[HN Gopher] Twitter board adopts poison pill after Musk's $43B b...
___________________________________________________________________
Twitter board adopts poison pill after Musk's $43B bid to buy
company
Author : grogu88
Score : 218 points
Date : 2022-04-15 17:59 UTC (5 hours ago)
(HTM) web link (www.cnbc.com)
(TXT) w3m dump (www.cnbc.com)
| nickysielicki wrote:
| I don't understand how any board can implement a "poison pill",
| not just Twitter but Netflix and others, and not be found working
| against the interest of shareholders. Can anyone help me
| understand?
|
| You're categorically changing the profile of the stock. This has
| a chilling effect on large investors, including but not limited
| just to Musk, right?
|
| Vanguard, for example, has just had its range of further
| investment limited arbitrarily. Isn't that bad for all
| stockholders, to know that large stakeholders will not drive the
| price up if they somehow gain substantial belief in the company?
|
| The risk portfolio of Vanguard just went up considerably because
| in the case that they fully lose faith in the board, they no
| longer have the option of installing a friendly board, they must
| simply liquidate their holdings. This, in turn, makes them more
| skeptical of further smaller (non-takeover) investment because
| it's more to liquidate and more risk.
|
| Who does this benefit _besides_ the board? I guess I understand
| that the board is not beholden to the interests of all
| shareholders equally, and I'm not suggesting that this doesn't
| benefit _some_ shareholders, but where does the line start?
| recuter wrote:
| I don't understand how any board can implement a "poison pill",
| not just Twitter but Netflix and others, and not be found
| working against the interest of shareholders. Can anyone help
| me understand?
|
| You're categorically changing the profile of the stock. This
| has a chilling effect on large investors, including but not
| limited just to Musk, right?
|
| Correct. Hence the term poison pill. Now nobody else will be
| interested in buying them either and Elon selling out will tank
| the stock. As a reminder their stock steadily dropped all the
| way to $14 after the initial IPO pop and they've been losing
| money since before Covid.
|
| Woke means broke I guess. I think his plan B will be to start a
| competitor. I'm very tempted to heavily short as soon as he
| walks away definitively.
|
| As to your question of, won't the other shareholders get mad at
| the board and potentially sue them - I think the board is
| drinking their own koolaid.
| version_five wrote:
| > I think his plan B will be to start a competitor
|
| I hope it isnt: I think that starting a top down, meaning
| "look I built this, everyone move over from twitter",
| competitor has a very low probability of success, regardless
| of who starts it. There is too much of an attack surface,
| there will be too much drama on real Twitter about it, early
| adopters will be gun nuts or some other out group and that
| will be how they get characterized, etc etc.
|
| The real chance at a competitor would be something that grew
| organically, that people wanted to move to because it offered
| something valuable before it reaches scale. This is how
| actual businesses start. The top down approach is how massive
| flops happen.
|
| Incidentally, the same holds true for the Facebook metaverse
| and imo suggests it will certainly fail
| ratboy666 wrote:
| Remember that this IS Musk; not very predictable. But I'm
| going to try... Since Musk has stated that this was NOT to
| make money, I imagine that triggering the poison pill, and
| THEN dumping the shares would tank the stock. Musk did say
| "final offer, and if rejected, re-evaluate". The poison
| pill trigger? Not something talked about.
|
| I hold some shares of TWTR, and would continue. For the
| lulz.
| recuter wrote:
| You're probably right. On the other hand he is one of their
| biggest users and has a lot of celebrity friends.
|
| There's too much drama on real twitter about it anyway.
| They might be stupid enough to ban him too soon, and if
| they keep on doing that nobody will want to use it. A lot
| of the top users haven't tweeted in over a year.
| quest88 wrote:
| He can buy one of those other competitors used by right-wing
| folks. Hell, if "free speech" is so important to him and to
| everyone else he wants to rescue he can just tweet to use
| those other platforms. It's certainly cheaper.
| recuter wrote:
| Twitter is "losing hundreds of millions of dollars every
| year" (I don't know if that's how we're using air quotes
| now, just following your lead), it is already circling the
| drain. No need to buy anything, it would be _trivial_ for
| him to setup a clone and fund it indefinitely while it
| tears itself apart.
| threeseed wrote:
| Revenue grew 37% since last year.
|
| And they were profitable when you exclude their once off
| litigation expense.
|
| Not sure about your definition of circling the drain but
| Twitter definitely isn't.
| Hamuko wrote:
| Spoiler alert: other platforms are not in any way more
| "free speech". Gab for example bans porn, which is both
| free speech protected by the First Amendment, and allowed
| on Twitter. TRUTH Social seems to forbid a lot of things,
| such as depictions of violence, lewd content,
| libelous/slanderous content and lying (true to their name,
| I guess?).
| Cookingboy wrote:
| >Woke means broke I guess.
|
| That sentence alone means you weren't even discussing this in
| good faith.
|
| It's very well possible that the Twitter board believes that
| they can achieve higher value for the shareholders than what
| Elon offered. It's also very well possible that after talking
| to Elon through private conversations that you were not part
| of, they fundamentally disagree with his value and the
| direction he wants to take the company.
|
| >I think his plan B will be to start a competitor.
|
| Hey, maybe he would buy Parler, that would sure get him all
| the attention he desperately craves for. /s but maybe not.
| JKCalhoun wrote:
| Fascism means cashism!
|
| (Sorry, unable to resist.)
| [deleted]
| 015a wrote:
| All of this is possible, but the reality is: Twitter is a
| 16 year old company that has changed imperceptibly since
| its inception. Elon has several polls over the past month,
| voted on by literally over 3M people, vehemently
| disagreeing with some of the policies Twitter holds dear.
| Their revenue is flat and down. They literally had a
| chokehold on global politics during the Trump era, and did
| nothing with it toward building a better business, or even
| a better social network.
|
| Their board can believe all they want. But they're failing,
| miserably. Elon isn't perfect, but at least he doesn't have
| a demonstrated history of driving his companies' value into
| the basement, like Twitter's leadership does. This move by
| their board serves no-one but them; it doesn't serve
| Twitter's users, it doesn't serve their customers
| (advertisers), it doesn't even serve the vast majority of
| shareholders (which will be evidenced by an unprecedented
| sell-off on Monday).
|
| Goldman advised them to block the purchase, because
| $52/share was too high, while simultaneously holding a $30
| sell benchmark on TWTR. Its not even ironic that this is
| where Twitter's stock is going; its what they predicted,
| and then caused. The idiots in the room are the Twitter
| board, who actually believed the advice was given in good
| faith.
| threeseed wrote:
| > Elon isn't perfect, but at least he doesn't have a
| demonstrated history of driving his companies' value into
| the basement
|
| How are SolarCity and Boring doing these days ?
| johannes1234321 wrote:
| > Elon has several polls over the past month, voted on by
| literally over 3M people,
|
| Oh sh*t i don't follow him and didn't care about those
| votes ... should I write a bot to make my voice heard? Is
| that how it goes? (Or in other words: such a vote has no
| statistical significance aside from pleasing Musk's ego
| or whatever is driving him and his need for attention)
| cinntaile wrote:
| > Their revenue is flat and down.
|
| This makes me wary of your post. You could have easily
| fact checked this and you would have seen that this is
| incorrect. It's up 37% compared to the year before that.
| [0] I checked the last 3 years and the growth has been
| positive during all 3 years. [1]
|
| [0] https://www.prnewswire.com/news-releases/twitter-
| announces-f... [1] https://www.macrotrends.net/stocks/cha
| rts/TWTR/twitter/reven...
| swayvil wrote:
| I for one prefer that my communication-medium not have
| "values". For obvious reasons.
| Cookingboy wrote:
| Not having value is a value in itself. It takes a crazy
| amount of _effort_ to be completely neutral.
|
| >that my communication-medium
|
| Twitter is first and foremost a publishing platform, you
| should not rely on it as a private communication medium.
| None of the chat apps I know censor stuff, so use them
| instead.
|
| Use Twitter for public communication if you want, but
| since it's in the public domain you can't complain too
| much if there is content moderation.
| swayvil wrote:
| I dunno man. My email software seems to accomplish that
| feat quite easily.
|
| Sure I can complain. When it's the defacto public forum
| any administrative conversation-tweaking is pure poison
| to our society.
|
| And also, yes, there is an implicit promise that the
| conversation between you and me is not getting fucked
| with by an invisible rat in the middle. So when I smell
| one of those rats, heck yes I'll complain. That's
| objectively ratty.
| treeman79 wrote:
| The entire Twitter battle is about the woke left taking
| over / banning all of America culture.
| nemo44x wrote:
| > It's very well possible that the Twitter board believes
| that they can achieve higher value for the shareholders
| than what Elon offered
|
| Who would believe that? They've had years to prove it and
| as they stock market has doubled in value their stock has
| been cut in half.
|
| Share holders should sue. It's time to trick their world
| and either drive the stock price to a few bucks or force
| then board to do their fiduciary responsibility and sell
| the company.
|
| It's a great offer.
| recuter wrote:
| > That sentence alone means you weren't even discussing
| this in good faith.
|
| Is that what good faith means now? Being religiously part
| of Camp A or B?
|
| The balance sheet speaks for itself. Incidentally Parler or
| his potential Twitter clone will also end up a toxic
| internet community. Who cares? I personally wouldn't use
| either one.
|
| Certainly with Twitter already doing a great job losing
| money and alienating most people (almost nobody actually
| tweets and usage is falling) an alternative would split the
| user base and accelerate their demise and the inane concept
| of web micro-forums being worth tens of billions of
| dollars. Companies will simply decide advertising on
| Parler/Twitter is not worth the hassle.
| threeseed wrote:
| > The balance sheet speaks for itself
|
| a) Revenue increased 37% y/y.
|
| b) User count growing at 2% y/y.
|
| c) Profit of $273m in 2021 when you exclude once-off
| litigation expense.
|
| https://www.prnewswire.com/news-releases/twitter-
| announces-f...
| woadwarrior01 wrote:
| > c) Profit of $273m in 2021 when you exclude once-off
| litigation expense.
|
| The once-off litigation expense might soon be recuring in
| 2022, after this move. The former was a shareholder class
| action lawsuit, and the latter will most likely be the
| same.
