There's another belief floated by Josh Wolfe (an investor with Lux Capital) who claimed it was a ruse to liquidate Tesla stock en masse without Tesla hodlers getting suspicious and tanking the inflated stock price.
If someone's stock is as incredibly overinflated as Tesla has been for so long, choosing the most effective way to liquidate stock without triggering a run becomes a social engineering problem with the incentive of a multi-billion dollar payoff.
Honestly I think other people trying to read this situation in some way that ignores a multi billion dollar incentive just sitting there is utterly naive.
It also does not make sense to do this kind of fraud, as Tesla stock will surely tank on the news of it being used as a collateral in an acquisition deal.
Nah, the "everything is securities fraud" trope is qbout some (usually immoral) behavior that a shareholder argues would materially affect the stock price, and which was not disclosed to shareholders.
Elon Musk announcing some M&A news with the intent of effecting price changes in TWTR,TSLA securies would be pretty boring, vanilla securities fraud.
Though it's weird to me that it's fine to sell stock just because you want to, but pretending you didn't want to could qualify as securities fraud.
And that seems to be what the concern boils down to? The issue of whether he defrauded twitter is a separate thing. (Though I'm inclined to say no, because twitter came at this in a very skeptical and careful way, and normal fraud requires fooling someone into material loss.)
Having driven Twitter's value down by $15B, I can't imagine Musk won't be sued by shareholders for it, since his claims of fake accounts are as yet unproven. The same goes for the damages this little venture has inflicted on Tesla stock. The SEC and FTC are likely to cost Musk Enterptises a pretty penny in legal fees before all of this ends.
The $1B penalty for backing out of the Twitter deal is the least of Musk's concerns.
it's somewhat hard to argue that musk is responsible for the decline given that the entire NASDAQ is also down. you might be able to find some contribution, but only a relatively small amount of it.
But Musk set the price at $54 by agreeing to buy Twitter at that price. If this deal were guaranteed to go through, shares should be trading at that price until the sale is complete. Trading at above that price means shareholders would lose money at closing, and trading at below means someone is leaving money on the table. Market forces should cause the price to converge at $54.
The fact that it’s trading lower means that investors don’t expect the deal to go through. And who exactly as been doing his best to very publicly bring the deal into question? Elon Musk.
If he was the only thing dragging twitter toward $54, and then he stops dragging it as hard, it's hard for me to see that as driving value down. If he hasn't caused any other damage, that's just twitter returning to its natural value.
> Sure, let’s pretend the entire market hasn’t sunk.
Why does that matter? Musk agreed to buy Twitter for $44 billion. If he comes through, that's the value of Twitter. If he doesn't, then the value is something else. The difference between $44 billion and fair market value is just the expectation of investors that Musk really will pay. So yeah the drop really _is_ due to Musk trying to back out of the deal. If Musk weren't backing out of the deal, then then Twitter's value shouldn't drop regardless of the fact that the rest of the market has.
Mens rea is a necessary but not sufficient component of proving a criminal charge - the defendant intended to break the law. Actus reus is also required, which is actually doing the act.
US law doesn't "judge by intent". If you try to murder someone but you don't succeed, you don't get charged with murder.
Yes, I agree with you and I should have worded my comment better.
To keep with the murder example, intent is what separates 3v2, in most states. Yes, a crime was committed but was the intent to cause bodily harm vs actions causing bodily harm, without intent.
As Levine has repeatedly stated he didn’t “waive due diligence”. It was a binding purchase agreement. It’s meant to come after all of the due diligence.
He didn’t waive his right. He just opted not to do any before buying.
We've had the Teflon Don, now we have the Teflon Elon.
I'm sure he'll be able to weasel his way out of this. He'll spend a crap ton of money to lawyers just to be able to say he doesn't have to pay for it, but he's still paying for it on a smaller scale and not in public. Anything to put up another W on the scoresheet.
The counter point here is that the Twitter board is not poor, and the incentives to force the buyout (or at least extract more money from Musk) are huge.
