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Shouldibuytwitter.com – A tiny takeover arbitrage model for TWTR

shouldibuytwitter.com

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Re: Shouldibuytwitter.com – A tiny takeover arbitrage model for TWTR

#51

Post by majormajor »

TrapLord_Rhodo wrote: post #18

People seem to be discounting the fact that Elon still owns 9% of the company and is one of the largest shareholders. He just wants a chance to renegotiate as he know if he actually walks away he will lose around $5B.

Of course, if Elon's right, and Twitter has been showing ads to way more bots than anyone else has realized[0], than that's gonna seriously tank Twitter's value.

So my question is: what did he learn between the point when he decided to buy all those shares at a high price and the point where he started making a stink about bots? He hasn't made any claims based on new information. Did he just spend a massive amount of money on Twitter stock with zero idea of how much it should actually be worth, and only have second thoughts after signing a deal to buy the company? There's no scenario where his actions look economically sound, so the implausible-on-the-face-of-it "do it for the lulz" argument seems like one of the last best guesses available.

[0] the internet ad space is filled with players, and generally a low-trust industry for obvious reasons, so this claim strikes me as extremely dubious, but here we are

Re: Shouldibuytwitter.com – A tiny takeover arbitrage model for TWTR

#52

Post by motohagiography »

MonkeyMalarky wrote: post #44
motohagiography wrote: post #34

Imo, the only hypothetical reason for Musk not to buy it would be because the real numbers on the bot issue showed the company has seriously defrauded investors, and the stock goes to almost zero. That's implausible to me. It's kind of an outsider case where shorts could get squeezed pretty hard if they're wrong about that, as a Musk owned Twitter has huge growth in front of it. However, I'd propose there is also a c…

>Twitter has huge growth in front of it. Twitter has been around for 16 years. In western countries, I think everyone who was going to join, has joined by now. What growth is left? Children becoming old enough to join, people with multiple accounts?

An internet protocol for short message services with an established user base. This was Dorsey's vision, and one Musk appeared to nod to. A t.co product could compete with Signal, Slack, and WhatsApp. Further Slack has wasted what I thought was a huge opportunity to create a Twitter competitor where channels could have public facing boards that published curated highlights from Slack chat. They could have done federation without the body odor. A t.co product could just adapt their existing userbase into using private IRC-like experience, with all of their celebrity and social proof stuff intact.

The product level stuff has huge opportunity, but I think the company became too indexed on their nannyishness, so much so that some billionaire got pissed off and is taking their toy from them.

Re: Shouldibuytwitter.com – A tiny takeover arbitrage model for TWTR

#53

Post by formercoder »

Sebb767 wrote: post #48
cwkoss wrote: post #32

Earlier quoted context omitted.

didn't he waive due diligence, not due process? Or do those mean the same thing in this context?

He signed that he knows everything he needs to know about the company and wants to buy it. Now he wants to back out with the claim that he actually did not know everything, which is a pretty hard sell. Though it's important to note that his lawyers are well aware that this will never fly and therefore the actual court case is them trying to find an edge case where Twitter actually broke the contract (that's the shodd…

He’s not claiming that he actually didn’t know everything, he’s claiming that Twitter lied in public filings not related to the deal.

Re: Shouldibuytwitter.com – A tiny takeover arbitrage model for TWTR

#54

Post by ben_jones »

majormajor wrote: post #51
TrapLord_Rhodo wrote: post #18

People seem to be discounting the fact that Elon still owns 9% of the company and is one of the largest shareholders. He just wants a chance to renegotiate as he know if he actually walks away he will lose around $5B.

Of course, if Elon's right, and Twitter has been showing ads to way more bots than anyone else has realized[0], than that's gonna seriously tank Twitter's value. So my question is: what did he learn between the point when he decided to buy all those shares at a high price and the point where he started making a stink about bots? He hasn't made any claims based on new information. Did he just spend a massive amount of…

> "do it for the lulz" argument seems like one of the last best guesses available

Or Musk is, was, and always will be, a financier, and is doing all this because at some point it made sense to his broader financial plans - dumping Tesla stock near its peak and minimizing the fallback.

Then there was you know, an economic collapse, shortly after this started going into motion. Maybe, I don't know, the financial collapse had some impact on the cost/benefit and changed the course?

Why do people always throw out the simplest most obvious solution in favor of conspiracy and cult-of-personality worship ("do it for the lulz")?

1) Musk wanted to offload Tesla (which he himself said was overvalued). Twitter was as good a reason as any to do so.

2) Economic collapse made the deal unfeasible.

3) When you owe the bank a billion dollars its the banks problem, Musk knows the deal is worthless and is more then happy to let the courts settle it to optimize his personal costs.

Re: Shouldibuytwitter.com – A tiny takeover arbitrage model for TWTR

#55

Post by Sebb767 »

graeme wrote: post #41
cmer wrote: post #38

Earlier quoted context omitted.

Based on information publicly available deemed correct and accurate by the company. This is false representation and downright fraudulent. If indeed Twitter lied about their not numbers, there will be a major lawsuit against the company.

Not quite: 1. Twitter represented that they made sample, exercised judgement, and could be wrong 2. That is hard to falsify 3. For it to matter in this lawsuit, it would have to be so false that it materially adversely affects the company If 10% of users are bots, #1 wouldn’t even be false. If 20% of them were, it might be, but you’d still have to cause a material adverse effect. Like a large change in expected reven…

Even 20% would not fly, winning with MAE in Delaware is basically impossible - the one case where a buyer actually proved MAE there is still referred to as unicorn. Given that Elon waived due diligence and even openly talked about the bot problem, this would probably still be a coin toss if he somehow proves that there are 90% bots.