| threeseed wrote:
| Twitter is predicting a drop in GAAP loss in 2022 to
| between $225-$175m.
|
| So even if the lawsuit is recurring (neither of us know)
| they are still managing to reign in their losses.
|
| By any definition the company is heading in the right
| direction.
| Cookingboy wrote:
| >Is that what good faith means now? Being religiously
| part of Camp A or B?
|
| No. But you immediately made this into a Camp A vs. Camp
| B problem when in reality there could be a million
| different reasons for the Twitter board to not want to
| get acquired means you weren't trying to discuss this
| specific situation, you were looking to turn this into a
| debate on "wokeness". That's why I said you weren't
| discussing in good faith.
|
| >The balance sheet speaks for itself.
|
| Does it? Elon has seen the same balance sheet and he
| thinks the true value of the company is higher than what
| it is now as well. So obviously he thinks Twitter has the
| _potential_ to achieve much higher value through
| implementing XYZ. The board agrees too but just disagree
| on what that XYZ is.
| freedomben wrote:
| > _Elon has seen the same balance sheet and he thinks the
| true value of the company is higher than what it is now
| as well. So obviously he thinks Twitter has the potential
| to achieve much higher value through implementing XYZ.
| The board agrees too but just disagree on what that XYZ
| is._
|
| Yes, but one version of XYZ (the board's) has been tried
| while the other (Elon's) has not. Elon's plan might lead
| to even worse results than the board's, but _he_ doesn 't
| think it would, hence his optimism if they adopt his
| plan.
| recuter wrote:
| > Elon has seen the same balance sheet and he thinks the
| true value of the company is higher than what it is now
| as well.
|
| Up to you to take him at his word however he has stated
| otherwise.
|
| "It's important to the function of democracy, it's
| important to the function of the united states as a free
| country and on many other countries and actually to help
| freedom in the world more broadly than the US.
|
| You know I think this there's the risk, civilizational
| risk, uh is decreased if twitter, the more we can
| increase the trust of twitter as a public platform and so
| I do think this will be somewhat painful and I'm not sure
| that I will actually be able to to acquire it.
|
| I mean I could technically afford it um what I'm saying
| is this is not a way to sort of make money you know..
|
| It's just that I think, my strong intuitive sense is that
| having a public platform that is maximally trusted and
| broadly inclusive is extremely important to the future of
| civilization"
|
| - https://www.youtube.com/watch?v=yDfqwTBHah8
| Cookingboy wrote:
| Wait, you seriously think Elon is buying Twitter out of
| his good heart to "protect" the healthy functioning of
| democracy?
|
| Jesus I know it's Friday but some of you guys start
| drinking early man.
| recuter wrote:
| His net worth is over a quarter trillion dollars.
| Flipping twitter for profit is very far from a sure thing
| and seems like a waste of his time.
|
| Why out of everything that he could invest in would he
| bother with twitter specifically? Whatever his intentions
| are it seems plausible that this isn't about money.
|
| I get that you don't like him but this attitude of "I am
| right, you are wrong, and if you disagree you are drunk"
| is.. not a good look.
| Cookingboy wrote:
| >Whatever his intentions are it seems plausible that this
| isn't about money.
|
| It's very plausible that this isn't about money, and I
| never said it's about money. However it's far more
| plausible that this is about a narcissist buying media
| and social influence and he wants to be able to shape
| public discourse that paints him in a positive light. He
| _really_ cares what people thinks of him.
|
| All of that would seem far more likely (and suits his
| past track record) than him doing this to "save
| democracy".
| recuter wrote:
| > I never said it's about money.
|
| > Elon has seen the same balance sheet and he thinks the
| true value of the company is higher than what it is now
| as well.
|
| Also I'm pretty sure a narcissist is exactly the sort of
| person to genuinely think he is saving democracy by
| buying a website.
|
| Do you know him personally? Are you a trained
| psychiatrist? Narcissistic personality disorder can be a
| serious affliction, tell him I hope he gets the help he
| needs and that I wish him the best.
|
| I personally just want to know what will happen to the
| stock.
| spion wrote:
| You're incredibly naive.
|
| He is already an influencer and owning a social network
| where he gets to set his own rules would be the best way
| to ensure his influence increases further.
|
| Free speech on social media is an oxymoron. SM is
| designed to give you power in proportion to the number of
| connections you hold. Its a popularity contest of
| twisted, faked, carefully crafted viral thought - most
| real, true and meaningful things get lost in the sea of
| professional influencers.
|
| You will find more real free speech with a single visit
| of a subreddit than you will within a week of being on
| social media.
| medler wrote:
| The topic of discussion is corporate governance and
| finance, and you immediately pivoted to some irrelevant
| culture war BS.
| rufus_foreman wrote:
| The topic of discussion is Elon Musk trying to purchase
| Twitter, which is very much at the intersection of
| finance and culture war.
| [deleted]
| pcmoney wrote:
| Poison Pills are rarely exercised, this is a positional move.
| Unlikely Elon is the only interested party at this point. If
| the board can use a pill to force a slower buy-out discussion
| and negotiation it is very much beneficial to shareholders.
|
| Their stock price was over $70 in the trailing 12 months.
|
| Even with Elon's offer they are still worth 10 NFL teams
| combined.
|
| I can find zero credible evidence to support your position.
| Please short the stock :)
| recuter wrote:
| I wasn't aware NFL teams was a unit of measurement. One has
| to wonder if you think I am wrong why you wish for me to
| short the stock and lose my shirt.
| threeseed wrote:
| a) The poison pill only affects those who are looking to
| control the company in some way. Which isn't most large
| investors at all. So I doubt you will find any who will be
| concerned by this.
|
| b) Twitter's stock price is now $45, peaked at $77 only last
| year and is profitable. Not sure where you get this
| ridiculous idea the company is unsellable.
|
| c) There are plenty of free speech competitors to Twitter.
| None are even remotely successful. Because as Reddit also
| showed far more people want a moderated experience more than
| those that don't. And Twitter is a business first and
| foremost.
|
| d) Musk is offering shareholders a premium as the stock is
| today. But as I mentioned even just last year it was
| significantly higher. And so I can't imagine shareholders
| would have an issue about them turning it down if they
| believed Twitter was still continuing to head in the right
| direction as it is now.
| SilasX wrote:
| >The poison pill only affects those who are looking to
| control the company in some way. Which isn't most large
| investors at all. So I doubt you will find any who will be
| concerned by this.
|
| That's not the right way to think about it. Anything that
| scares off ambitious, optimistic activists from buying big
| stakes, will then suppress the stock value in general,
| which hurts all shareholders, including the smaller ones.
|
| More broadly, going public is a tradeoff. You potentially
| give up control to outsiders, in return for greater share
| value (and the cash infusion). Moves like this go the
| opposite direction: decrease the potential for outside
| control, and with it, the upward pressure on the stock's
| value.
| tonguez wrote:
| "Who does this benefit besides the board?"
|
| the people who run the US/world who depend on censorship to
| maintain their power
| woodruffw wrote:
| If I was a member of Twitter's board, Musk's history of erratic
| public behavior, SEC settlement, and openly hostile attitude
| towards the company's employees would be more than sufficient
| to justify my belief that his controlling ownership would not
| be in the interest of the current average shareholder.
|
| That opinion would also be consistent with how "fiduciary duty"
| is interpreted by US regulators: companies are not required to
| perform any _particular_ action that might reasonably be in the
| interests of shareholders; they must merely show that the
| company 's actions were _intended_ to be in the best interests
| of the shareholders.
| newaccount2021 wrote:
| gigatexal wrote:
| 52 week high was 70 something. His offer is too low anyway. And
| he said it was his final offer. He's just an egomaniacal
| billionaire who is bored.
| SkyMarshal wrote:
| _> and not be found working against the interest of
| shareholders._
|
| It depends on what the interests of the shareholders actually
| is. Monetary only, or are there other considerations they care
| about?
|
| I assume the boards of such companies have had private
| discussions with the majority shareholders to find out exactly
| what their priorities are, and then acted accordingly.
| RosanaAnaDana wrote:
| >It depends on what the interests of the shareholders
| actually is. Monetary only, or are there other considerations
| they care about?
|
| Is a board allowed to consider anything but?
| ameister14 wrote:
| So most directors can get around the shareholder primacy
| rule pretty easily by tying the changes they want back to
| shareholder value.
| namdnay wrote:
| Of course they are, major investors regularly push boards
| to do more ESG for example
| riccardomc wrote:
| Yes. The law doesn't bind directors to maximize
| shareholders value.
|
| https://www.reddit.com/r/law/comments/3pv8bh/comment/cw9t52
| d...
| ameister14 wrote:
| I could be wrong but I don't think Twitter is a B corp.
| moomin wrote:
| I think the answer is that "the interests of shareholders" can
| be interpreted in a much broader fashion than some people,
| including board members, like to pretend.
| themitigating wrote:
| You're claiming that Musk's purchase of twitter is objectively
| good for shareholders
| nickysielicki wrote:
| Given that it's at a share price premium for 90%+ of the
| lifetime of the stock since IPO, yes. Most shares were bought
| below the price Musk is asking.
| [deleted]
| philistine wrote:
| The board has declared the price offered to be too low. You
| say it's high enough, but I doubt you own as much stock as
| the people on the board.
| nickysielicki wrote:
| To be clear, they haven't actually rejected the offer
| yet, they've simply limited the ability of Musk to
| acquire a majority stake in the case that they reject.
| paxys wrote:
| Not everyone buys a stock for a quick short-term
| turnaround. If I expect Twitter to 20x in the next 5 years
| why would I want to sell my share to Elon?
|
| And existing investors all have the option to cash out
| today for just 17% less than Musk's final offer.
| IMTDb wrote:
| > If I expect Twitter to 20x in the next 5 years why
| would I want to sell my share to Elon?
|
| Vote with your dollars: buy shares at a price higher than
| Elon's. Borrow if you must. If you are not ready to take
| that risk, then maybe your _expectations_ are more
| _wishful thinking_ than anything real.
| aetherson wrote:
| If you expect Twitter to 20x in the next 5 years, then
|
| a: You're dreaming.