Yes, and they are the side I'm cheering for in this match. Even if Musk is forced to pay, I doubt it will slow his twitter tirades down. In fact, I'd expect him to come out harder to prove whatever his little ego thinks needs to be proven.
Applying unrelated leverage between two parties is usually not looked at favorably by court. And court is likely where the musk/twitter thing will be settled.
There is no option 2. That was a proviso in case Elon was unable to secure financing. He secured financing, so now he has to buy Twitter. Or they can sue him.
The clause about the $1B penalty says nothing about separation. That clause only activates if the deal is stopped by some outside entity, such as the SEC, or if the two parties mutually agree to stop the process.
In all other cases, Elon has committed to give them $44B in exchange for the company.
What reads like simple English to you or I does not get read the same way by lawyers. Once lawyers are involved, all reasonable logic goes out the window in my perspective.
Ever since what "the definition of 'is' is", my whole outlook on lawyers was just obliterated.
Not for sure why you're downvoted, because you're right. Lawyers do not operate on logical basis. They operate on interpretations of logic. I found this out when buying my house. Interacting with the lawyers was completely miserable because they live in their own little world. They expected me to just know things that they would poorly specify, requiring several emails to clarify, and then when I would point out mistakes, logical inconsistencies, or poorly defined things in the contract, they would just shrug it off or sort of grudgingly fix them, seemingly just to appease me. Then they would just dig their heels in the ground about what the contract "says" because the contract "says so", even though it made no logical sense. Because the contracts aren't what they say logically. They say what they say based upon a sort of colloquially agreed upon interpretation of them. Lawsuits then center around this colloquial agreement and not around the contractual logic. It's an excruciatingly frustrating world to be introduced to. I wish to never have to deal with lawyers.
> Ever since what "the definition of 'is' is", my whole outlook on lawyers was just obliterated.
Is that in reference to something? Got a link or an article or something?
>Is that in reference to something? Got a link or an article or something?
Very much yes[0]. It was one of the defensive lines from Bill Clinton. I was still in high school during this, and it set me on a very bad path of thinking how to twist anything and everything anyone ever said. After all, if the pres can do it, then we should all be able to do it.
I have accepted that I will eventually see Musk put behind bars--all of a sudden--by the SEC. I get the sense that they are always building a case on him. He would be a great "Martha Stuart."
SEC can only levy civil penalties, criminal (aka jail) is another matter. Which they are happy to refer to the relevant prosecutor, it just isn’t their job at that point.
I wondered this early on. More so when I thought he would actually buy twitter as Twitter had had some serious share price decline at that point for over 6 months, so it's a way to shift money from an inflated area to a more moderately priced one. Plus he obviously likes the platform in general.
If true, I don't think it's the case he did it intending to pull out. Seems unlikely he would have signed the billion dollar exit clause when he could have easily dragged the initial talks on a bit longer for largely the same result before 'changing his mind'.
My best guess is the offer was genuine (thought impulsive) but as he's seen the price drop further, now his offer seems too much. Why pay $44bn for a sub $30bn company. Kinda simple but seem most likely than all these more complex theories.
Happy to have a conversation with you on reasoning, and apologise if I'm wrong in how I read your reply message, it feels like a curt criticism statement, not add value to discussion.
But anyway, yes I believe it is possible to be impulsive followed by more logical decision making. This process seems fairly commonplace in the world I observe.
I apologize for being curt, I thought my statement was obvious. Here's some lines from your comment
"If true, I don't think it's the case he did it intending to pull out. Seems unlikely he would have ......
My best guess is the offer was genuine (thought impulsive) but as he's seen the price drop further, now his offer seems..
"
Considering his impulsive behavior, which has prior occurrences. 1. Making an immature derogatory remark to one of the people trying to assist with that cave rescue. 2. His statement that he was taking tesla private that he retracted later 3. This situation..
