Elon Musk-Twitter’s drama continues to take on sometimes strange, unexpected twists, so anything I write here may be debatable soon after the ink dries.
It has always been dangerous to speak in absolute terms about Musk. He is said to be smart at the level of a genius, but he did some really stupid things (strange tweets almost made him slander and caused him problems with the Securities and Exchange Commission). His baby, the electric car giant Tesla, was terribly mismanaged, plagued by production problems and nearly declared bankrupt. He miraculously survived and returned stronger, making him the richest man in the world.
Most recently, he celebrated the “best and final” offer for the financially unstable but ubiquitous social media company Twitter. Price: $ 44 billion or $ 54.20 per share (which includes a pot reference; “4:20” is the “drinking time” in the weed culture). This was a solid premium to the price of his shares then and even greater now after the sale on the market.
The Twitter board eventually realized that Crazy Elon was offering a once-in-a-lifetime salary to its besieged investors and accepted the deal.
Musk was about to buy what he called World Public Square. He will be the king of all media, making Twitter private and correcting its many business shortcomings (for all its influence, it has no cash flow or profits).
Until suddenly he was not.
Somewhere along the line, it occurred to him that he was overpaying for a flea dog. He postponed the deal indefinitely. His hardly plausible reason for the threat to walk: There are too many fake Twitter accounts that can’t be monetized by him or anyone else. He also said that Twitter was hiding this problem with bots, something like a scam. He wants to take a closer look at the books.
Elon Musk said he was worried about the large number of fake Twitter accounts. JOSH EDELSON / AFP via Getty Images
If he was really worried about bots, he wouldn’t give up on proper due diligence before signing the transaction documents.
What next? The business press has always been skeptical of Musk’s intentions because most of Wall Street has been skeptical. That is why the shares are never traded close to its offer price.
What it’s worth is the point of view of two bankers, one who worked with his Tesla board and the other at a company involved in his financial machinations on Twitter.
Only under his conditions
They say almost the same thing. Musk tells people he still wants Twitter. He believes it could make him work as a private company, clear up the bot problem and sell it at a profit for the next five years.
But Musk wants the company (like everything else) on his terms, which are always changing. He doesn’t read balance sheets, but he walks on his stomach and has no problem disregarding conventional banking rules (ie your word is your bond) to get his reward. His mind told him to give up due care. Now he tells him that even though he signed a deal, leaving him on the hook for the $ 1 billion separation fee and maybe more for damages, he can get Twitter on the table and agree to his terms, also known as much more -low purchase price.
Maybe he’s right. Twitter first said it would impose the original terms of the deal, maybe even go to court, but now it looks like it’s playing ball with Musk. He recently said he would pass on more information about the problem with his bots – a move that means negotiations have resumed. Bankers tell me that the Twitter board knows that finding another suitor will be difficult even with about $ 40 per share currently traded. The board can’t just accept anything, but it also can’t tell Musk to just knock sand.
Elon Musk could lose $ 1 billion if his Twitter deal falls apart. Patrick Pleul / Pool Photo via AP, File
So the thinking among my two boys is that Twitter agrees to a lower price, probably significantly lower, and Crazy Elon gets his public square, albeit for much cheaper.
That means the deal is done, right? It seems. But no one really knows about Crazy Elon.
Gensler leaves
Left SEC chief Gary Gensler finally announced his intentions last week to review the stock market. Forget about the pretty good deal that small investors are getting now: zero-commission and mobile app deals that make stock trading hassle-free and cheap for beginners.
Securities and Exchange Commission Gary Gensler is stalking investors in retail memes. Samuel Corum – CNP / MEGA
Gensler told attendees at an investor conference that bad things happen where no one can see them; too many deals do not go public. They target private retail outlets known as dark pools. Investors believe they are trading for free on Robinhood, but may be robbed unknowingly.
Gensler did not offer data to show that markets are screwing small investors through their current structure. This is his premonition.
The overturning of markets due to foreboding is quite a dangerous thing. Especially when you’re just trying to hone your class warfare skills, as most observers suspect. The good news (and the bad news for Gensler): The changes he is proposing are likely to take years to implement as Congress – which is likely to be in the hands of the Republican Party after November – discusses their merits.
At that time, everything will be over. His current boss, Sleepy Joe Biden, is likely to be out of office, replaced by a Republican president or a sober Democrat who will resist “fixing” something that doesn’t need to be fixed.
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