Jump to content

Elon Musk: Visionary or Fraud?


MaybeACoordinator

Recommended Posts

Twitter has an unique role in shutting down some people's voice. Ban Elon and he would be like Trump in that most likely, he wouldn't be quoted much. Obviously you can go on TV (business or cable news) and make any comment but that involved more time, more advance notice and the possibility of being asked questions you don't want.

As humorous as it would be to see Elon banned from Twitter, I don't think they would unless he broke some other rule.

Break a deal, face the wheel. Not break a deal, get banned from Twitter.

Link to comment
Share on other sites

I love how people are all "TWTR will sue Elon." Like he gives a shit. 

Real commercial litigation against deep pockets defendants lasts years. If they sue him the end result will be in some conference room mediation many years from now for pennies on the dollar. 

People would be shocked if they knew how many corp litigation people have never had a jury trial. 

As for TWTR, if you sue, you are open to discovery on the bot and censorship question. Not really sure they want anyone to see how that sausage gets made. I would bet the bot number as WAY north of 5%

At any rate, I for one am entertained. 

  • Hook 'Em 3
Link to comment
Share on other sites

1 hour ago, Nice Guy Eddie said:

It's fair to say that Tesla is overvalued but it's difficult to say that is Elon's fault. I believe that he's actually said those very words. 

A scam would be raising money and not producing a viable product.

Turns out that twitter bots were critical to TSLA's inflated valuation that he's now trying to weaponize to buy twitter

Alanis Morissette Reaction GIF by MOODMAN

  • Haha 5
Link to comment
Share on other sites

6 minutes ago, Captainant said:

Turns out that twitter bots were critical to TSLA's inflated valuation that he's now trying to weaponize to buy twitter

Alanis Morissette Reaction GIF by MOODMAN

It really is like hiring Pamela Anderson for a role that is all about her showing her breasts, telling the world you know more about Pamela Anderson than she even knows about herself......and then saying "wait, Pamela, we need to renegotiate your contract because I don't know if you can prove your breasts aren't fake."

It's a non-argument.  Everyone knows her cans are fake, and everyone knows that Twitter's users are more than 5% bots -- even Twitter's public disclosures say that it's 5%, BUT, they can't guarantee that number, it could be higher.  No shit, Sherlock.

pamela-anderson-people-in-tv-photo-u73?a

  • Like 1
Link to comment
Share on other sites

1 hour ago, gsoda3 said:

how exactly would selling tesla shares to finance a twitter takeover be turning scam money into real money?

Tesla is a company that sells a few shoddy toys for city dwelling libs.  Tesla having a valuation higher than the rest of the industry combined is risible.  At the end of the day Tesla is a niche luxury brand and when/if EVs really take off it will be the big boys who make that happen, not Tesla.

Twitter may also be overvalued depending on how many of its users are actually real but its unlikely to be overvalued to the same degree as Tesla.

  • Hook 'Em 2
Link to comment
Share on other sites

47 minutes ago, bullzak said:

I love how people are all "TWTR will sue Elon." Like he gives a shit. 

Real commercial litigation against deep pockets defendants lasts years. If they sue him the end result will be in some conference room mediation many years from now for pennies on the dollar. 

People would be shocked if they knew how many corp litigation people have never had a jury trial. 

As for TWTR, if you sue, you are open to discovery on the bot and censorship question. Not really sure they want anyone to see how that sausage gets made. I would bet the bot number as WAY north of 5%

At any rate, I for one am entertained. 

I'm pretty sure I'd pursue the claim if I could recover one penny on each of the $44 billion he agreed to pay.