|
| b: You're absolutely expecting a quick short-term gain.
| EdiX wrote:
| Twitter has operated for 16 years and public for about
| 10, explosive growth of their userbase is in their past
| and monetization strategies have already been implemented
| for years. There is no reason to believe it has the
| potential for such growth.
| paxys wrote:
| Then why were they holding the stock the day before Musk
| got involved?
| mechanical_bear wrote:
| They feel there is potential for growth, just not flights
| of fancy like you describe.
| jayd16 wrote:
| If you think the stock could grow further without Musk then
| the board would be protecting your interests.
| ryoshu wrote:
| If North Korea offered $60 billion to buy Twitter would
| Twitter be forced to sell? Not comparing Musk to NK, but
| money isn't the only consideration when an offer to sell
| comes in.
| mdoms wrote:
| North Korea is under economic sanctions by USA. Your
| hypothetical is stupid for a whole bunch of reasons.
| nickysielicki wrote:
| No, but only because you chose North Korea.
| loceng wrote:
| Indeed, what happens when Elon starts his own platform
| instead and uses some of the ~$40 billion he'd otherwise
| buy Twitter with instead on paying top users of Twitter
| to exclusively use his platform instead?
| metadat wrote:
| I'd ditch twtr in a heartbeat, at this point it's a
| cesspool in every sense.
| dev_tty01 wrote:
| There are already alternatives to Twitter. Why haven't
| you ditched it already?
| metadat wrote:
| I'm aware, and do you realize nobody of note is using the
| alternatives? Why would you recommend someone invest time
| building a presence in yet another loser platform with
| bleak future prospects? Doesn't seem helpful or all that
| bright.
|
| For a real alternative to succeed, solid backers focused
| on dethroning tw are needed to inspire confidence and
| stability, then we all need to jump at about the same
| time to get the momentum going and bounce out of the
| twatterverse.
|
| As it stands now, there is no _real_ competition.
| tshaddox wrote:
| What would happen is that it would almost certainly fail
| to make any impact.
| root_axis wrote:
| > _what happens when Elon starts his own platform_
|
| He wouldn't bother because it'd be a failure. Twitter's
| tech stack isn't worth 40 billion, Musk could clone
| twitter for less than $500m, but just having a platform
| doesn't accomplish much, the overwhelming majority of
| twitter users have no reason to leave twitter.
| dijit wrote:
| North Korea is under heavy sanctions and is thus a poor
| choice.
|
| But if France put a bid on twitter, they would be forced
| to entertain the offer.
| gobengo wrote:
| it's radical to equate dollar values with objective
| goodness
| iancmceachern wrote:
| Exactly. Profit does not always equal good.
|
| One of my favorite books: "Small giants, companies that
| choose to be great instead of big"
| tsimionescu wrote:
| Fiduciary duty, such as it is, only extends to dollar
| value; and there is no other criteria to sue the board
| over.
|
| Note that I'm all for companies having much more legal
| responsibility to other stakeholders, not just
| shareholders, but that is somewhat irrelevant for a
| discussion of whether the board could be successfully
| sued over adopting this decision.
| dasil003 wrote:
| True, but the GP's phrasing of "equate dollar values"
| implies a sort of cut and dried interpretation. A
| mechanical calculation of a short-term price snapshot is
| not the only thing that matters. If the board has good
| reason to believe that Musk will be bad for the stock
| price in the long-term then there wouldn't be any breach
| of fiduciary duty.
| tsimionescu wrote:
| That's not exactly true, as Musk's offer is to buy the
| company outright, making it private (and thus buying out
| all shareholders), as I understand - so there is no
| concept of how Musk's ownership would affect the stock
| price. Still, the board can easily argue "we believe
| shareholders will be able to achieve higher profits in
| the future by maintaining their ownership than by selling
| all stock at Musk's offered price today".
| dEnigma wrote:
| It's not that radical to equate dollar values with "good
| for stockholders". At least in my impression that is what
| most stock holders care about.
| jungturk wrote:
| There's an entire sector of funds that include criteria
| around environmental, social, and governance impacts in
| addition to returns on investment.
|
| https://www.investor.gov/introduction-investing/general-
| reso...
| dev_tty01 wrote:
| Today's price and the 'expected' future price is all that
| matters. The 90% lifetime price history is not relevant.
| All transactions of this nature are based on future value.
| The offer is only an 18% premium at a time when many tech
| stocks are being hammered due to extrinsic reasons. It is
| not a serious offer.
| oh_sigh wrote:
| Getting paid a 25% premium for my stock sounds pretty good to
| me.
| themitigating wrote:
| What if the stock goes higher in the future?
| tomComb wrote:
| I'm sorry that sort of argument makes no sense. Anything
| could happen in the future, but the price today is what
| the market judges it to be worth.
|
| The historical price is irrelevant as well. Looking at
| the historical price is the same sort of thinking that
| leads to "throwing good money after bad".
| [deleted]
| ransom1538 wrote:
| It is irrelevant.
| 14 wrote:
| What if the stock crashes in the future? Having a
| guarantee profit sounds like a pretty good deal for some.
| justapassenger wrote:
| Guaranteed profit at the point in time is great for
| speculators. If you're doing long term investment,
| realizing profit at random point in time, isn't really
| that attractive.
| elcomet wrote:
| What ? Even if you're a long time investor, having an
| instant 25% guaranteed profit is good as you can sell
| part of the stock and diversify.
| justapassenger wrote:
| If you follow that logic, each time stock goes after good
| earnings, everyone should just sell off everything.
| [deleted]
| outside1234 wrote:
| Maybe - it depends on the growth prospects of the company
| - if they were high anyway - then it is better from a
| capital gains tax perspective to just continue holding
| the stock until you need the money.
| philistine wrote:
| Not for Twitter's board. They want more, and good for
| them. In the history of hostile acquisitions, the first
| offer is never the final one.
| TsomArp wrote:
| And why wouldn't be? He is offering a premium from the
| current valuation. You either accept it or reject it if you
| think the premium is low, or am I wrong?
| teeray wrote:
| The board's mandate is to maximize shareholder value. They
| have an offer that will objectively maximize that value. To
| scorn it in favor of intangibles is to act against the
| interest of shareholders.
| philistine wrote:
| According to your logic, any offer to go private above
| market value must be accepted. That's not the case.
| Stockholders might be interested in owning Twitter stock
| for a long time. Elon's offer might not make financial
| sense for them.
| avs733 wrote:
| The boards mandate is one of fiduciary duty. Bluntly, that
| is not a mandate to maximize shareholder value, especially
| in the short term.
|
| They do not have an offer that will maximize shareholder
| value - they have an offer that will increase it.
|
| Words have meaning and concepts have definitions. They are
| not arbitrary of flexible for the sake of making the
| argument you want.
|
| The BOD's responsibility is to the company, a public
| company's responsibility is to the shareholders - this
| difference matters.
|
| Cornell's legal information institute provides a nice and
| _cited_ set of definitions (albeit in legalese) -
| https://www.law.cornell.edu/wex/fiduciary_duty
| akomtu wrote:
| If someone offered to buy your house at a 25% premium,
| would you sell? A house is a place to live at, in addition
| to having a dollar value, and so is Twitter - a powerfool
| tool to control speech, in addition to its dollar value on
| the market.
| LocalPCGuy wrote:
| No, a board is mandated to act in the best interests of the
| shareholders. That might be different than just maximizing
| the share price. They may believe this is a bad idea for
| the company as a whole, and that long term, it's
| objectively better for the company to not be owned by Musk.
| compsciphd wrote:
| isn't musks offer to buy out all the shareholders. i.e.
| lets take a crazy example.
|
| you have a company that is worth $1mil and we only
| imagine that it can be worth $100mil (based on the size
| of the market we are addressing). someone comes and
| offers $200mil but we know he will shut the company down
| (i.e. liquidate all its assets, or even simply the desire
| to destroy the company).
|
| While this might be sad for the company, why is it not in
| the interests of the shareholders to take the offer?
|
| so if Musk is willing to offer more than shareholders
| expect to see in the forseable future, why does it matter
| what will happen to the company after that? their
| interest in the company ends when their shares are
| purchased.
| LocalPCGuy wrote:
| > willing to offer more than shareholders expect to see
| in the forseable future
|
| That is your assertion/opinion (yes, shared by many,
| sure). But it's not the only opinion in this case, and so
| I don't think the analogy holds.
|
| Sure, I could see in the abstract times where an offer it
| just unavoidably good, and so it would not be in the best
| interest of shareholders to take it. But in this specific
| instance, there is a lot to be said on both sides of the
| offer (taking vs. rejecting it).
|
| I would also argue that, depending on the purpose and
| goals of the company, knowing that a person intends to
| shut it down would be a reason to value existing (in
| order to continue carrying out their purpose) over money.
| jungturk wrote:
| Sure - if an offer is greater than the conceivable return
| then of course you take it, but Musk's offer is less than
| the stock traded at 6 months ago and 30% below the
| stock's all-time-high from 14 months ago.
| LocalPCGuy wrote:
| It's also not just about $$. In your scenario, it's just
| negotiating. It's possible the Twitter board and
| shareholders are just unwilling to ever sell, regardless
| of the money involved. (I don't know if that'd ever be
| the case, just that is is possible, and possible within
| fiduciary responsibilities.)
| dundarious wrote:
| Musk is trying to buy everyone out because he wants to
| influence the direction of Twitter. Why not ascribe a
| similar set of motivations to the other current
| shareholders? If that is a motivation for them, then
| shareholder profit is not the only relevant sense of
| shareholder value.
|
| This isn't an argument for the poison pill clause, but is
| an answer to the following quoted question. It is funny
| to see this motivation of most existing shareholders
| ignored in order to bring into being analogous
| motivations of another. Especially when Musk's offer for
| Twitter has been in order to change it promote certain
| values, but conspicuously, better profits has not been
| one of those touted values.
|
| > While this might be sad for the company, why is it not
| in the interests of the shareholders to take the offer?
|
| I will sabotage my own argument somewhat though and say
| that I believe the economic motive dominates over time
| and is almost always (in macro and micro) the primary
| force.
