As in my post, assuming this reaches a "negotiated" settlement there are going to be two important values: the original purchase price (OPP), and the fair market value (FMV).
If Twitter "wins", they get Elon to pay the full market value. Now, they don't actually want Elon to be involved, so if Elon pays the difference between FMV and OPP (~$24B) that's essentially the same as buying then divesting with fewer steps.
If Elon "wins", he gets out paying nothing.
So the range is 0 to $24B.
Elon has a terrible case here, so the best negotiating tactic he has is being a disruptive asshole so TWTR just wants it done with (this is playing to his strengths). I'm also making a big assumption about the FMV, which could easily rebound a bit by EOY. With those factors pulling it down from 24, I'm expecting in the 10-15 range, and if I had to guess I'd say $12.5B.
Pick your own inputs for your own estimate, but this is the deal structure.
Which actually makes Elon's position worse, since theoretically that reduces Twitter's stock price and increases the spread between the fixed offer and the current valuation. Plus, his financing tanks since it is predicated on Tespa's stock value.
For that to happen, the market would have to (1) believe there is a very very high probability that the deal won't happen, and (2) believe Twitter is suddenly going to grow significantly.
Neither of these seem very likely, especially in combination.
> Elon has a terrible case here, so the best negotiating tactic he has is being a disruptive asshole so TWTR just wants it done with (this is playing to his strengths).
Twitter isn't trying to stop him, probably because they don't use their product and may have forgotten they can just ban him.
Banning him at this stage would almost certainly expose Twitter to massive liability, especially as they have shown they will ignore rules for public figures. Twitter could only get away with banning Elon if he egregiously violated their policies, and Elon is too good of a troll to do anything that severe.
That doesn’t follow. The exceptionality of Elon is obvious to everyone. He’s the richest man on earth (by some measures), not an Everyman voicing a contrarian opinion. You couldn’t convince anyone you honestly thought “if they banned him, they could ban me” After all your latte art tweets aren’t significantly, materially damaging Twitter’s financial outlook
I'm saying that the formerly most famous tweeter (trump) fluted rules that would have gotten my account banned. Twitter didn't ban trump until after Jan 6th; so Twitter doesn't have any way to legally justify banning Elon unless he does something equally egregious. That's why Elon didn't get banned for the pedo claims or the multiple SEC violations. He is such a notable figure that Twitter can't ban him (without violating the terms of the acquisition) without stupendously egregious evidence that Elon violated their terms.
If Twitter banned Elon's account for a minor TOC violation now, they would likely expose themselves to legal retaliation. Sucks, but it seems we both agree that there are separate rules for the ultra-wealthy.
Edit: I can't swing any stocks with my tweets; whereas Musk can. That is the difference, is who has the platform.
If he's calling off the deal (which isn't a thing but they can pretend he is), it doesn't seem like a violation if you agree it's off. He might then get bored and decide to make it on again.
They had good reasons for not banning Trump until then, namely that he literally would've gotten their employees killed.
If Elon wins his claim that they breached contract, he will be able to go after them for damages. It's pretty clear Twitter was lying and fudging fake user numbers, the question is how much and whether that was a breach of contract.
1) The contract states they are obligated to provide information, Elon alleges such information was withheld or curtailed - a contract violation. There doesn't need to be a specific clause about a particular metric because the obligation to provide information is broad.
2) Facebook lied about video watch time for years, including in SEC filings and to advertisers (essentially fraud). Is this an appeal to the sanctity of SEC filings? I don't think Facebook is significantly more reputable than Twitter, they're both pretty shady.
Why should we just trust the company, as you imply? Companies routinely and regularly lie in SEC filings, including big tech -- and Twitter! They paid close to a billion in securities settlements for - wait for it - lying about user engagement!
Twitter admitted to lying about user engagement in 2015 and paid a hefty fine for it. [1]
Is your argument really "the company that has been proven to lie about user engagement wouldn't lie this time"? Seems flimsy.
Contract violations are more complex than that. You can’t simply void a contract over a little technicality. Even if they had given him the data, he wouldn’t have been able to get out of the contract. So a judge is not going to look at that and say, “oh yeah, Musk was paying $44B for the company and the right to review its data, so unless he gets both he pays nothing.” The judge is going to go, “okay the company is worth nominally $44B and reviewing data is worth zilch in light of the rest of the contract, so these aren’t equal parts.”
1) They provided access to their firehose API, how is that not enough? The crap about rate limiting doesn't apply to the firehose, and decent engineers can get around rate limiting, so either way this doesn't hold up.
2) Twitter's CEO gave a pretty good explanation of how they combat bots and how they calculate their mDAUs, Elon Musk responded with a poop emoji. I get that his personal experience on Twitter is heavily bot-infested, a significant proportion of bots on Twitter engage with his account and use his image as a user profile. Twitter doesn't claim that the bots in Musk's feed are under 5% of users, or that the number of bots overall are under 5% of users, they claim that the number of monetizable daily active users is under 5%. Given the definition of a "daily active user", reduce to "monetizable", and consider the number of users who never post anything but read tweets and click on ads and promoted tweets, and this isn't hard to believe.
On the other side we have Elon Musk, notorious liar, claiming that he doesn't want to buy Twitter because Twitter is lying about the number of bots, despite the fact that before tech stocks crashed, he said he wanted to buy Twitter to solve the bot problem. This isn't hard. He has buyer's remorse and the bots thing is the best excuse he has to get out of a contract he signed. It's a shitty excuse and no one other than Musk fanboys have any reason to believe him, and it's not even an excuse in court.
>Twitter's CEO gave a pretty good explanation of how they combat bots and how they calculate their mDAUs
Company that previously lied to investors about engagement and settled a massive billion-dollar lawsuit makes further unproven claims about engagement. You believe them why?