Link to comment
Share on other sites

I’m generally a fan of Elon, but this is getting embarrassing:

“I think it is important to be clear here that Musk is lying. The spam bots are not why he is backing away from the deal, as you can tell from the fact that the spam bots are why he did the deal. He has produced no evidence at all that Twitter’s estimates are wrong, and certainly not that they are materially wrong or made in bad faith. (Musk can only get out of the deal if Twitter's filings are wrong in a way that would cause a “material adverse effect” on Twitter, which is vanishingly unlikely.) His own supposed methodology for counting spam bots is laughable. Yesterday Twitter’s chief executive officer, Parag Agrawal, tweeted a threadexplaining in general terms how Twitter estimates that fake accounts represent fewer than 5% of its count of active users, and how this analysis can’t be easily replicated by outsiders (because they don’t know which accounts are real, and also because they don’t know which accounts Twitter counts as daily active users). It seems clear that Agrawal’s thoughtful answer is basically correct.[1] Musk responded with a poop emoji.”

Link to comment
Share on other sites

Also from Levine:

Quote

One fun thing to do with this proxy is to go through it and count how many times Musk violated US securities laws in his efforts to buy Twitter. For instance:

Also on March 26, 2022, Mr. Musk contacted Egon Durban, one of Twitter’s directors, to set up a discussion between Mr. Musk and Mr. Durban. Mr. Musk and Mr. Durban subsequently spoke on March 26, 2022 and March 27, 2022 and discussed the potential of Mr. Musk joining the Twitter Board, as well as the fact that Mr. Musk had purchased a significant stake of more than five percent of our common stock.  …

On March 27, 2022, Messrs. Musk, [the chairman of Twitter’s board of directors, Bret] Taylor and [Twitter Chief Executive Officer Parag] Agrawal discussed Mr. Musk’s interest in Twitter and potentially joining the Twitter Board. As part of that discussion, Mr. Musk stated that he was considering various options with respect to his ownership, including potentially joining the Twitter Board, seeking to take Twitter private or starting a competitor to Twitter.

Musk started buying Twitter stock in late January, and crossed over 5% on March 14. Under the securities laws, he had 10 days — until March 24 — to disclose this fact publicly. In fact he waited until April 4, disclosing his stake 11 days late. During this period — when he was legally required to disclose his Twitter stake, but had not — he (1) kept buying more stock and (2) had discussions with Twitter’s board of directors about taking over the company. That seems like it would have been material information, for the people who were selling him the stock!

Then, when he finally did disclose his stake on April 4, he did it on a form (Schedule 13G) that is limited to passive investors, checking a box indicating that he had “not acquired the securities with any purpose, or with the effect, of changing or influencing the control of the issuer.” Again, he was already in discussions about taking over Twitter or joining its board. He was very much not eligible to use Schedule 13G, and by using 13G — and representing he had no plans to influence the company’s control — he was lying to the US Securities and Exchange Commission and the market.

Then Musk negotiated a board seat and standstill with Twitter, which was made public; he filed a Schedule 13D, belatedly but accurately indicating that he was going to be an active investor. The 13D said that, while he was keeping his options open, he had “no present plans or intentions” to take Twitter private. A few days later he decided to scrap the standstill agreement and buy Twitter instead; again from the merger proxy’s background section:

On April 9, 2022, before Mr. Musk’s appointment to the Twitter Board became effective, Mr. Musk notified Messrs. Taylor and Agrawal that he would not be joining the Twitter Board and would be making an offer to take Twitter private. Mr. Agrawal informed the members of the Twitter Board of Mr. Musk’s communication.

That was a Saturday; that Monday, Musk filed an amended Schedule 13D announcing that he was not joining the board. This 13D said that he “might engage in discussions with the Board” about “potential business combinations,” but neglected to mention that he had already told Twitter he would be making an offer.

I don’t know; it all seems bad. The SEC is supposedly “investigating” Musk’s disclosure failures in this deal, and I suppose these admissions will help with the investigation, but what can they do about it? Fine him? He's so rich. Prevent him from buying Twitter? That’s what he wants! Ban him from running a public company? That is probably more drastic than the SEC (or a judge) could stomach, and will just lead to another annoying effort to take Tesla private. 