Why do you think he's acting logically now? Why is it your best guess? Your words
> Why do you think he's acting logically now? Why is it your best guess? Your words
1) As said, its not uncommon to act impulsively, followed by more logical decision making after. From your examples, I dont feel listing a few impulsive cases removes his ability to act logically. And the sequence I've guessed seems the most likely in my kindly eyes.
2) Because its not my second best guess, or any other.
I think we have a disconnect on probability and booleans. Elon musk can act logically or impulsively. Each historical act of impulsiveness increases the probability of future impulsive acts
I feel there is huge profitability growth potential there. If you look at the better quarters the revenues can be significant. If you ran that against a lean headcount and were genuinely A-political there's really a money maker there potentially.
That said the risk is huge as the world can move on quickly as we saw with MySpace. And Elon s becoming increasingly a political risk factor himself in a business were peoples view on the leaders/owners really matters.
My point is he can pay more because he believes he's going to make much more in the future. There is a downturn but most people suffer downturns through life and hold through them. It's just childish to back out now but I would expect that from him.
His views really don't matter. Nothing happened to Facebook and nothing will. People will just continue fighting (tweeting).
I see you point, but being childish in backing out may not mean much if you feel you're overpaying $14bn, or if not him his funding partners. People have a much stronger emotional response to losing something than gaining something.
But really who knows. Maybe he realised he had too much on his plate, or any number of things.
I think the incentive you mean is to move out of a stock you think is overvalued (I agree about that). But that works with any purchase, not just Twitter. And with that motive in mind, Twitter would be a really unwise company to buy, when there are so many companies available with actual asset value around. Wouldn't you rather buy something with your over-inflated stock that had some value-preservation attributes? For example, you could buy a mining stock, or a railroad. With Twitter, you're going from the frying pan into the fire.
He could sit next to whatever dark lord descendents currently run Ford, for less. But that would make Tesla into a serious car company; which is a real business deal, for someone serious about changing the world.
This is just one of the impacts of the high potency products at the local cannabis dispensary. You can't function if you wake and bake on that shit.
If he was able to exit his Twitter stock position after the jump in price he created it would wash out the $1B.
If he exited TSLA to the tune of the remaining $10B or $15B, staving off a 50% decline in that value then he came out way ahead.
It seems very likely to me he will find a way out of the $1B fee and end up settling for some fraction.
Of course if he just borrowed against his TSLA to facilitate this deal, as I have read he did, then his profit on the move depends on the terms of the loan.
The $1B termination fee is the tip of the iceberg. Changing your mind is not covered in the termination clause, and his evidence Twitter mislead him is contradicted by his own statements prior to the deal. Twitter is owed substantially more than a billion. Likely closer to ten.
He sold something around $10 (+/- 2) billion of Tesla stock. The loans don't matter as they were (a) tied in to use only to buy Twitter and (b) allowed to expire last month.
It's not just the potential impact upon markets. Shareholders of that size have legal obligations as well. If you own that much of a company you are specifically and legally precluded from selling it all at once in many circumstances. Bill Gates could not sell his entire Microsoft stake all at once back in the day into an open market as it might cause the security to drop significantly and for other, legal reasons. Certainly, the securities exchange act of 1934 requires disclosures of certain sales of shareholders above a certain percentage of shares of publically traded companies, but also more nuanced and exacting laws regarding national security interest prohibit the sales of securities and ownership to specific parties or foreign interests. When the scale of your ownership stake is in the billions, that certainly limits the potential buyers of the entire stake to a short list.
The deal includes a "specific performance" clause, which allows Twitter to force Musk to carry out the deal. He can't simply pay $1 billion and walk away, he's in for a very messy legal fight. This pretext about bots is incredibly weak and he's in no way guaranteed to win.
If this really were part of some grand master plan, I think he would have left himself an easier out.
It also depends on what the Twitter board and shareholders want. Will they want to get bought out and owned by someone who clearly doesn't want to own the company, and may run it into the ground out of spite? Certainly some shareholders will just want to take the money and run (the agreed-upon buyout price is quite a premium over the current stock price), but others will be more interested in protecting the future of Twitter as a company and platform.