Should corporations which deliberately lie to investors be immediately trusted again, especially on the same topic they got caught lying about previously?
Your argument is an appeal to authority where no authority exists. They're liars. Not just liars in general, but liars about this exact topic. Do you trust BP's offshore drilling because the CEO now insists it's totally safe this time?
>Twitter doesn't claim that the bots in Musk's feed are under 5% of users
He never claimed this, this seems like a strawman. Did you read the complaint?
>this isn't hard to believe
Choosing to believe a company that has admitted to lying to investors is your prerogative, it doesn't make them trustworthy or correct -- and it absolutely doesn't make your argument based in any kind of reality (why should we take the liars at their word?). Why go to bat for a company with a billion in fines for misleading investors? Under what basis do you believe they've reformed and can be trusted?
I don't understand why you believe Elon can't be believed because of his history of lying while you ignore Twitter's sordid past of securities violations and lying to investors.
>Elon Musk, notorious liar
Why don't you label Twitter as notorious liars, given their billion in settlements for lying to investors?
> Choosing to believe a company that has admitted to lying to investors is your prerogative, it doesn't make them trustworthy or correct
More to the point, it's Musk's perogative, which he excercised when he signed a contract to buy the company based on their represenations while choosing not to do any due diligence to verify those representations.
I think Twitter is probably more believable here than you give them credit for, but Musk trusted them 100% for some reason.
> Should corporations which deliberately lie to investors be immediately trusted again, especially on the same topic they got caught lying about previously?
For lies known previously to Musk's offer, he had every opportunity to decide whether to trust Twitter or not, and he chose to by waiving due diligence.
If there's an allegation of an additional lie that's material to the deal, Musk hasn't provided evidence of that here.
>If there's an allegation of an additional lie that's material to the deal, Musk hasn't provided evidence of that here.
Did you read the filing? He provided evidence of them violating their obligations under the agreement (refusing to provide adequate access to data to independently verify claims made about user engagement). Twitter agreed to these terms. Read the original agreement to see for yourself.
>he had every opportunity to decide whether to trust Twitter or not
How does that mean fraud is okay? If Twitter lied again, it would be a clear contract violation. You can't just lie about critical company metrics to acquirers, due diligence or not. It's fraud AND a contract violation.
Given we're talking about a disreputable company with a history of lying, I'm not inclined to believe them and I don't know why you immediately believe their claims. Perhaps you can enlighten me as to why you think they deserve trust in this matter.
I mean, I'm anti-musk, but I certainly would believe his claim they've been lying about the bit population. Both Twitter and Facebook have lied about this in the past, so the only part of musk's position I find believable is that Twitter underreported bot users. That being said, he waived his right to due-diligence, so lol. Truly a situation where both sides are dislikable.
But there is lying as in “not telling the truth in a technically correct way”* and there is lying as in “committing a fraud”.
Musk would need to show the latter, not only the former. And that carries rather stiff penalties. As opposed to reading the rules very precisely and only effectively lying. Which is what lawyers are for
* always remember that Bull Clinton technically didn’t lie. He in fact asked his lawyers before that hearing and was told that “no getting a BJ, according to the law, does not constitute a sexual relationship”. In didn’t end up mattering because him staying president is a _political_ decision. Unfortunately for Musk, public opinion does not matter here
Twitter admitted to lying about user engagement in 2015 and paid a hefty price for it. [1]
Your argument is absolutely ridiculous. They've done it before, and settled.
Seems you have absolutely no idea who you're defending, which is a company that has routinely misled investors on user engagement and paid settlements for that very fact.
"The company with a history of lying to investors about user engagement would never lie about user engagement!"
Be that as it may, it’s not relevant to Musk getting out of his merger agreement now, which is unconditional except for 1) material adverse effect (which is a way higher bar than the well known bot issue) and 2) Twitter fulfilling the covenants in the agreement, such as continuing to run their business and providing requested information within reason. Since there is no way he is getting out under 1, MAE, he is trying 2.
You claim that lying about user engagement could never qualify as a "material adverse effect". On what basis do you make this claim?
As a thought experiment, if 50% of Twitter's claimed MAUs were bots, it would absolutely be material.
Given Twitter has a history of lying about this exact metric, under what basis do you believe that the bot issue isn't material? Blind trust in the same company that lied about it before?
I'm trying to understand why people trust the company that was caught lying to investors about the very subject they were lying about. Where do you get this trust?
For it to be relevant, the "material adverse effect" needs to have been caused by an action by the company subsequent to the deal being signed. Like, for example, the corporate treasurer suddenly going to Vegas and losing the treasury on blackjack.
Twitter may well have been grossly lying all these years, but the time to figure that out is before you sign the deal. That's kinda the point of doing due diligence.
The merger agreement requires Twitter to provide adequate access to data requested, if they haven't done this then the merger agreement has been violated even without a MAC violation.
Specifically, the merger agreement requires "all information concerning the business ... of the Company ... for any reasonable business purpose related to the consummation of the transactions".
Seems like an arbitrary API rate limit could easily violate this clause. How are you providing "all information [...] requested" if you drip feed it?
The fact they'd even play cloak-and-dagger with this information suggests there's fraud again. Companies with nothing to hide don't mislead acquirers.
You're using lots of words that imply malicious intent and bad faith, without providing anything to back that up.
Not to mention that your theory of Twitter behaving fraudulently in the context of this transaction makes no sense. They've got a commitment to purchase them at vastly more than their market value, so they're highly motivated to see the deal close. What's the incentive for acting in bad faith?
In an important sense, this particular conflict is (as yet) dramatically better than these -- it hasn't involved thousands of people bickering for many years.
