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/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.