Agree that there will be a massive legal fight, but my guess is that it will be over how much extra Musk has to pay to get out of the deal (beyond the $1B breakup fee), than over making him perform. But who knows; only time will tell.
He's constantly dragged the company and founders through the mud and the stock dropped 7% once he called the deal off.
I'd sued and settle for a few billion instead of taking the one billion backout
He uses his wealth as a weapon against companies he doesn't like, just the mere threat he may get involved causes massive changes in the stock price
and in turn causes investors to suffer financial lose.
> He uses his wealth as a weapon against companies he doesn't like, just the mere threat he may get involved causes massive changes in the stock price and in turn causes investors to suffer financial lose.
Reminds me of Bitcoin "whales". It's a shame that this guy is the figure that will take humanity to Mars.
> It's a shame that this guy is the figure that will take humanity to Mars
That's just more BS from him. He'll just keep kicking the can, resuming the project with some spectacular stunt every time he needs it. Everything Musk does or says is just a performance to manipulate the markets.
I think the Mars stuff is the least likely to be BS. There's been ongoing, real advancement towards the goal for over a decade now, advancement serious enough that NASA's picked them to land their astronauts on the Moon with their Mars rocket.
A permanent colony seems like the sort of thing he'd get bored with, though.
Establishing a colony on another planet is going to require a monstrous amount of money, time and resources. I doubt a single country could manage it (look at what it takes to run the ISS, and that's a joke comparse to Mars), but there are zero chances a single man, no matter how rich, is going to do more than a dent in that enormous task.
Solving the technology problem is just the tip of the iceberg.
> there are zero chances a single man, no matter how rich, is going to do more than a dent in that enormous task... Solving the technology problem is just the tip of the iceberg.
Agreed, but enabling folks to get there makes it possible.
Musk doesn't have to build the colony to have made it possible, and it seems to be the thing his attention is genuinely invested in.
> Agreed, but enabling folks to get there makes it possible.
It doesn't. Getting a few people to Mars alive does not a colony make. And even that sentence is misleading because while getting to Mars orbit is certainly challenging but that's something I can see humanity capable of overcoming with current technology. Although we never kept humans in space for 2-3 years before which is just the travel there so we don't really have any idea what will happen to them but let's pretend.
Landing very fragile humans on Mars, however, is a much, much formidable challenge. The heaviest object we have managed to soft land on Mars, so far, is the 1025kg Perseverance rover. The Apollo Lunar Module carried two people and was 4280kg dry weight. Of course, you don't need to ascend -- getting those people back to Earth is not even considered by anyone sane -- but still, it shows there's a problem here. And that was two people. And you need everything for them to live on the surface, including air and water and that's even more weight that you can't just slam those into surface at the ~20 000 km/h the spacecraft will approach either.
It would be just about infinitely better if he tried to show off with climate change combat projects. If you want to show off, a vast forest would be much better, much easier to achieve and so much cheaper. He could build storage for renewable energy, these are also sufficiently massive to be good for showing off. And so forth. There are easy but significant things one such as him could do. For a more formidable challenge, elevate the Brazilian people so they don't need to burn the Amazon.
We already have a terraformed planet but the climate is changing in a way which is incompatible with the way humanity currently exists. It would be prudent to change both -- while the change is inevitable it could be slowed and humanity could change too. Once we bought time, we can wait until material and other sciences make space elevators possible and then we can send robots to Mars to build a space elevator too and then we can begin to think about colonizing Mars.
If Starship can get reusable, zero-disposable flight working, and on-orbit refueling, all of those issues become quite surmountable. Mass to Mars (or the Moon) ceases to be "what's the most we can fling in a single launch", and the flight can be shorter if you can depart Earth orbit with a lot more fuel. I can't find numbers for the current iteration, but they were batting around 90-110 day transits with the older ITS proposal.
You start talking about being able to build propellant depots in Earth orbit, build Aldrin cyclers, send large amounts of supplies (or even a whole station on the slow, efficient route) in advance to Mars, etc.