| mise_en_place wrote:
| They're doing it on purpose so people will sell off TWTR, then
| they will secretly buy and approve the acquisition offer. It's
| a blatant insider trading scheme.
| Majromax wrote:
| > You're categorically changing the profile of the stock.
|
| Mechanically, it's not much different than an issue of new
| shares. From Twitter's announcement:
|
| >> each right will entitle its holder [...] to purchase, at the
| then-current exercise price, additional shares of common stock
| having a then-current market value of twice the exercise price
| of the right.
|
| There's no obvious breach of fiduciary duty through this plan.
| Existing (non-Musk) investors get new shares, but Twitter also
| raises capital at the current market price.
| philistine wrote:
| Elon's offer is at the same time an hostile offer, and
| conditional on obtaining financing from banks. This is never
| heard of in the history of hostile acquisitions, and is a BIG
| risk for the board to entertain any attempt by anyone to buy
| Twitter before they know what their loan percentages are.
| krona wrote:
| What's wrong with a leveraged buyout, for example? It seems
| like the norm these days, not the exception.
| colinmhayes wrote:
| Twitter has no equity. There's nothing to leverage.
| samhw wrote:
| Unless I'm missing something, 'leveraged buyout' doesn't
| specify that it's _Twitter 's equity_ which has to be
| leveraged. Off the top of my head, I think Elon Musk has
| some other bits and pieces which he could scrounge
| together for collateral.
| tyre wrote:
| Twitter already has a lot of debt, far too much to fund
| this.
| hajile wrote:
| Once Elon owns the company, HE is the one taking the risk on
| the loan -- NOT the board of directors.
| dev_tty01 wrote:
| Hmm, not sure I understand what you are saying here. If
| Elon gets a loan using his Tesla stock as a guarantee, the
| risk is solely his. If he puts together a consortium to do
| the purchase, then that group is taking the risk. It
| doesn't matter though, given the Twitter bylaws, if the
| Board doesn't want it to happen it won't happen.
| mdoms wrote:
| Elon's offer is not a hostile takeover, it is just that - an
| offer.
| rufus_foreman wrote:
| Elon's offer is not a hostile offer. He has made an offer,
| management has not yet rejected it. It is just an offer to
| purchase the company, as of now.
|
| If the offer is rejected and Elon continues to attempt to
| gain control of the company, that would be an attempt at a
| hostile takeover.
| outside1234 wrote:
| Hostile, in financial terms, is whenever the board or CEO
| did not initiate a conversation around an acquisition, and
| it is just made to the company.
| samhw wrote:
| What? This is not just wrong, it's comical to even think
| of what it would mean if it were true. The board would
| have to clairvoyantly foresee any possible acquirer who
| might be interested in the company, or else reach out to
| _every company and individual in the world_ , stating its
| willingness - or otherwise - to be acquired. That would
| be, uh, quite something.
| jacquesm wrote:
| No it isn't. They key is that management and board are
| against it and the deal is still pursued by the
| (potential) acquirer. It is perfectly possible to
| initiate a conversation regarding an acquisition and this
| is not a hostile takeover per-se though it could develop
| into one.
|
| https://www.investopedia.com/terms/h/hostiletakeover.asp
| zwily wrote:
| No, right now it is an unsolicited offer. That doesn't
| mean hostile, in financial terms.
| nradov wrote:
| What exactly would be the risk for the board?
| twblalock wrote:
| Offers aren't hostile. Trying to take over a company after an
| offer has been rejected is hostile.
| jacquesm wrote:
| Not necessarily, the offer could be amended and increased
| that's perfectly normal and still not hostile. Hostile is
| when you pursue _against the wishes of the current owners
| of the company and their management_ , so in other words if
| they have indicated that they are either not for sale or
| that they are not going to sell _their_ shares to you.
|
| You could then try for a hostile takeover by buying up as
| much as you can on the open market and possibly to try to
| get one or two smaller shareholders to sell their shares to
| get you more than 51% (and in some cases more than 66% aka
| a supermajority) to be able to call the shots.
| dev_tty01 wrote:
| Even then, the Twitter board has staggered terms, so it
| is impossible to do a wholesale replacement of the board
| and thereby gain control of Twitter. The board voted
| unanimously to invoke the poison pill provisions in the
| bylaws so it isn't a matter of swaying a small number of
| board members.
| friesfreeze wrote:
| Tender offers can be hostile - a "hostile tender offer" is
| an offer directly to shareholders to buy shares at a
| certain price, without getting the blessing of the board.
| avs733 wrote:
| It would be simple for them to say 'this is not a serious
| offer' no matter the premium that is a good faith way of
| rejecting it.
|
| I could offer them $150 a share tomorrow, contingent on
| financing and would get laughed out of the room.
| AlbertCory wrote:
| You can read "Barbarians at the Gate" for some 1980s history of
| corporate raiding. Back then, it was pure greed and ego. So
| unlike today [smile emoji].
|
| The "poison pill" defense is very old. I'm not going to defend
| or attack it; it is what it is.
|
| I WILL observe that, once a stock is "in play" it usually gets
| acquired, or at least gets a bunch of new board members.
| ameister14 wrote:
| >I don't understand how any board can implement a "poison
| pill", not just Twitter but Netflix and others, and not be
| found working against the interest of shareholders. Can anyone
| help me understand?
|
| So let's say you put in a shareholder rights plan that allows
| all current shareholders to buy 10 new, discounted shares
| whenever a new shareholder reaches 20% ownership and for every
| share they buy from then on. That effectively dilutes that one
| owner without anyone else, and if they continue to buy it makes
| all the other shareholders much more money.
|
| That's not always legal, but it would help the interests of
| shareholders.
| IMTDb wrote:
| > That's not always legal, but it would help the interests of
| shareholders.
|
| Except the guy at 19.9% trying to move up. Considering he has
| _already_ invested quite a lot of money on the company,
| shouldn 't the board _also_ work for him ?
|
| Why should he be treated differently and his share give him
| different "rights" than others people share ?
| kolbe wrote:
| You are digging in the wrong sandbox if your goal is to
| find ethical behavior.
| hedora wrote:
| Wait, if some ETF accidentally exceeds 15%, then what? First of
| all, that'll screw over a bunch of small investors, right?
|
| Second, could Elon swoop in at that point?
|
| Edit: Also, if Elon is reading this, I'll happily buy 14.9% of
| twitter, and vote as part of your block. Just pay me enough to
| cover the sale and taxes, plus 1%.
| mike_d wrote:
| > Edit: Also, if Elon is reading this, I'll happily buy 14.9%
| of twitter, and vote as part of your block. Just pay me
| enough to cover the sale and taxes, plus 1%.
|
| You might want to speak with a lawyer who is familiar with
| inchoate crime.
|
| What you publicly proposed to Elon is a crime, since you
| intend to conceal beneficial ownership of shares.
| kingcharles wrote:
| And inchoate crimes don't require the person to do as you
| commanded them. Just the statement above would probably be
| enough to charge someone. And even if the crime you are
| encouraging someone to commit is impossible (for instance,
| asking Musk to buy 110% of Twitter through you), it is
| *still* a crime for you to have asked him.
| friesfreeze wrote:
| Likely wouldn't even get around modern poison pills since
| they often contain "wolf pack provisions" covering multiple
| persons acting in unison.
| epicureanideal wrote:
| Yet another example of something that many people wouldn't
| think would be a crime, but would send them to prison for
| decades!
| PenguinCoder wrote:
| Fuck with rich peoples money, you're going to jail _for a
| long time_. Murder someone in a case of 'mistaken
| identity/residence', go to work tomorrow.
| [deleted]
| stevespang wrote:
| beaned wrote:
| Where does the concealment come in?
| samhw wrote:
| Yeah, there's no concealment and no beneficial ownership.
| "I'll vote as part of your bloc" isn't beneficial
| ownership. ( _At most_ it 's delegating the 'control'
| aspect of the equity, but even that is a stretch - in
| context, it's clearly a statement of incidental agreement
| with his opinion on this point, not a total delegation of
| control no matter what he should choose to do in future.)
| rad88 wrote:
| No, "I'll vote as part of your bloc just pay me $50M" is
| obviously not an incidental agreement.
| elif wrote:
| X AE X-12 buys 15% triggering pill, X sells shares
| immediately to drop price, elon purchases 42.0% equity by
| minting new discounted budget shares?
| friesfreeze wrote:
| Poison pills often have exemptions for passive investors such
| as ETFs.
| rosndo wrote:
| An ETF isn't going to "accidentally" exceed 15% ownership of
| Twitter.
|
| Seriously, do you think funds playing with the kind of money
| to buy 15% of twitter often make careless purchases?
|
| >Edit: Also, if Elon is reading this, I'll happily buy 14.9%
| of twitter, and vote as part of your block. Just pay me
| enough to cover the sale and taxes, plus 1%.
|
| Such an arrangement would make Elon the beneficial owner of
| your shares.
| kolbe wrote:
| Barclay's literally forgot to register with the SEC to be
| allowed to issue securities, then issued $15bn of them over
| the course of years, and lost $600m as a result. If you
| think "funds with this kind of money" are any better than a
| pack of chimps, then you should direct that "seriously"
| back at yourself.
|
| https://www.bloomberg.com/opinion/articles/2022-03-28/barcl
| a...
| rosndo wrote:
| Just because one tiny fund screwed up once does not mean
| that it is anywhere near likely that any ETF would screw
| up in a manner that would trigger this poison pill.
|
| $15bn is _tiny_ , presumably we're talking about big ETFs
| like SPY here.
|
| And anyway, you're pretty much agreeing with me. It's
| absolutely possible for a big fund to make a huge and
| hilariously stupid mistake, but this twitter poison pill
| does not meaningfully affect the chances of that
| happening.
|
| In a world where you can shoot yourself in the foot in a
| million ways, it is utterly pointless to speculate about
| this one extraordinarily unlikely situation.
| kolbe wrote:
| What? Barclays is one of the largest financial
| institutions in the world with $1.9tn in assets.
|
| I think we're in agreement that this Twitter thing isn't
| worth the attention, but we are far from agreeing that
| large financial institutions are inherently competent
| because they're large.
| rosndo wrote:
| > but we are far from agreeing that large financial
| institutions are inherently competent because they're
| large.