For Musk to pretend that he cares about Twitter allegedly misrepresenting how many bots it has to the SEC is pretty rich, even for him.

Link to comment
Share on other sites

13 minutes ago, Vegas64 said:

I’m generally a fan of Elon, but this is getting embarrassing:

“I think it is important to be clear here that Musk is lying. The spam bots are not why he is backing away from the deal, as you can tell from the fact that the spam bots are why he did the deal. He has produced no evidence at all that Twitter’s estimates are wrong, and certainly not that they are materially wrong or made in bad faith. (Musk can only get out of the deal if Twitter's filings are wrong in a way that would cause a “material adverse effect” on Twitter, which is vanishingly unlikely.) His own supposed methodology for counting spam bots is laughable. Yesterday Twitter’s chief executive officer, Parag Agrawal, tweeted a threadexplaining in general terms how Twitter estimates that fake accounts represent fewer than 5% of its count of active users, and how this analysis can’t be easily replicated by outsiders (because they don’t know which accounts are real, and also because they don’t know which accounts Twitter counts as daily active users). It seems clear that Agrawal’s thoughtful answer is basically correct.[1] Musk responded with a poop emoji.”

LOL.  No way that's a "material adverse effect".  People sue as to whether an MAE has occurred pretty frequently, and I think Delaware has only ever agreed there was an MAE in one case.

Link to comment
Share on other sites

6 minutes ago, Keef said:

LOL.  No way that's a "material adverse effect".  People sue as to whether an MAE has occurred pretty frequently, and I think Delaware has only ever agreed there was an MAE in one case.

There's also the whole thing that one of his first statements regarding the purchase was about his desire to acquire Twitter because of the spam bots, so he could get rid of them.

  • Hook 'Em 1
Link to comment
Share on other sites

Tesla is a company that sells a few shoddy toys for city dwelling libs.  Tesla having a valuation higher than the rest of the industry combined is risible.  At the end of the day Tesla is a niche luxury brand and when/if EVs really take off it will be the big boys who make that happen, not Tesla.
Twitter may also be overvalued depending on how many of its users are actually real but its unlikely to be overvalued to the same degree as Tesla.
Just because Tesla is overvalued doesn't make it scam. Him buying Twitter has nothing to do with making his money legitimate.

Link to comment
Share on other sites

LOL.  No way that's a "material adverse effect".  People sue as to whether an MAE has occurred pretty frequently, and I think Delaware has only ever agreed there was an MAE in one case.
Elon's argument is it's a MAE since it drives revenue in a brand advertising model where there are no quantifiable interactions. Part of the calculus in turning around a company is how can you do it without cratering revenue?
So as much as it reeks of buyer's remorse I think he has a point. However:

- Parag should tell him to pound sand. He has no obligation to oblige Elon publicly. Elon can send in auditors and if then they find something untowards that changes things

- Elon challenging Twitter's claims of 5% should have occured before a bid was given. Saying he relied on Twitter's public statements like any other investor is accurate to how the process usually occurs but he can't withdraw that bid now based on a claim of incomplete information.

Link to comment
Share on other sites

14 minutes ago, wildcat09 said:

If Twitter wants him to pay it, they'll have to go through years of litigation.

They will go through the litigation if necessary - they won’t walk away from the break-up fee.

Link to comment
Share on other sites

Posted (edited)

https://www.bloomberg.com/news/articles/2022-05-17/musk-has-a-bigger-problem-than-bots-a-huge-twitter-debt-burden?srnd=premium

 

Quote

Elon Musk may be directing his buyer’s remorse at Twitter Inc.’s bot problem. But underpinning the deal is a $13 billion debt bill that’s looking like a bigger burden by the day.

The package, drummed up in a rush and signed by banks before the end of the billionaire’s beloved April 20 weed holiday, will leave the social media platform with an annual interest expense approaching $1 billion, giving the company an alarmingly small margin for error.

To sober-minded credit analysts, second thoughts about the deal are to be expected.