Mars landing of objects is now a TRL9 problem that has been solved already, and the science has moved forward greatly [1]
Recent rover landings happened at what, < 1 M/S ? which is well within the capacity of the human body.
Considering that Mars atmosphere is substantially thinner, and gravity there much weaker, landing there would be different from Earth anyways.
We are not currently employing any of the more cost efficient methods of getting things to orbit in the first place, for large scale missions of epic size, nor are we currently employing the most efficient propulsion types.
The way I see it, the biggest problem is not one actually being discussed which are the longterm effects on the human body of living on a planet without a protective atmosphere, and protective magnetic field [2]. If getting mass to space becomes less of a financial constraint due to more efficient launch mechanisms, then, shielding would much less of an issue because mass in space would be cheaper [3]
I think that much of these problems come down to the huge capital cost, and unsolved problems around low cost launches; the novel technologies that need to be developed & turned into a new space launch system, and no, i am not talking about traditional rockets.
There’s no problem with landing. The weight limitations you mention are entirely a factor if the current “it has to all fit in one rocket launch” limitation.
Our current technology is capable of doing everything you listed and more. The problem is their cost. There is no point to doing it while the cost is this great and there is absolutely no monetary return from doing it. And Musk's effort has been for reducing that cost so that he could do it with the capital he has.
If need be, large countries that have the technology like China, Russia, US could do it. But it would still require gigantic amounts of capital allocation and effort at this stage. So no one will do it. The biggest thing that is happening right now is China and Russia signing an agreement to build a base on the moon. (yes)
The hard part is getting significant amounts of material into space. Once you do that you can do anything there. Go to Mars, build O'Neil cylinders or even make your own asteroid mining factories up there.
Likely is putting it quite mildly - it's likely to cause a premature death in the same way that throwing yourself off the empire state building is likely to cause some injury.
The Americas were divided among people (original inhabitants, and later colonies), and many countries & people weren’t recipients. But I’d still say that humanity has reached America.
Your second sentence makes no sense. If the board and shareholders sell the company, "they" aren't owned by anyone. The board is no longer the board and the shareholders are no longer the shareholders. They're just a bunch of regular people holding big bags of money.
It's like if you sell your car to a dangerous driver: you have no financial stake in whether they go on to crash it.
> It also depends on what the Twitter board and shareholders want. Will they want to get bought out and owned by someone who clearly doesn't want to own the company, and may run it into the ground out of spite?
Uh, yes?
The shareholders, and the board as their agents, care about the company as a means to an end: and that end is making money. They’ve already concluded the sale achieves that goal.
If Musk wants to burn the company to the ground after they cash out, they don't care.
Heck, some of them may invest in competitors after the sale banking on that to make even more money.
The board already willfully agreed to sell him the company and the deal is even better now than at the time they made it. Why would they also want to drop the deal?
The notion that the board is all of a sudden worried about what Musk might do with Twitter is about as silly as Musk thinking he can weasel his way out of a binding contract he already signed.
If you talk to random people in a democracy, they can't vote their interest even if they wanted to, because they don't know what's actually affected by politics and what isn't.
Some people switched to culture/values voting (ie, telling other people what to do), some people just enjoy winning and so vote for whoever they think is going to win.
Never underestimate the incompetence of the average human. Doubly so if they are rich and powerful. In fact if a master plan has several fatal flaws on closer inspection, then that’s just evidence that the perpetrator just didn’t think it all through before executing.
If you watch an amateur chess game you’ll find that most players actually have some master plan, but don’t have the skills to see the flaws, or even if the plan is perfect, they don’t have the skills to play it through either.
My sniff test for any conspiracy theory actually involves incompetence. The more competent the plan and execution need to be, the less likely it is to be a conspiracy.
I don't see how you can simultaneously believe that this is some 4D chess move from Musk to allow him to cleverly liquidate his Tesla holdings without tanking the stock - and also believe he is too incompetent to make sure he could actually back out of the Twitter deal which he never intended to complete in the first place.