|
| I don't see anyone making that argument.
| hedora wrote:
| I was literally wondering what would happen. ETFs are
| supposed to be algorithmically traded right?
|
| There's a race condition between the poison pill being
| instated and the ETF updating their strategy. I wonder if
| a board could maliciously take advantage of that somehow.
| hedora wrote:
| > _Such an arrangement would make Elon the beneficial owner
| of your shares._
|
| Thanks for explaining why that won't work.
|
| Presumably, if Elon has a few rich friends, they could use
| their own money, vote as a block, and the board would still
| be screwed.
|
| I wonder what other schemes would work. B corp, maybe?
| doldols wrote:
| > Presumably, if Elon has a few rich friends, they could
| use their own money, vote as a block, and the board would
| still be screwed.
|
| But that's just playing along with the spirit of the
| rules, not a loophole.
| akvadrako wrote:
| I'm pretty sure a majority of shares of Twitter care about
| making the most money ahead of everything else.
|
| But just offering a 50% premium might not be enough. They'll
| need to pay taxes on the realized gains and they'll need to
| find other places to put their money.
| alasdair_ wrote:
| >They'll need to pay taxes on the realized gains
|
| The bulk of the holders of stock in most public companies are
| institutional investors that don't need to pay taxes on the
| realized gains.
| akvadrako wrote:
| Why don't they pay taxes on realized gains?
| ceejayoz wrote:
| Because they're largely managing tax-advantaged accounts.
| [deleted]
| s1artibartfast wrote:
| Because they are taxed on annual profit, not capital
| gains. If they sell a stock and buy a different one,
| there is no profit.
|
| The private analogy is a professional gambler. You don't
| pay taxes for winnings on each bet. You pay taxes on what
| you have cashed out at the end of the year.
|
| Tax on individual sales is only a thing for individuals.
| SV_BubbleTime wrote:
| That's been it though. If the board of Twitter isn't
| concerned about what is best for the share folders, a direct
| violation of their fiduciary responsibility, then what is
| their interest?
|
| If Twitter isn't a business to make money to them, what is
| it, and who is it for?
| jungturk wrote:
| A parameter in assessing the relative value of the offer to
| shareholders is the time horizon.
|
| Perhaps the board believes the value of the shares over the
| next year or two is substantially higher than Musk's offer,
| such that they should reject the buyout so that
| shareholders can reap that gain.
| _3u10 wrote:
| Yeah I made 10% getting in after the disclosure was made. I'd
| actually invest in a twitter owned by Elon and likely ditch
| all my other profiles too.
|
| A platform that makes money and has free speech would be
| wonderful. Maybe he can steal Rogan from Spotify too.
| tyre wrote:
| What's a concrete example of speech that you'd make which
| is specifically banned on Twitter?
| tomcam wrote:
| Not OP but Elon has stated explicitly that all speech
| legal in the USA, so if I had the choice it would include
| parties left, right, and center: Occupy Wall Street, the
| AntiMedia project, Global Revolution Live, President
| Trump, Milo Yiannopoulus (sp?) Alex Jones, Robert Stacy
| McCain, Laura Loomer.
| brian_cloutier wrote:
| I'm not the OP but Twitter has at various times
| suppressed information about covid and covid vaccines.
| They are well intentioned but they occasionally
| overreach.
|
| As a quick example, [1] lists some categories of tweets
| which they will delete. Twitter seems to have overreached
| with category 2:
|
| > Claims that specific groups or people (or other
| demographically-identifiable identity) are more or less
| prone to be infected or to develop adverse symptoms on
| the basis of their membership in that group;
|
| This is nonsense. Your risk increases with your age. Your
| risk increases with your BMI. Men are at higher risk than
| women. Those working in customer-facing roles are at
| higher risk than those who can work from home. Each of
| those statements are apparently banned on twitter.
|
| [1]: https://help.twitter.com/en/rules-and-
| policies/medical-misin...
| _3u10 wrote:
| Don't have one. Let's go with Trump or Alex Jones. People
| who say a lot of things people don't like but aren't
| illegal or their illegality hasn't been proven in court
| yet.
|
| Instead this is how I'd moderate twitter, when a court
| orders a tweet to be banned or a judge rules that a user
| should be banned that is when the moderation team would
| step in.
|
| I'd also make it easier for people to filter content
| themselves. So if there's POVs they don't want to ever
| see they don't have to see it.
|
| Essentially this would reverse 99% of the mod teams
| decisions.
| stale2002 wrote:
| > What's a concrete example of speech
|
| The example that people use, would be any speech that
| legal within the US.
|
| If it is illegal, then most anti-censorship advocates are
| still fine with it being banned. But generally speaking,
| the best case scenario for them would be all legal speech
| in the US.
| politician wrote:
| I'd make them publish their content moderation policies,
| and have all decisions documented and filtered through
| those public rules.
|
| The speech is made in public and should be adjudicated in
| public. Today's Twitter hides its moderation policies and
| decisions. Even though they are a private company (albeit
| publicly traded and the effective public square), this is
| wrong.
| mschuster91 wrote:
| What value does a platform have when people are fed up with
| those who complain about "I want free speech" and leave for
| greener pastures?
|
| Just look at Facebook. It's widely seen as "boomer garbage"
| that's only used as a least-common-denominator resort for
| communication by the target group these days, and
| conspiracy crap groups and peddlers of propaganda are a
| _huge_ part of the reason.
|
| Platforms and societies that fail to maintain some basic
| social order all eventually disintegrate into chaos.
| _3u10 wrote:
| Would you be ok if Trump was setting mod team policy?
|
| Like is this a we need a speech dictator even people I
| disagree with is better than chaos point of view?
|
| Or is this a my point of view should be enforced on
| everyone and platforms should not be allowed to publish
| things I disagree with point of view?
| [deleted]
| gigatexal wrote:
| Hahaha. Nice. Now musk can take his ball and go home.
| jdrc wrote:
| Media politics are just as bad as they always were. Typically TV
| and newspapers are ran at a loss by people who carry out
| political favors. I wonder how twitter users feel about being
| herded around like this
| 14 wrote:
| Anyone care to speculate what his plan B would look like? Could
| he make a twitter clone/replacement then offer existing members
| $50 for their username and password plus x amount of engagement
| on his new site?
| paxys wrote:
| Anyone can make a Twitter clone/replacement. Getting hundreds
| of millions of users to switch over is more complicated than
| just handing them $50, and even that is logistically impossible
| to do.
| fabrika wrote:
| My bet is X.com as a twitter replacement.
| zalebz wrote:
| Backup 1: Make a huge show of dumping 9% of the company at the
| lowest possible share price (that does not trigger any SEC
| scrut6). Deride the current board as inept and having no vision
| for the future of the company. Watch the price plummet and
| acquire the injured version for less than his initial offer.
| Admittedly that doesn't work as well with a 1 year poison pill
| delay the board just triggered.
|
| Backup 2: Continue making Twitter polls that potentially
| steer/force the current management's hand into the changes he
| wants to see implemented regardless.
| fairity wrote:
| People are overlooking the fact that a poison pill will likely
| increase the price of Musk's final offer, and in doing so will
| maximize shareholder value.
|
| Put another way, Musk may be willing to pay a lot more than a 25%
| premium for Twitter (he already said he doesn't care about
| price). Without this poison pill, Musk can force a takeover by
| accumulating shares. With this poison pill, the board has
| leverage to maximize his final offer.
| loceng wrote:
| He said it's not an economic decision, that doesn't mean price
| he pays isn't considered; he also said it's his final offer,
| whether that's just presenting a firm stance as a negotiating
| tactic or not, I don't know; ~$40 billion investment (far less)
| could create a better platform than Twitter with mass but it
| wouldn't be a head start that it looks like he's wanting to
| buy.
| tomatowurst wrote:
| I don't think its possible for Musk to ever attain 51%,
| everytime the price sinks and he accrues shares, they would
| just choose to issue more shares diluting his equity.
|
| really think Musk knew this ahead of time...but what's his end
| goal i can't figure out. is it to profit off his purchase?
| because if he wanted to acquire 51% this is the worst way to do
| it (creating a hostile board who can at will issue infinite
| amount of shares)
| MrStonedOne wrote:
| propogandist wrote:
| or the stock can be dumped with public fanfare, bringing it to
| a fantastically low price. Then, it can be purchased back, even
| with the 25% premium, likely for the same total price.
| not2b wrote:
| Even before the poison pill was adopted, the evidence is the
| market wasn't taking Musk's offer seriously. That's because he
| was offering $54.20 per share (ha ha, 420), but the stock price
| never closed higher than $48.36. So almost $6/share was left on
| the table.
|
| Part of it is that Musk doesn't have $43B in cash, he'd have to
| raise it or borrow it. He's worth more than that but it isn't
| liquid; as an officer of Tesla there are some restrictions on
| when he can trade. Another part is that many doubt whether Musk
| is serious or if he is playing games again, like the last time
| "420" appeared in a financial announcement from him.
| s1artibartfast wrote:
| >So almost $6/share was left on the table.
|
| This is only true if the there is no uncertainty.
|
| If you think the value without the takeover is $30, and it is
| trading at 48, and buyout is $54, that means the market thinks
| it 75% likely.
|
| downside -$18, upside +$6 = 75% likely
| UnpossibleJim wrote:
| So, I'm not very corporate savvy and this might be a very stupid
| question. Is there a NON-culture/political reason for all the
| push back against Musk buying Twitter? From the read, this just
| seem to be opening the door for someone else to try and take
| majority control and pining away for the days of Dorsey (which,
| if looked at objectively, weren't great... just filling an
| opportunity).
| axg11 wrote:
| The pushback is simple: Twitter stock price was higher than
| Musk's offer for most of 2021. We are in a downturn affecting
| the entire tech industry, and it's likely that prices will
| return to previous levels at some point. Elon's offer is a
| lowball and Twitter can bring more value to shareholders with
| or without Elon.
| FFRefresh wrote:
| I don't immediately buy the logic of "Stock A hit a peak of
| $X last year, therefore that is the correct price/valuation,
| and not the lower price it is right now"
|
| If Twitter was worth more, it'd be worth more.
