banks forcing him to cash out before the stock tanks. At this point he may not stick around as he would have no skin in the game and the price collapse that would trigger would probably leave many of them holding the bag and Musk laughing all the way to a different bank. But I won't go there yet.
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I was responding to someone saying Twitter has big secrets that will be outed in a trial. Twitter filing a lawsuit over this makes it pretty clear they’ve got nothing to hide in court.
No it doesn't, they HAD to file a lawsuit. They had a fiduciary duty to their shareholders. Otherwise lawsuits would have been filed against them anyway.
You are over thinking this. Any sane investor or tax advisor will sell lots with highest cost basis to minimize tax liability. This doesn't mean he/she is betting against stocks decline in the future. It just means that, in the event IF stock does decline in the future, like in this case, he/she would not have overpaid unnecessary tax. And it's an even further stretch that he's shorting his own stock. How many shares does he own vs how many shares he sold? If he truly wants to get out you would've seen him steadily selling Tesla shares throughout the years already.
I guess we’re soon going to see Twitters secrets out in the open then, and the prophet Elon’s claims will be validated for all to see!
Not necessarily.
It (most likely) means they feel like they think the upside of winning the court case is worth the risk of exposing their backend.
If Twitter was truly all good they would never waste their time on this lawsuit.
And I don’t think Elon musk is willing to risk his whole reputation and time in court without some real basis to his thought.
Game theory tells you that twitter is desperate.
How did it go from
We don’t want Elon to acquire twitter.
We don’t want to reveal data.
To
Force Elon to acquire twitter
Risk all data in court
…?
If you want to ask how the deal changed from twitter not wanting to be acquired to accepting Elon’s offer, I’d be curious to hear your thoughts on how Elon announced in 2018 he had “secured funding” to take Tesla private.
Elon is about as reliable as a magic 8 ball when it comes to the things he says. I don’t think Twitter even took him seriously at first, but the moment he verified he had the funds to make the deal happen the board voted to accept the deal because it was a good price for shareholders.
Of course, as is often the case Elon didn’t do the thing he said he’d do.
Now that the lawsuit has been filed in court.... both parties are now obligated to disclose EVERYTHING. Absolutely everything must be disclosed for possible evidence. Let the judge, lawyers, and jury (if it's a jury trial) decide which ones are relevant to the trial, and which ones are not.
Methinks that this trial will reveal bazilliions of skeletons in the closet..... Elon's closet, as well as Twitter's.
🍿🍿🍿🍿
Methinks that this trial will reveal bazilliions of skeletons in the closet..... Elon's closet, as well as Twitter's.
🍿🍿🍿🍿
I guess some actions that might appear meaningless and dumb to the casual observer in reality are very well designed to "shine a light" on the skeletons and inefficiencies of the companies. I believe Elon is just an instrument or an avatar through which this kind of stuff gets done.