The fact that his supposed plan here has some flaws is not _further_ evidence that it was planned from the beginning, that's absurd.
It seems much more likely that buying Twitter was just an impulsive decision for him that he is now regretting and looking for a way out of.
I agree with you that many supposed conspiracies require too much competence in order to pull off, and can usually be dismissed as impossible to achieve in practice. But it doesn't follow that, as a consequence, any action that would be incompetent as part of a conspiracy should be considered evidence that a conspiracy exists.
I don’t know if you’ve ever played chess against a more skilled player. But when I play, I usually think I have a sure way of taking my opponents rook for a knight, only to realize too late that I’m stuck in a trap.
You only need to be competent enough to realize how markets can be manipulated to initiate a conspiracy, however successfully executing one requires a whole new master level of skill set. Off course the people with such skill set exist (as evidenced by the numerous market manipulation schemes successfully executed in today’s business world) and if Musk was smart he would hire such an expert to scheme it for him.
What we might be witnessing here is a business person that is smart enough to realize that market can be manipulated, and see a position to where they can execute such a manipulation, but not competent enough to execute a non-trivial plan without flaws. And worse not smart enough to hire a person with the correct skill set to do it for him.
For me, flat Earth. The sheer skill necessary to bribe or convince so many governments to gaslight their population, the incredible optics and geodesics work necessary to fake a curved horizon in a plane window and have consistent flight durations, and the maintenance of shadow power across millenia, paints the picture of a group of people way beyond what human competence can achieve.
Of course, there are simpler examples, like John Titor, or Pierre de Fermat’s last theorem proof that he would have done all in his head.
The fake moon landing conspiracy is a good example. Then number of people involved would be pretty big, and the science is complicated. The logistics behind such a big secret operation requires such skill that it is hard to believe anyone would be able to pull it off. If the moon landing was truly fake surely they would have messed up somewhere.
On the other hand many things went wrong in the actual moon landing. There were liftoffs that failed, experiments that went nowhere, targets that were missed, and even people that died. The actual moon landing was a hard task they succeeded at while making a ton of mistakes in the process, just like humans do in the real world when we are at our best.
Indeed it is different. My point was simply that incompetence is not evidence against conspiracy. My sniff test was simply emphasizing this point. Further, a sniff test is—by definition—not supposed to be your only marker in evaluating a theory, it is merely supposed to be a marker determining if evaluating further evidence is even worth your time.
The conspiracy theory that Musk is using this twitter scheme to manipulate the markets in his favor does not fail any sniff tests that I’m aware of.
It's a pretty universal reason to dismiss or at least cast serious doubt on conspiracy theories. A close cousin of Ockham's Razor and Hanlon's Law
The amount of competence required to prepare a controlled demolition of a 110 storey trade center which is occupied 24/7 and full of cameras without anyone noticing and associating this prep work with the much publicised plane crashes that happened afterwards would be staggering, even before considering the insanity of such a scheme.
At the risk of opening a can of worms, the best evidence against the considerably more plausible "lab-leak" COVID theory is that manufacturing an alternative chain of evidence that convinces most unconnected foreign experts of an alternative theory (which still points at Wuhan and Chinese market regulations) when they have plenty of reason to find fault with it requires a lot of competence, as well as totally the opposite approach to China's usual way of suppressing stories.
His legal team maintains Twitter is in material breach of multiple provisions of the Agreement and appears to have made false and misleading representations.
Is Twitter going to spend the next few years litigating this just to force someone to buy the company that doesn't want to? Elon's team can drag this on and on.
What will happen to the value of Twitter's stock in the meantime? What will happen to the value of working at Twitter? It'll become a zombie company.
Yes, that's exactly what will happen. If Twitter were to say now "OK, let's forget this whole thing happened" the stock would drop massively: not only are they losing any chance at the $44B buyout, they are also admitting they (1) lied in their current contract, and (2) likely have huge bot issues that they would rather not litigate.
The only option for Twitter to continue existing is to sue Musk for the amount he promised.