|
| With that logic, you should put a huge chunk of your savings
| into Twitter to benefit from the insight, as it's currently
| trading at 39% below its 52-week high.
| minhazm wrote:
| In 2016 Microsoft acquired LinkedIn at a $26 billion
| valuation, which was at the time a premium of ~40% or so over
| the current price, but still lower than their valuation was
| the previous year. So it isn't unprecedented to accept an
| offer for an amount lower than your all time high Elon's
| offer is a 38% premium over the price it was prior to him
| disclosing his position in the company.
|
| > We are in a downturn affecting the entire tech industry
| Some companies are down more than others, and some are doing
| fine. Twitter revenue is largely driven by ads and they are
| likely also going to be hit by Apple's privacy changes like
| all other ad based businesses. Meta (Facebook) has already
| said they expect ~$10 billion revenue hit from the changes.
| It's feasible to think that Twitter revenue for the year may
| actually drop and the stock price may not recover to the 2021
| levels any time soon.
| defen wrote:
| > We are in a downturn affecting the entire tech industry,
| and it's likely that prices will return to previous levels at
| some point.
|
| So why not take the offer (which is 20% higher than the
| current market price for the stock) and put the received
| cashed into other tech stocks? Is Twitter
| uniquely/excessively down compared to other tech stocks, and
| due for a bigger rebound?
| pm90 wrote:
| Because Twitter is not a hedge fund.
| moralestapia wrote:
| >Twitter stock price was higher than Musk's offer for most of
| 2021.
|
| That's cute but the past is gone. Twitter is clearly going
| downhill, both with their product and with their management
| (good thing they got rid of Dorsey, but perhaps that was too
| little too late), the stock just follows on that. If
| anything, people like Musk are the ones who still attract
| interest to the platform.
|
| >Twitter can bring more value to shareholders with or without
| Elon
|
| Twitter is on a very dangerous spot right now, their MAUs
| peaked long ago as young people go to other platforms, and
| overall, everyone is a bit of tired of the kind of discourse
| that predominates there, for instance, Trump was banned and I
| STILL find out everything about him because the people there
| (left and right-wing) are absolutely _obsessed_ with him.
|
| Honestly, Twitter is the one social media platform that I
| wouldn't really mind if it just disappeared. At least
| Facebook has some family members in there and some pictures
| from my earlier years. Twitter brings nothing of value to my
| life and I'm sure I'm not the only one who feels like that.
| dnissley wrote:
| Counterpoint: it's not a downturn, just a return to reality.
| Tech stock valuations were sky high in late 2020 / early
| 2021, and even considering recent drops most are still above
| their pre-pandemic levels.
| mdasen wrote:
| Totally possible, but the original question was "Is there a
| NON-culture/political reason for all the push back" and
| "Twitter stock price was higher than Musk's offer for most
| of 2021" is definitely a non-cultural/political reason to
| push back on the offer.
|
| Again, you might be right that Twitter's price was over-
| inflated in 2021, but "it was worth more" is certainly a
| non-cultural/political reason to push back on the offer -
| even if they're wrong about Twitter's long-term value.
| hajile wrote:
| Their stock dropped along with Facebook and other media
| platforms the second Apple stopped them from tracking users
| everywhere. That's without mentioning the crazy overvalue
| problem such companies already have.
| FFRefresh wrote:
| Surely there is both a status quo and survival bias going on
| with the existing leadership/management team. When you have an
| outside person who wants to change some fundamental things
| about the company, it seems natural that there would be
| resistance.
|
| As an outsider, I'm personally intrigued by the prospect. There
| are two things he's mentioned that I think could be very
| beneficial (outside of freedom of expression) to society:
|
| 1. Transparency - open sourced algorithms for what shows when
| and transparency about moderation decisions
|
| 2. Reduced short-term financial incentives - Given it'd be
| bank-rolled by someone with a lot of money and private, they
| wouldn't need to play the gray area game of increasing
| advertising & data sharing that other sites do.
| systemvoltage wrote:
| The sad truth is that this is an intense political battle. I
| would personally favor Elon Musk taking over and shaking things
| up, any other position is untenable. And, I am saying this as a
| progressive. I think an open and transparent social platform
| would be great for the society.
|
| The issue is that managerial class of America, both in private
| and public sector, are in bed with each other. The government
| cannot suppress free speech using the frontdoor, but these
| social media companies (Meta, Twitter) as well as Big Tech
| machinery (Google, Apple, Microsoft, Amazon) act as a proxy for
| supressing political speech through opaque algorithms and
| straight up censorship.
|
| We, liberals, used to be exceptionally devoted to free speech.
| Just look up ACLU's cases from the 90's and prior. We were
| against the establishment. Against the managerial class
| crushing labor. Against the fucking 3 letter agencies.
|
| Now, my own party wants to turn America into an authoritarian
| censorship dystopia. It's hard to stand by that.
| paxys wrote:
| As a shareholder, either you are happy with the price Musk is
| offering you, or you think the company can do even better long
| term. Twitter is clearly a very valuable asset, considering
| this fight is happening in the first place, so it is not
| inconceivable that >50% of shareholders will want a larger
| buyout. Heck even if you are completely happy with the terms,
| pushing back and asking for more is a standard negotiation
| tactic. They'd be foolish not to try.
| anonymousiam wrote:
| AlbertCory wrote:
| Bias? Of course it is. It's one point of view. Anyone is free
| to cite one of the thousands of opinions to the contrary.
|
| Would the naysayers say a site was "biased" if it claimed "this
| is a direct threat to our democracy"?
| themitigating wrote:
| This site is littered with hyperbolic opinions
|
| "Twitter's management wouldn't have to worry about being kicked
| to the curb and they can continue doing what they do best,
| restricting conversation and censoring whatever they don't
| like."
| [deleted]
| 3327 wrote:
| NaturalPhallacy wrote:
| They'd rather tank their own company than allow free speech.
| themitigating wrote:
| What should be allowed?
| MrStonedOne wrote:
| [deleted]
| politician wrote:
| Twitter's speech moderation policies should be public, and
| all decisions pertaining to speech should be public, and
| there should be a public appeals process before a jury of the
| speaker's peers.
| metadat wrote:
| That's a lot to ask when each user account is free.
|
| You're basically replicating the US Courts Legal System,
| except those on trial pay 0% taxes. Not viable.
|
| Keep thinking though, we need a hero of an idea to make
| forward progress on the question of what strategy is best
| for US-based public companies, and what their role is in
| showing the world what the gold standard for "freedom of
| speech" online looks like.
| politician wrote:
| This is why Twitter needs to go private. The current
| management has no idea how to run a public square without
| falling back to an authoritarian censorship regime.
|
| EDIT: Arguably, much of what I am suggesting can be
| automated cheaply.
| xenadu02 wrote:
| Isn't this fairly standard? It doesn't stop the board from
| accepting Musk's offer, it just means he can't execute the
| takeover without board approval.
| friesfreeze wrote:
| Technically he could - it would just be ludicrously expensive.
| tempestn wrote:
| Fair amount of irony in the exhange at the end. Twitter needs to
| be privately owned, so it can help usher in an age of
| cryptocurrency when everyone can own a piece of everything...
| NoOneNew wrote:
| While reading this, I feel Musk just pulled a Bobby Axelrod on
| Twitter. I'm curious what's about to happen because of it.
| jacobolus wrote:
| A web search indicates that "Bobby Axelrod" is a TV show
| character. What does "pulling a Bobby Axelrod" mean in this
| context?
| NoOneNew wrote:
| His character, along with his foil Chuck Rodes, trick people
| into knee jerking traps. The more "public" of a trap, the
| better for them. A lot of wall street plays in the show are
| based on real world plays. This article read like it came out
| of an episode.
|
| Billions is a great show by the way.
| jacobolus wrote:
| Can you explain Musk's trap and who is being trapped?
| NoOneNew wrote:
| If I knew the play, I wouldnt be sharing it publicly.
|
| My whole point is, Musk made a series of public actions
| that made a stir. One action had the board make a knee-
| jerk decision that seems somewhat logical. He's jabbing
| with his left and the Twitter board seems to have hopped
| to their left and he's maybe going to uppercut, right
| hook, maybe go for a knee or do nothing at all and get
| hammered on martinis or mojitos or whatever a rich super
| villian likes to drink.
|
| This is all a public side show for some greater end down
| the road or Musk made a drunk filing with the SEC. I dont
| know... well, all I do know is what's publicly available
| is pure propaganda to sway the public towards some
| greater play by someone who's going to profit off of
| this. I'm done with my poop now, find someone smarter to
| figure it out.
| WalterBright wrote:
| Every company I know of that did a poison pill to prevent a
| takeover wound up tanking within a year or two and the
| shareholders wound up with sand.
|
| As a Twitter shareholder myself, the board is making a big
| mistake.
|
| As a legal matter, I don't understand how a board could sell
| shares to other shareholders at a lower price than to the entity
| wanting to buy shares to gain control.
| memish wrote:
| As a shareholder and end user of the product, I agree.
| alphabetting wrote:
| you want to cash out with a 20% bump and be out of the stock
| during a huge tech equity downturn when the stock was over
| 60% higher last year?
| missedthecue wrote:
| I think last year was some serious bubbliciousness, not the
| true value of Twitter and all the other tech companies (and
| shitcoins and NFTs and basically everything else people
| were throwing money at)
| loceng wrote:
| Elon said he'd keep as many shareholders as he's legally
| allowed to.
| matthewdgreen wrote:
| What does it mean to keep shareholders in a private
| company. Isn't there a limit of 2,000 or so?
| hackernewds wrote:
| "Elon said" is not a stamp of trust anymore. Elon also
| said TSLA would accept Dogecoin, which he had accumulated
| prior to communicating it. Then he sold it off.
|
| History should be a lesson here, it's almost Deja Vu with
| Twitter
| colinmhayes wrote:
| And also that tesla was going private at $420 a share.
| gameswithgo wrote:
| hajile wrote:
| The big reason it tanked was privacy regulations from
| Apple/Android. That's not changing to favor Twitter and
| effectively took away one of their biggest revenue streams.
| That's a big deal for a perennially non-profitable company.
| twblalock wrote:
| A 20% bump with zero risk? Yes please!