 

Quote

The purchase will be funded with a leveraged loan and high-yield bonds. CreditSights estimates this will dramatically increase Twitter’s annual interest expense to around $900 million, while Bloomberg Intelligence sees $750 million to $1 billion.

With numbers like those, Twitter looks poised to burn cash, boosting the pressure on Musk to transform the company by finding new sources of revenue and slashing costs. That’s even the case with Wall Street analysts estimating record earnings in 2022, though those rosy forecasts could be imperiled if predictions for a US recession -- Musk said Monday one is already under way -- come true.

 

Quote

“This is just a bad capital structure to put on a business like Twitter that has never proven to be highly profitable,” said John McClain, portfolio manager at Brandywine Global Investment Management. “It’s been a public company for quite some time and they never have seemed to really figure out how to attractively monetize the consumer.”

 

Spoiler

Musk himself is casting doubt over his own deal, saying this week that he won’t proceed unless Twitter proves bots make up fewer than 5% of its users. 

 

Debt is only one of three components of Musk’s financing. He’s found 19 other equity investors to join him in $27.25 billion of equity commitments. And he’s taken out a $6.25 billion margin loan against his Tesla shares, but he’s currently trying to replace that by bringing in preferred equity investors, which could include Apollo Global Management Inc. and Sixth Street.

Bankers pulled all-nighters and worked through the Easter and Passover holiday weekend, rushing to meet Musk’s April 20 deadline to build the financing package. What they cooked up will take Twitter far deeper into debt, boosting its interest costs from $53.5 million during the past 12 months.

That gives Musk little room for error, though he’s not on the hook for the debt. As is typical in a leveraged buyout, Twitter will be stuck repaying if anything goes wrong, while Musk and his fellow equity investors can only lose the cash they put into the deal.

“Leverage is really high and free cash flow is going to be negative out of the gate, so that certainly adds an element of risk to the deal,” Jordan Chalfin, a senior analyst at credit research firm CreditSights, said in an interview. “Twitter really needs to grow into their capital structure and drive earnings higher in order to cover both their capital expenditures and their interest expense.”

Fears are also growing that a recession could be on the horizon, which would make this an even worse time to load debt onto Twitter, as most of its revenue comes from advertising. “In a poor macroeconomic background, the first things that companies pull in terms of marketing budgets is advertising spending,” said Bloomberg Intelligence analyst Robert Schiffman. 

Meanwhile, selling corporate debt has gotten more difficult in recent weeks. Rising rates have hit junk bonds the hardest, and the average yield, a proxy for the cost of borrowing, has increased by more than a full percentage point since banks agreed to the Twitter deal to about 7.6%. The leveraged loan market has cooled, too.

Analysts see Twitter posting record earnings before interest, taxes, depreciation and amortization of $1.67 billion in 2022. Twitter has forecast roughly $925 million of capital expenditures. Deduct that and Twitter’s newly increased interest expense from its Ebitda, and the company would be burning through cash.

If Musk successfully grows Twitter, the debt load would become more manageable over time, and the company could hit neutral cash flow in 2023 and positive cash flow in 2024, Chalfin said. If Musk can’t make good on his promises to turn around the company, the debt load could become a problem.

Twitter does have about $6.3 billion in cash and short-term investments that could support burning cash for a few years, Bloomberg Intelligence’s Schiffman said.

 

Edited by Francisco 2.0
  • Hook 'Em 1
  • Fuck Around and Find Out 1
Link to comment
Share on other sites

Good for them:

 

https://www.axios.com/2022/05/17/elon-musk-twitter-will-enforce-merger?utm_source=twitter&utm_medium=social&utm_campaign=editorial&utm_content=technology-musktwitterenforce

 

Quote

Twitter's board said Tuesday that it plans to "close the transaction and enforce the merger agreement" between Elon Musk and Twitter, The New York Times reports.