It's worth north of $20B to Twitter shareholders and they have an (almost) rock-solid case. You can bet your ass they're going to spend the next few years to fight for it.
The downvotes on this comment are the clearest evidence that people will downvote verifiable facts presented neutrally if they don’t like the facts, the people or companies involved in the fact.
The karma hit at-fates-hands takes because people are irrational is collateral damage.
The downvotes are most likely because it's a specious claim that Elon's legal team is making, not supported by fact. He waived the due diligence phase. Twitter provided his team with information. He's just trying to get out of the deal because he made an impulsive and stupid decision.
Parroting the statements of his legal team without adding the context around those statements is going to garner downvotes.
But Tesla stock did drop after the announcement of the deal. I think that is the real reasoning behind him quickly getting cold feet. He probably thought Twitter would be a fun side project, but the backlash from people in regards to Tesla, SpaceX, and just the general public meant it would be more costly both to his reputation and financially beyond just the sticker price. That took the fun out of it so he has been looking for ways to escape the deal ever since.
This isn’t the first time he has sold Tesla shares. He sold billions of dollars worth last year too. I’m not sure the exact dates to do the math, but did those sales cause a immediate drop of over 10% like the Twitter announcement?
That's not the right question, the question is the perception of the difference between selling $44B of stock outright or selling it with the goal of buying Twitter.
What actually happened isn't relevant. What is relevant is whether he may have thought it would work better. Tricky to prove.
We agree that he didn’t suspect the backlash from buying Twitter. I think our disagreement is just that you think he expected a large backlash from selling Tesla shares and I’m not sure history really suggests that was something to be concerned about.
he wasn't (or isn't) aiming to sell the stock, he was/is aiming to finance the purchase using his Tesla stock as security. So this line of argument... Doesn't really make sense?
This is all publicly available. Due to leverage, he faced ruin if Tesla fell below X (whatever X is) if he funded it all himself. So he opened his side of the deal up to other people, and allowed other large shareholders to come inside his tent - which reduced his exposure.
Then the market dropped 15%.
Matt Levine has an excellent series of newsletters covering it.
His present situation with a multi-billion dollar agreement he entered based on hype and is now very desperate to exit seems to suggest his hype management skills have room for improvement.
He typically creates massive hype, well over what he could possibly deliver, not sure I've ever seen him temper hype.
Just remember the launch of Tesla auto-pilot, where he was promising full self driving within a year or two, so good that you would let your car work as a taxi while you don't need it and it would become a passive stream of income so great you would see your investment back in around a year! He actually said "our goal is to make Ilit financially irresponsible to buy any other car". This is not a man who "manages hype".
More than one financial analysit/money manager has floated this idea in our circle. It seems reasonalble; an pointing to the last time he sold a bunch (11B?) and told everyone it was to pay his taxes. They seem to think it was to just convert some high-risk (TSLA) to low risk (Cash, etc).
That sounds reasonably logical, but by what measure of logic is overpaying for Twitter, of all assets, a good deal? There are surely better companies to do this sort of thing with, and end up with an actually valuable asset at the end of it.
To over simplify: it's the trick of a illusionist; look over there! Something interesting (now switch the rabbit for the dove or whatever). So while GenPop is looking at this noisy deal; he's able to shuffle around money in three(?) ways -- where the net result is to reduce the TSLA holdings w/o too much penalty (or somethign). I'm not smart or rich enough to fully understand. The logic is distraction to execute a big dollar amount shift in equity positions.
According to this theory, he never intended to buy Twitter. He just used the offer to liquidate stock without raising too many eyebrows and now he's backing out, with a few billion extra in cash and, if everything works out for him, not even a termination fee.
Sure but then why skip diligence? That would be the ideal time to sell lots of Tesla stock and eventually say “You know what? Nah” without any sticky legal issues.
AKA the Lou Pai option, which is an extremely funny (and almost certainly untrue) theory that Pai deliberately got caught by his wife with a stripper so that he would be "forced" to liquidate his Enron stock which he allegedly already knew would soon be worthless without having to explain the timing of that to a court later.
