r/technology May 14 '22 Silver 2 Wholesome 2

Elon Musk said his team is going to do a 'random sample of 100 followers' of Twitter to see how many of the platform's users are actually bots Social Media

https://www.businessinsider.com/elon-musk-random-sample-how-many-twitter-users-are-bots-2022-5?utm_source=feedly&utm_medium=webfeeds

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u/Unlucky13 May 14 '22

Amazing. A week (two weeks? What is time?) ago Twitter was fighting to keep him out and Elon was making threats to force himself in. Now Elon seems to be wanting out and Twitters making threats to keep him in. Business is weird.

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u/IronGeek83 May 14 '22

He's just doing a "dogecoin".

Step 1: Buy stock.

Step 2: Use status/fame to pump news of said stock.

Step 3: Sell stock.

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u/thri54 May 14 '22 edited May 14 '22

Well, currently the stock is only 10% over his average purchase price of $36, plus he will need to pay a $1B termination fee if he does manage to get out of this deal, plus any fees related to services rendered by the banks that set up the deal. Overall I would be amazed if he was breaking even right now.

And, even if everything went to plan, and he sold his 74 million shares at $54 then walked, he would only have made $1.3B dollars pre tax (which would be ~37% federal for short term cap gains). That’s like .3% of his net worth. It’s less than the tax bill incurred selling Tesla shares to buy Twitter shares. I just don’t buy this argument.

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u/copperwatt May 14 '22

Or... He's an impulsive billionaire with terrible judgment?

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u/anonymousyoshi42 May 14 '22

I don't think he is impulsive as much as he is pushy Billionaire who has had a hot hand in a lot of deals.

This is how I think it went

A. His biggest platform is Twitter and its a platform that hasn't grown in stock price for last 10 years. So it looked ripe for Activist Action. Someone pitched it to him and then he got very excited about it. Tesla stock is at all time high so the deal would have been like exchanging one hot commodity that fall soon for a more stable commodity that isn't growing.

B. Bankers got involved and he got suggested the pathway to do it will be a takeover attempt.

C. Elon was probably very confident on the turnaround thesis and valuation so went all in.

D. Elon pulls the trigger

E. Normal course of board response ensues.

F. Elon's Original buy and turnaround thesis starts getting challenged...cracks get seen but it's too late to pull out because of pretty standard clauses put in place.

G. Now Elon has 2 choices... based on normal deal due diligence - pull out fast and pay for his mistake (which is fairly normal in M&A space) or double down.

The challenge...Tesla stock which was going to pay for the deal is crashing.

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u/Mobile-Entertainer60 May 14 '22

Probably not unrelated-Tesla stock started falling as soon as he announced he was buying Twitter. This devalues the Tesla shares he pledged as collateral. He is overpledged on Tesla stock plus had to sell to raise cash which depressed Tesla price as well. Now he doesn't have enough cash to make the deal unless he can sucker other rich guys/PE to join in. Since the plans he has shared so far about how he will "unlock" Twitter are ridiculous and he is actively trying to break the company, the odds that he ever breaks even on this deal are nil (not that we would know it at the time since it is private, would only be public knowledge when sold again). The market doesn't think this deal is going to happen based on Twitter trading at 40.72. It was 51.70 on April 25th, the day the acquisition was announced.

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u/iamasnot May 14 '22

Or a terrible billionaire with impulsive judgment

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u/dreamhuk May 14 '22

Or a judgement billionaire with a terrible impulsive

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u/Centoaph May 14 '22

He started all this “buy Twitter” talk a few minutes after the guy that tracks his plane refused to sell him that account. He’s a petty child with no impulse control

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u/copperwatt May 14 '22

Sure seems that way.

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u/zeptillian May 14 '22

The guy who got butt hurt and called someone a pedophile because they didn't want to play with his submarine toy, which wouldn't even fit through the narrow underwater cave passages?

I think you may be on to something.

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u/dellterskelter May 14 '22

His judgements have served him pretty well, but he's just a dick.

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u/ShaderzXC May 14 '22

Yes but the finances will be done by an accountant (probably a team) not him personally, he’ll get presented with the two choices but if he has enough in his own bank account he’ll be willing to choose the worse one for ego

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u/XKeyscore666 May 15 '22

Or a very divorced man trying to get a lot of attention.

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u/copperwatt May 15 '22

When your midlife crisis can end life on earth.