|
| Even if you think Twitter stock will go up 20% next year,
| you'd want to take this offer. If you think it will go up
| 50% next year, you might still take the offer because of
| the risk:reward ratio.
| mcintyre1994 wrote:
| I think the most famous counter-example would be Netflix in
| 2012
|
| https://www.bbc.co.uk/news/business-20214401
| cwkoss wrote:
| Are you going to sell? If not, why not?
| WalterBright wrote:
| I'm considering selling.
| anonymouse008 wrote:
| Read some Matt Levine, he's way more articulate and makes
| finance quite fun. But if I were to take a stab at it:
|
| The market has been so weird recently that stock splits - which
| according to previous theoretical belief do not create
| shareholder value - have in fact increased the share price for
| extended periods. So issuing stock for whatever reason (high
| price, poison pill) could be seen as shareholder maximizing.
|
| One could say diluting the stock so that a particular
| personality cannot buy the whole company could be shareholder
| maximizing as it would entrench ESG held values -- emboldening
| new shareholders to purchase the stock (saving the stock
| price).
|
| And point of information, by diluting rather than selling
| already owned shares, control is not ceded to the potential
| acquirer -- unless the potential acquirer doesn't care about
| the poison pill and will pay the premium for the new issue as
| well.
|
| This is quite fun to watch.
| atmosx wrote:
| Matt is awesome. Super-smart guy, I love his perspective
| although I must admit I rarely read his newsletter nowadays.
| and-not-drew wrote:
| > The market has been so weird recently that stock splits -
| which according to previous theoretical belief do not create
| shareholder value - have in fact increased the share price
| for extended periods
|
| You're right that theoretically, they shouldn't create value,
| but I think even back to the 80s and 90s it's been shown that
| companies that go through a split tend to out perform the
| market for years after the split. The main reason isn't that
| the split creates value, but rather that companies who go
| though a stock split are usually successful and already on a
| trajectory to beat the market, split or not.
| hackernewds wrote:
| So that selection bias seems to project that buying before
| a share split is actually not an educated+good decision
| and-not-drew wrote:
| I think it still is. I'm going to try to find a source,
| but I saw an analysis where they measured from a year
| before the split, the day the split was announced, and
| the day the split was executed all until one year after
| the split was executed and the returns on all of them
| beat the market as a whole.
|
| That being said, holding before the announcement
| performed the best.
| Majromax wrote:
| > I'm going to try to find a source, but I saw an
| analysis where they measured from a year before the
| split,
|
| There's a bit of time travel / survivor bias with this
| one. A company that has not beaten the market is much
| less likely to split its stock. In other words, if I know
| nothing other than that a company is splitting its stock,
| I can reasonably guess that it's shown good returns in
| recent history.
| and-not-drew wrote:
| Yeah, that was their whole point. Stock splits don't
| cause better returns, but the stocks with the best
| returns are more likely to split.
| eqmvii wrote:
| IMO, Matt Levine is mostly writing with his tongue firmly in
| his cheek when he suggests stock splits and meme stock antics
| are Rational Things Boards Should Do For Value.
|
| Excellent source for financial news though, I agree!
| [deleted]
| xyzzy21 wrote:
| Legally they can't - it would violate fiduciary obligations for
| profit maximization.
| rileymat2 wrote:
| Not sure this is true, if they believe the long term outlook
| is higher than the hostile price, they are being good
| fiduciaries.
| sbelskie wrote:
| Are you claiming that this common kind of poison pill
| provision is illegal?
| tuckerman wrote:
| The idea that the board's fiduciary means they must maximize
| profits at the expense of all else is a bit of a myth. Yes,
| they need to look out for their shareholders but they also
| need to do right by the company, and companies can be formed
| for any legal purpose and everyone (the company and the
| shareholders) values things differently. It's generally been
| upheld that the board has a lot of autonomy and, outside of
| gross negligence, is generally protected by the business
| judgement rule.
| tsimionescu wrote:
| > Yes, they need to look out for their shareholders but
| they also need to do right by the company, and companies
| can be formed for any legal purpose and everyone (the
| company and the shareholders) values things differently
|
| The board has a lot of leeway into how they achieve profit
| for the shareholders, but all decisions they make must be
| nominally in the interest of that goal (assuming we're
| discussing a for-profit company such as Twitter). They can
| basically claim anything they do is done in the interest of
| shareholder value and be safe, but if they said "we know
| the company will lose money on this, but we really like X
| so we'll spend company money on it", they would pretty
| clearly be in breach of their fiduciary duty.
| tuckerman wrote:
| At least in Delaware law, a board's fiduciary duty
| involves a duty of care, loyalty, and good faith. While
| acting to maximize their personal interests or
| egregiously working against profits could be considered a
| breach, not trying to maximally make profits probably
| wouldn't be.
|
| All of this would need to be litigated on a case-by-case
| basis, but many modern cases have found that companies
| can freely act to maximize the wages of their employees
| at the expense of dividends or act charitably even when
| there aren't tax breaks.
|
| That said, I'm not sure this really even applies in the
| case of Twitter---I think its not unreasonable to argue
| that the innate value of Twitter is so much higher than
| what Musk is offering that its better for the
| shareholders to wait even thinking purely in terms of
| profits (I would probably personally disagree with that,
| but I don't think its any more unreasonable than plenty
| of other valuations I see)
| tsimionescu wrote:
| Yes, they don't have to _maximize_ profits, but they also
| can 't ignore profit to the benefit of other values they
| deem more important, per the very old but still in force
| Dodge v Ford.
|
| As long as they are not egregiously and obviously acting
| against that goal, or taking decisions without
| deliberation, the law would favor them in any trial that
| only hinged on whether the price offered by Musk was
| better than the market. Basically the burden of proof to
| show that it _could not_ have been a good business
| decision would lie with the plaintiff, and I very much
| doubt that you could build a solid case of that.
| LocalPCGuy wrote:
| Achieve profit is not the same thing as provide value or
| best interest of. It could be. It does not have to be.
| tsimionescu wrote:
| A for-profit company is there for profit. There is no
| other way to interpret shareholder value in a for-profit
| company, for purposes of discussing fiduciary duty.
|
| Now, providing profit/share-holder value need not mean
| _maximizing_ said profit - it just means that profit must
| always be considered in any business decision, it can
| never be entirely ignored in favor of other things.
|
| Note that not even shareholders get to decide what kind
| of value they expect their board to offer them. That
| definition of value is set in stone by the type of
| corporation. The board of a for-profit company has a
| fiduciary duty to the shareholders of the company as
| pertains to profits.
|
| If 100% of the shareholders of Twitter voted to ask the
| board to sacrifice profit for free speech; and the board
| decided to ignore this request entirely and publicly
| announced they would limit free speech at every trun to
| focus on profits, the shareholders would have no chance
| of winning a breach of fiduciary duty trial against the
| board. The board has no legal duty to uphold some
| abstract values that shareholders hold dear, they only
| have a legal duty to act in the interest of company
| profit as they see fit.
| hajile wrote:
| We are the largest perennially unprofitable company to
| ever exist. The richest guy in the world offered to
| invest a fifth of his net worth into the gamble of
| turning our company profitable while making our
| shareholders a massive profit.
|
| Instead, we poisoned the system knowing that the stock is
| all but guaranteed to tank massively reducing our market
| cap and hurting our ability to take out still more loans
| to continue our unprofitable venture.
|
| But we're holding true to our other nebulous values.
|
| They'll have a very compelling argument.
| tsimionescu wrote:
| To prove a breach of fiduciary duty, you generally have a
| very high burden of evidence, unless you can show some
| conflict of interest or obvious lack of deliberation.
|
| Otherwise, the business judgement rule is applied, where
| the presumption is that the directors acted in good
| faith, and you would essentially have to prove that it is
| impossible for Twitter stock to grow beyond the current
| offer.
| hajile wrote:
| What answer could they give for their actions that isn't
| immediately disprovable garbage?
|
| Do you really think that discovery would show that this
| was all in good faith?
|
| I'd bet heavily that a lot of ideological discussions
| would be disclosed. As that is completely contradictory
| to what Twitter claims is their goal, bad faith would be
| the only remaining option.
| tsimionescu wrote:
| I would bet that no such ideological grounds would be
| found in discovery, even if it were true, unless the
| board are complete morons to discuss such things over
| email.
|
| Instead, it is easy to expect they would discuss the
| sincerity of Musk's offer (the chance that they may
| accept it only for it to be retracted, as happened with
| the board membership offer), the plausibility of him
| having the required financing, the stock price today vs 6
| months ago compared to the offer, and similar business
| discussions.
|
| I also don't personally believe this is an ideological
| battle at all - it's much more likely to be a financial
| manouever or simple ego-driven ambition by Musk.
| philistine wrote:
| You gave a very clear example of a breach. To add to your
| point, _Elon 's offer is both conditional on financing
| and too low, so we will implement a poison pill_ would
| never be seen as a breach.
| xyzzy21 wrote:
| And then the board and executive get sued for failing to maximize
| shareholder value. It's literally a violation of federal law.
| gdulli wrote:
| Often repeated, but not true: https://caselaw.findlaw.com/us-
| supreme-court/13-354.html
| SalmoShalazar wrote:
| You've posted this several times in this thread and it is not
| correct.
| themitigating wrote:
| I wish hackernews had more moderation and could ban people for
| lying
| nullc wrote:
| A poison pill adopted up front before there were any third
| parties that could claim to be prejudiced by it or adopted with a
| shareholder vote is one thing ... this seems to be begging for a
| successful lawsuit, and I can think of one 10% level investor who
| would be likely to file one.
| randyrand wrote:
| How are poison pills legal? If the board can make arbitrary rules
| can't they just zero out Musks or anyone else's shares right now?
|
| Or say "Anyone with the last name of Musk now owns type D share
| with 1/100th ownership value".
|
| Poison pills seems pretty close to doing just that.
| randyrand wrote:
| From ArsTechnica:
|
| "Even before Friday, Twitter had bylaws that "could have the
| effect of rendering more difficult, delaying, or preventing an
| acquisition deemed undesirable by our board of directors," the
| company said in a February 2022 SEC filing. That includes "a
| classified board of directors whose members serve staggered
| three-year terms," and the ability to "authoriz[e] 'blank
| check' preferred stock, which could be issued by our board of
| directors without stockholder approval and may contain voting,
| liquidation, dividend and other rights superior to our common
| stock."