That would be implying that a Musk company was in trouble. They constantly are in trouble, but he can never say it or else it breaks the fiction that Musk companies are predestined to be amazingly successful.
I also read somewhere that if Elon ran Twitter into the ground in the next decade, using it just to advertise Tesla cars, he would have paid an amount in line with what GM pays for advertising their cars (at least what they paid pre-pandemic) https://www.statista.com/statistics/286522/general-motors-ad....
It blows my mind how much (non Tesla) car companies spend just on advertising.
This is such a strange take. There's any number of more effective ways for Musk to justify selling some Tesla stock that aren't especially likely to tank it. On top of that, announcing his intent to buy Twitter did in fact get factored into the stock quite rapidly, in the negative direction as you'd assume, because Twitter is not seen as an especially good investment while Tesla has been.
I don’t buy it. Musk compulsively creates huge and innovative companies. To liquidate stock, he could just as easily have just waited until his next big thing and sold off his stock then, once again, in order to pay for a non-Tesla venture; and then either used the money for the company, or bailed on the new company. Involving Twitter doesn’t make sense and is unnecessary
I tend to believe it's something along these lines. The real question is why is he going to such great lengths to liquidate stock? He is not the only high profile billionaire who has recently come up with sudden circumstances to justify the liquidation of massive amounts of stock.
I doubt that is the case, because of such a flimsy reason chosen to back out of the twitter deal, if the plan was all along to create a ruse deal, I think the exit would have been better planned
He’s not the only one to float this possibility. It’s one of the more plausible explanations if you take the assumption that Musk was acting rationally with forethought.
Couldn't he have sold Tesla as part of an offer that still had due diligence and was in negotiations rather than waiving due diligence and committing to a deal?
why do people assume that all aspects of this transaction and negotiation have been happening in the public and thus qualify for all these folks here to make claims like they know what's going on.
People here don't know what claims in entirety were made by either party, and thus, it's impossible to speculate. This is what courts are for and Elon, and his team, are not idiots.
All we know are the facts, he agreed to buy twitter and now he is trying to walk
away from the deal.
There could be multiple reasons for that, including what he is saying on face value or a dozen other scenarios.
He could still be wanting to buy twitter and use this as a bargaining tool to lower the price.
You can say he was right, once we know the full facts which will be once this plays out and since it doesn't really affect any of us, speculating right now is simply taking part in silly gossip.
It's incredibly implausible that it's what he's saying on face value because a million other people seem to understand what Twitter was referring to around monetized monthly users or whatnot, and the idea that he didn't at first and then realized this other number was actually make-or-break is ludicrous.
Like, you can sign up for free. What's gonna prevent fake accounts in that case?
Yeah and everyone knew for months this day would come. After the stocks started falling in the spring there was no way he would not try to weasel out.
In my mind this is an insane conspiracy theory that fails occam razor, he was high and said we wanted to buy Twitter. People made fun of him so he dug in to prove all those stupid people. There is no complex deal needed here.
Occam razor is Musk made an offer at the height of the market, now he doesn't want to honor the legally binding contract he entered into because he'd lose 20b right away.
That is a very good question, monitor the SEC for clues, if they bring some kind of action (which should either happen soon now that he has made it official he wants to back out or not at all).
With counterparties like Musk it doesn't pay to try to go for some minor infraction, they will just lawyer their way out of it or stretch it forever, but if it is solid enough (and $44B might just do it) then it may well wake up the dragon. To be fair, someone would likely have to ask them nicely to do so because they feel that they have lost a lot of money due to Musk's actions.
Which ones? Basically any way of him dumping billions of Tesla stock would've immediately popped the price. With this action, not only did he get plausible deniability, he also got a massive distraction on top.
That’s immensely believable, I wonder how he got someone people onboard to be help him fund it though. It’s even more of a stretch but maybe the rest of them wanted more liquidity too?
https://twitter.com/wolfejosh/status/1545387947578597376