Driving the news: "The board and Mr. Musk agreed to a transaction at $54.20 per share," Twitter's board said in a statement to The New York Times. "We believe this agreement is in the best interest of all shareholders. We intend to close the transaction and enforce the merger agreement.”

This followed an earlier statement from Twitter that said it was “committed to completing the transaction on the agreed price and terms as promptly as practicable."

 

Quote

Twitter’s board urged shareholders in a regulatory filing Tuesday to vote in favor of the deal.

The big picture: Musk said last week that the $44 billion deal with Twitter was "temporarily on hold" until CEO Parag Agrawal publicly proves that less than 5% of users are bots or spam accounts.

"My offer was based on Twitter's SEC filings being accurate," Musk said in a tweet. "Yesterday, Twitter's CEO publicly refused to show proof of <5%. This deal cannot move forward until he does."

Yes, but: Musk currently has a contractual obligation to buy Twitter at the agreed price, Axios' Felix Salmon writes.

 

  • Fuck Around and Find Out 1
Link to comment
Share on other sites

6 hours ago, gsoda3 said:



- Elon challenging Twitter's claims of 5% should have occured before a bid was given. Saying he relied on Twitter's public statements like any other investor is accurate to how the process usually occurs but he can't withdraw that bid now based on a claim of incomplete information.
 

That’s sort of interesting to think about. Had he actually done that diligence and received information about the bots that would make him want to back out, he’d arguably be in possession of material non-public information. Twitter doesn’t disclose that information and obviously wouldn’t agree to cleanse him, so he would have been locked up in his position for…a while? Who knows when that info goes stale. I have no idea if he was acting on advice at the time, but agree this sounds like buyer’s remorse. 

Link to comment
Share on other sites

So deals have termed and conditions; this one was publicly announced before any of that was hashed out. Mostly because a)Elon in a huge attention whore,  b) there was due diligence still remaining to be done and c) Elon is an attention whore

Link to comment
Share on other sites

Posted (edited)
On 5/17/2022 at 10:51 AM, gsoda3 said:

how exactly would selling tesla shares to finance a twitter takeover be turning scam money into real money?

because, maybe, it was never about actually buying Twitter but only saying he was going to buy it. Then he sells his TSLA and as of right now he is sitting on cash and when (if) this deal completely falls apart then Elon (and all of his buddies & financiers) will have cash instead of TSLA (or whatever else they sold to free up cash) and then they can do as they damn well please with the funds. Including buying $44 billion of lower priced stock; or that whole world hunger/student debt/water shortage/name your favorite crisis thing.

Then again, depending on where TWTR stock falls after there is no buyer, Elon might have to use that cash to fill the hole in his wallet from the shares he already has purchased; and it TWTR will fall even more if he dumps his on the market.

Edited by Wally Fairway
Link to comment
Share on other sites

21 hours ago, gsoda3 said:

Saying he relied on Twitter's public statements like any other investor is accurate to how the process usually occurs

I'm no lord of high finance, but I seriously doubt takeovers are based on public statements and other info available to we common folk.

Link to comment
Share on other sites

Shamelessly stolen from the Ars Technica comments section:

https://arstechnica.com/tech-policy/2022/05/twitter-board-tells-elon-musk-we-will-not-alter-the-deal/?comments=1

 

I… hurt my stock today
To sabotage my deal
Focus on the price
the only thing that's real

The NDA tears a hole
the old familiar sting
Try to tweet it all away
but the media remembers everything

What have I become
my scam-filled friend
every promise I make goes away
in the end

and you could preorder it all
my empire of scams
I will let you down
I will make you hurt

  • Hook 'Em 2
  • Like 1
  • Haha 4
Link to comment
Share on other sites

18 minutes ago, Wally Fairway said:

because, maybe, it was never about actually buying Twitter but only saying he was going to buy it. Then he sells his TSLA and as of right now he is sitting on cash and when (if) this deal completely falls apart then Elon (and all of his buddies & financiers) will have cash instead of TSLA (or whatever else they sold to free up cash) and then they can do as they damn well please with the funds. Including buying $44 billion of lower priced stock; or that whole world hunger/student debt/water shortage/name your favorite crisis thing.