Re: Shouldibuytwitter.com – A tiny takeover arbitrage model for TWTR

#56

Post by danans »

motohagiography wrote: post #34

Imo, the only hypothetical reason for Musk not to buy it would be because the real numbers on the bot issue showed the company has seriously defrauded investors, and the stock goes to almost zero. That's implausible to me. It's kind of an outsider case where shorts could get squeezed pretty hard if they're wrong about that, as a Musk owned Twitter has huge growth in front of it. However, I'd propose there is also a c…

> Crazy?

Not crazy. More like a garden variety conspiracy theory that sounds especially silly due to its use of poorly cloaked expressions like "the party". Why not just say "Democrat[ic] party"? Obfuscation doesn't make the theory any more credible, and probably makes it less credible.

Re: Shouldibuytwitter.com – A tiny takeover arbitrage model for TWTR

#57

Post by Sebb767 »

formercoder wrote: post #53
Sebb767 wrote: post #48

Earlier quoted context omitted.

He signed that he knows everything he needs to know about the company and wants to buy it. Now he wants to back out with the claim that he actually did not know everything, which is a pretty hard sell. Though it's important to note that his lawyers are well aware that this will never fly and therefore the actual court case is them trying to find an edge case where Twitter actually broke the contract (that's the shodd…

He’s not claiming that he actually didn’t know everything, he’s claiming that Twitter lied in public filings not related to the deal.

And the "not related to the deal" part is the problem - even if he wins this claim, this does not necessarily constitute MAE and therefore does not get him out of the deal. Due diligence includes verifying those numbers or at least checking where they come from, especially if they are as important to the deal as they now appear to be.

Re: Shouldibuytwitter.com – A tiny takeover arbitrage model for TWTR

#58

Post by Sebb767 »

RosanaAnaDana wrote: post #46
motohagiography wrote: post #34

Imo, the only hypothetical reason for Musk not to buy it would be because the real numbers on the bot issue showed the company has seriously defrauded investors, and the stock goes to almost zero. That's implausible to me. It's kind of an outsider case where shorts could get squeezed pretty hard if they're wrong about that, as a Musk owned Twitter has huge growth in front of it. However, I'd propose there is also a c…

You know its funny that you mention this through a political lens because the entire time I've been watching this narrative play out, this is the exact reason that I think Elon made his play. The value in twitter would be in delivering it to the 2024 R assumed candidate. If you can't hold the office, control the office. I've speculated that the J6 committee might actually be the origin of Elons cold feet. Maybe he se…

But is there a 46 billion USD value in getting Trump (I'm assuming you're referencing him) back on Twitter? He lost his last candidacy while still having a Twitter and Facebook account, I don't think just restoring his account will be enough to tip the scales in his favor.

Re: Shouldibuytwitter.com – A tiny takeover arbitrage model for TWTR

#59

Post by majormajor »

ben_jones wrote: post #54
majormajor wrote: post #51

Earlier quoted context omitted.

Of course, if Elon's right, and Twitter has been showing ads to way more bots than anyone else has realized[0], than that's gonna seriously tank Twitter's value. So my question is: what did he learn between the point when he decided to buy all those shares at a high price and the point where he started making a stink about bots? He hasn't made any claims based on new information. Did he just spend a massive amount of…

> "do it for the lulz" argument seems like one of the last best guesses available Or Musk is, was, and always will be, a financier, and is doing all this because at some point it made sense to his broader financial plans - dumping Tesla stock near its peak and minimizing the fallback. Then there was you know, an economic collapse, shortly after this started going into motion. Maybe, I don't know, the financial collap…

This theory certainly has logic to it but, at this point, is "acting before he thinks" really not an option for "simplest most obvious solution" for Elon Musk's non-SpaceX/Telsa-core-business-decision actions? How many more 4/20 references does he need to sneak in?

He disclosed his share in early April and then signed the deal in late April. TWTR today is about where it was from January-April pre-news-of-his-investment, so the value of his initial Twitter investment actually looks pretty stable even post-"economic collapse" (the Dow, for instance, is down 10% over this period, hence the square quotes - obviously no picnic, but did people think the crazy 2020 runup wouldn't lead to a correction?). TWTR has already largely corrected from it's 2020/2021 peak, other than that it fairly steadily went up to be almost double what it was worth 5 years ago, still seems like a solid buy if you're trying to diversify your Tesla holdings that grew way more quickly than that.

TSLA is down 37% meanwhile from April 4 peak before the Twitter drama started. If that's because of the deal, and if that's weighing on his plans now, clearly even in the most rational case he wildly mis-judged that one.

And in getting out of some TSLA he also got INTO a bunch of TWTR (unless possibly he already sold that at the peak?). Which he now seems determined to tank the value of.

But heck, since Twitter is still valued about where it was before, but Tesla has fallen, "getting out of some Tesla stock for something more stable" seems to still make a lot of sense. He thought it was worth buying at this share price before, he even made an offer to pay a big premium (against a higher price driven by the news of his move, of course), so... what of that was unforseeable or seems dramatically different.

Re: Shouldibuytwitter.com – A tiny takeover arbitrage model for TWTR

#60

Post by yqsk »

robinsta wrote: post #12
yqsk wrote: post #2

Inspired by Matt Levine's awesome reporting on the Elon/Twitter purchase fiasco. Just a little app to model the arbitrage (gamble) opportunity.

Frankly, I’m disappointed I can’t pick prices that end in $X4.20!

Lol
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