|
| Sounds like the board can do pretty much anything they want
| with Twitter's stock. I find it incredible that a regulated
| public company can issue abitrary shares with any terms they
| want.
|
| They made these rules before Friday. but it also sounds like
| they could have made them today if they wanted to.
| cryptonector wrote:
| Then there's the question of whether such bylaws should be
| legal.
| mym1990 wrote:
| Not well versed in any of this, but could this be Musk just
| toying around with Twitter and/or him bluffing to get a reaction?
| Does he have any legal obligation to go through with the purchase
| if Twitter was open to it?
| friesfreeze wrote:
| (1) yes, though would be an expensive troll and (2) no - offer
| was non-binding and very conditional (due diligence, financing,
| etc.)
| mym1990 wrote:
| Thank you! Why would it be an expensive troll if no money is
| changing hands?
| friesfreeze wrote:
| Well (1) you can be sure Musk is paying lawyers $$$ to make
| sure he doesn't deeply fuck up on any securities rules
| given his contentious relationship with the SEC [though
| fairly that might be de minimus to him] (2) there is an
| opportunity cost to putting money so much money in twitter
| just for laughs [he could be doing other things] and (3)
| there is risk that the twitter stock could fall out from
| under him. (3) is really only a cost relative to having the
| money in a diversified portfolio - but it is a real cost
| nonetheless.
| s5300 wrote:
| I wonder if Twitter would be in the right to deactivate musk's
| account. They're a company & he's clearly trying to cause them
| harm. I see no reasons as to why it wouldn't be justified.
| (Hilarious too, I might add.
| outsb wrote:
| Because he's a near-10% shareholder and accounts like his are a
| major driver of new account growth. I wonder if this episode
| has impacted growth or engagement metrics any. Hard to imagine
| it hasn't
| [deleted]
| bombcar wrote:
| They can certainly do it but it's end Twitter as a going
| concern.
|
| People like to pretend.
| ceejayoz wrote:
| If suspending Trump didn't end Twitter, suspending Musk
| won't.
| darthnebula wrote:
| Don't be too sure of that...
| themitigating wrote:
| Why?
| asguy wrote:
| Because depending on how you look at it, Twitter
| suspending Trump (and Babylon Bee et cetera) was part of
| the motivation for Musk to buy Twitter in the first
| place.
| themitigating wrote:
| The parent offered no proof other than a cryptic
| statement
| rubyist5eva wrote:
| I think Elon just wants to destroy Twitter and he's just baiting
| them into tanking themselves, I have a hard time believing
| actually wants to own and run it.
|
| If he did own it, I wonder if he would unban Donald Trump?
| toephu2 wrote:
| Already a discussion here
| https://news.ycombinator.com/item?id=31042187
| computerdork wrote:
| First off, I should say I think Elon is the man. What he's been
| doing at "engineering" companies is of course _absolutely
| incredible_ (go Starship!). But not so sure he should be mucking
| around with a social-networking /media company, in which messy
| social and legal rules are even more important than the
| technologies themselves. Yeah, his idea that free speech should
| be the overriding principle is at it's heart true, but tell that
| to Mark Zuckerberg and FB (as many of us here know, he originally
| was saying something similar years ago, that it wasn't FB
| responsibility to moderate content, but then it became known that
| many organizations and states are using bots and companies
| dedicated to promoting their own agendas. How do you stop
| something like this??). Free speech is an ideal that must be
| balanced with other ideals like protecting individual people &
| groups against defamation and libel amongst other things. Not
| sure an intense, engineering mind like Elon is the right person
| to wade into these very murky waters. And, have a feeling Elon
| wouldn't even enjoy working on a problem like this (as a software
| engineer myself, don't think I would either!)
| politician wrote:
| Counterpoint: Banks are regulated, yet PayPal. Defense
| contractors are regulated, yet SpaceX launches satellites for
| the military.
|
| I don't think claiming that because social spaces involve legal
| decisions, that he's out of his element.
| computerdork wrote:
| Agree, he's used to regulations. But, it's not just the legal
| rules, but the unspoken social rules we have as well as
| groups and factions he'll have to deal with. I could
| _totally_ be wrong, but at least for me, I don 't see him
| being good at or even enjoying fixing the problems of social-
| networking companies. Seems like a distraction from SpaceX
| and Tesla (which is _more_ than enough)
| Nextgrid wrote:
| I don't believe in nor really care about his points regarding
| "free speech" (whatever that even means, considering everyone
| has a different concept of it).
|
| However I believe the current model of social media being
| funded by "engagement" has peaked, is hard to grow in a world
| already saturated by advertising, and is at risk from privacy &
| pro-consumer legislation slowly being enacted around the world.
|
| I just don't see a future in the current model, yet the social
| media industry seems to be stuck in this local maximum without
| an easy way out. A hostile takeover of a large existing player
| by a risk-taker is the "kick in the butt" that the industry
| needs. It may go well, it may go wrong, but IMO it's at least
| worth a try.
| computerdork wrote:
| Good point, Twitter is a bit of a mess. hmm... But a huge
| worry is that Twitter has become such an important mass-media
| tool, and if he messes it up, it could become even more the
| goto outlet for politicians, autocrats, or even just
| businessmen with bad intentions to sway public opinion.
|
| Yeah, as mentioned, Elon is a god, but in my humble opinion,
| his talents are in engineering (and Twitter just seem like a
| problem an engineer wouldn't even want to solve).
| mym1990 wrote:
| You would be surprised, Instagram is showing pretty dramatic
| revenue growth over the past 4 years and it doesn't seem to
| be slowing down. Global expansion into developing markets
| will continue to fuel that 'funding' for social media
| companies. On the ad side, humans seem to be pretty ok with
| buying more and more and more stuff.
| maxclark wrote:
| Predictably stupid. They're going to come back and say the
| company is worth >$70B.
| s17n wrote:
| That's how the game is played. If you want to take over a
| company without the consent of its executives, it's going to be
| a fight and you're probably going to lose.
| walterlb wrote:
| If Musk fails, are there likely to be any lasting effects to
| Twitter or more generally to the market?
| christkv wrote:
| Him liquidating his position could crash the stock.
| antr wrote:
| > ... consent of its executives...
|
| *sigh*
| nickysielicki wrote:
| The board of a public company cannot reasonably claim that
| they're worth twice(!) what the market currently values their
| company at simply because they feel it's true. Unless they
| have advertising contracts and growth metrics in the pipeline
| that represent a reasonable doubling of revenue and value,
| they're acting legally irresponsibly. Justifying this is
| difficult. This is objectively a good offer.
| Ferrotin wrote:
| Twitter has the potential to be much higher than its
| current value. It's currently at a zero-earnings pricing. I
| don't know whether Agrawal will turn it around, but if Elon
| or somebody like him stepped in, maybe they could clean
| house and do it. If Twitter employees are freaking out
| right now, it's because they have so many people doing
| stuff that isn't bringing in money.
|
| I think the board is right to reject the offer. Twitter
| could be worth more. Twitter in Elon's control would be a
| more valuable company.
|
| If I were a shareholder, I'd want them to reject 52.40.
| Maybe not 92.40. The ideal outcome would be if Elon gets
| 51% control and I got to remain a shareholder.
| elforce002 wrote:
| Well, Twitter is 16 years old with $5 billions in
| revenue. Their maximum was ~$70 per share and that was 1
| or 2 times. I don't think 92.40 is even reasonable since
| you have incumbents ranging from IG to tiktok.
|
| Heck, Tiktok could add a timeline just like twitter and
| decimate them since Gen Z and millenials (26 and younger)
| are basically there. Facebook is old school and will
| start slowing down going forward. IG is for business
| since the appeal (sharing photos with friends) has been
| lost. Snap has its niche and Gab, Gettir, etc... are
| catering to the right.
|
| People like controversy and that's the main reason
| twitter is relevant. Left and Right like to expose each
| other. That's the main reason alt-tech is not mainstream.
| tsimionescu wrote:
| Apparently it's lower than the current 52 week moving
| average of the stock price, so I don't think it would be
| outrageous to claim it's a low offer even without some
| massive deals in the pipeline.
| cryptonector wrote:
| Corporate governance needs a revamp. Executives have too
| much power relative to shareholders.
| xyzzy21 wrote:
| The literal value is their share price x total shares.
|
| The notional value is at best the NPV of future profit
| streams. However Twitter's track record on profits are
| dismal so the claim is dubious legally.
| rileymat2 wrote:
| No, that's only for shares trading at the moment.
| Otherwise buyouts would not have the premium they
| normally do.
| randyrand wrote:
| Share prices go up as you buy a company because you buy
| from the people that value their shares least first.
|
| You can't just multiply the current price and expect
| everyone to be willing to sell for that amount.
| systemvoltage wrote:
| What if someone is unwilling to sell? Or at an
| unreasonable price, say $100M/share?
| paxys wrote:
| Somewhere between 50% to 100% is the standard premium in
| all such acquisitions. As it stands Musk is offering 17%
| extra. Of course that takes the existing bump that the
| stock got from his initial purchase into consideration, but
| investors already have the ability to cash out at the
| current price so that lessens the attractiveness of the
| offer.
| cdash wrote:
| No, they don't really have the ability to cash out at
| current price. Maybe the smalltime investor but if any
| large institution tried to cash out the share price will
| tank. Just like it will tank when Musk ends up selling
| his shares.
| Proven wrote:
| systemvoltage wrote:
| What are the options for Elon Musk if he really wanted to
| counter this poison pill?
| grapehut wrote:
| Have multiple entities buy shares
| teeray wrote:
| I wonder if these could be Tesla, The Boring Company, and
| SpaceX?
| yieldgap wrote:
| The poison pill will apply to "groups" as well, so don't
| think that would work
| SnowHill9902 wrote:
| He could use the infamous antidote clause.
| emerged wrote:
| I think that clause has to be administered within a few
| hours and that time has already passed. It may be necessary
| to amputate a portion of the company.
| [deleted]
| stevespang wrote:
| [deleted]
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