Then again, depending on where TWTR stock falls after there is no buyer, Elon might have to use that cash to fill the hole in his wallet from the shares he already has purchased; and it TWTR will fall even more if he dumps his on the market.

no.  if he was looking to sell TSLA he would've just sold it.  discretely.  he wouldn't have announced a potential takeover of another company using TSLA shares as collateral or the cash from shares as a means of financing.  everyone and their mom front-ran him on selling TSLA. 

8 minutes ago, Fudge Nuggets said:

I'm no lord of high finance, but I seriously doubt takeovers are based on public statements and other info available to we common folk.

 

you'd be surprised then.  sometimes, if the two parties are amenable, the target will open their books to the acquirer.  otherwise, as in this case, it's based on public information and whatever private due diligence the acquirer performs.  

  • Hook 'Em 1
Link to comment
Share on other sites

15 hours ago, StruggleBus said:

God I fucking hate lawyers 

Haha except when you need them.  He’s going to spend a lot of his fake Tesla money on lawyers and wind up settling on paying Twitter half the walk away fee.  Everyone wins.

Link to comment
Share on other sites

Posted (edited)
15 minutes ago, gsoda3 said:

no.  if he was looking to sell TSLA he would've just sold it.  discretely.  he wouldn't have announced a potential takeover of another company using TSLA shares as collateral or the cash from shares as a means of financing.  everyone and their mom front-ran him on selling TSLA. 

 

you'd be surprised then.  sometimes, if the two parties are amenable, the target will open their books to the acquirer.  otherwise, as in this case, it's based on public information and whatever private due diligence the acquirer performs.  

Yeah. Eve Williams, who was by far Twitter's largest shareholder when it went public, has been methodically selling his stake in Twitter for the last 9 years. Quietly and regularly, up or down, to divest his ownership.  You don't have to do anything fancy to do it, just not dump them all at once.

Edited by Bateshorn
Link to comment
Share on other sites

18 minutes ago, Fudge Nuggets said:

And how many deals of this size or similar are done with no due diligence?  Other than Mr. Attention Whore here, I can't think of any other examples.

if you're serious about a takeover you perform due diligence.  if you're a tweet jockey riding the emotional waves of a 280 character limit you're more prone to writing checks even the richest man in the world can't cash.  from the beginning i didn't think he was serious about a takeover.  he claims he's been thinking about this since last november but to date he hasn't spoken to any serious steps traditionally taken in an m&a effort that would lead me to believe he plans on following through.  

 

Link to comment
Share on other sites

28 minutes ago, Hefeweizen said:

Haha except when you need them.  He’s going to spend a lot of his fake Tesla money on lawyers and wind up settling on paying Twitter half the walk away fee.  Everyone wins.

We should get rid of lawyers and bring back dueling 

Link to comment
Share on other sites

15 minutes ago, royiv said:

Interesting strategy from a man who has his wealth tied up in a company that sells a lot of cars to libtards. It will be interesting to see if he continues to double down and if it begins to impact sales.

Doesn’t he depend on a lot of government subsidies? Pretty smart to align with the party likely to run the table in November and potentially 2024. That’s all this is. 

  • Hook 'Em 1
  • Like 1
  • Fuck You 5
Link to comment
Share on other sites

23 minutes ago, Immaculate Vibes said:

Doesn’t he depend on a lot of government subsidies? Pretty smart to align with the party likely to run the table in November and potentially 2024. That’s all this is. 

That can easily be done behind the scenes. Musk has some Rocko in him and clearly loves attention whether it's good or bad.

 

Link to comment
Share on other sites

33 minutes ago, wildcat09 said:

Translation: he's about to be sued by the SEC.

At some point, it seems like a shareholder class action could also be headed his way.

  • Hook 'Em 1
Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.



Ă—
Ă—
  • Create New...