If the shareholders are rational and believe the true value is greater than current price, why aren't people buying until it asymptotically approaches that price?
Optimism and hopes for future gains aren't priced in because they are fantasy and not yet material.
I believe a lot of my long positions are worth more than their current price, doesn't mean I'm going to spend all my money buying them up to that price.
If I lock in a 20% gain today that's nice, but I might believe with high confidence that it'll rise 50% in the next year. Then Elon's bid doesn't move me that much.
That risk and upside is already priced in if you believe in market efficiency.
They’re not. You’re mixing up the market as a whole and the owners of a majority of shares.
The ask price is the lowest ask. If you buy a lot of something, you reach further into the order book and the price is going to be higher. If you want a 51% stake, then a lot higher.
Many of them are passive, and only adjust once a quarter or once a year. Additionally, big spikes by one stock match drops in other stocks, aka they're not likely to make a big sale because one stock (twitter) had a good day.
The market is large and has plenty of participants with different strategies. There are people selling at the going price, and there are people who are not. The trading price is a good reference price, but it's not the "right price" for everyone.
But it's the only price based on facts rather than opinion.
Every market participant has a buy price and a sell price for one share influenced by their personal opinions and the state of the whole market; each at a different level and trading price is only calculated on actual trades. So all the shareholders that are unwilling to sell for any of the current offers do not influence it.
Yet if you were to buy 100% of the shares then you would eventually have to climb up to their price.
I don't anyone would find your squishy confidence it's worth 50% more than current value any more credible than shorters who think it's worth 50% less. Both seem like fringe opinions without much foundation.
It's not my opinion that TWTR is worth 50% more. Please don't understand it as such. It's an example of what someone long TWTR could be thinking when they simultaneously hold their position and want to reject the Musk takeover.
I don't think it's worth continuing this thread anymore though. Have a great day.
Every time a stock trades, there’s a single price. And that price is the price one person is willing to sell at, and another is willing to buy at.
That’s how markets work.
My guess is Musk and a few key players are acting in a logical way and the rest of the price action is made up of emotional response.
It’s anyones guess what the endgame here is, but one thing is for sure, Musk muddying the waters spells trap to me. I’m swimming the other way.
If you can buy 1 share at $1, that means that yes.
But a controlling interest in something almost always requires more than 1 share. It may require millions or billions of shares.
And once folks figure out that they’re the couple percent that will block that controlling interest, their own prices tend to change.
That volume of shares also means you can't just buy from the person who is happy to sell right now, you need to convince folks who don't plan to sell ever, or aren't in a hurry, or don't need money right now. Their prices tend to be different too.
And just like buying a tank of gas is different than buying an oil field, the value propositions and likely price discussions are different.
If you can buy an oil field of gas one tank at a time, more power to you - but you’ll likely quickly discover it doesn’t scale the way you want.
A dollar in the hand is worth a LOT of imaginary gambling dollars.
This can only be described as political/ideological or a huge gamble that Musk would come back with an even bigger offer rather than walk away. Neither of these seem to be in the best interest of shareholders.
In my opinion, the real reason behind the board's decision is ideological. If Someone with their ideology made the same offer, I'd bet big that they'd be announcing their acceptance and talking about the bright future for the company.
Screwing your shareholders over for ideology would not sit well with a jury. I'd love for them to go to discovery over this and see what the board REALLY said.
- Tesla loses money on every car. They make money from regulatory credit trading.
- SpaceX's Starlink satellites are involved in about 1,600 close encounters between two spacecraft every week, ~50 % of all such
- Hyperloop is impossible
- The Boring Company tunnels are deathtraps
Absolute hogwash. In 2021, Tesla made 43B revenue in automotive sales and only 1.5B in regulatory credits, which is less than net income of over 5B.
That is including massive short term hit by continuing investments in new factories and new products.
Good luck spinning.
https://www.sec.gov/Archives/edgar/data/1318605/000095017022...
Sensationalist garbage. Starlink satellites have automated collision avoidance.
No, it's legacy auto who's losing money on every EV they make. Tesla's profit margin insane:
https://www.google.com/search?client=firefox-b-1-d&q=tesla+p...
> The company had an income of $438 million, including a $101 million "positive impact" from the sale of Bitcoin, and $518 million from selling zero-emission regulatory credits to other automakers. That means Tesla continues to lose money making and selling vehicles.
They made over 5 billion in GAAP income last year. 1.5 billion of that was regulatory credits. They currently make money making and selling vehicles.
-Space access is leading the world. Satellites bring freedom, access, and peace.
-Cars are the safest, fastest, and smartest you can drive.
-Tunnels solve waaaay more problems than they create. Hyperloop isn't so much an 'active' project, see tunnels.
-Robots are extension of AI work for self driving.
-Brain project will help those with physical disabilities, and learning.
-Solar roof and battery at home is wicked cool and useful.
I'm leaving stuff out. Don't know if they take a loss on their cars, but if so that's very common for hardware manufacturers.
I'm not an Elon apologist by any stretch, but you have objectively bad takes here. I can only imagine you just don't like his personality.
Are his companies not leading in Space access? Clean energy? Transportation? Maximizing life? Fun.
The guy is a workhorse He innovates at every turn. He hires the best, and expects the best. He has done a marvelous job incentivizing great engineering, science, and research. Their goals are lofty. He thinks long-term. His teams are largely motivated for the right reasons, and he helps make many of his employees very wealthy.
His intentions are good. He's an environmentalist. He loves Earth. He loves people. He's positive and optimistic for the future. He can be abstract, artistic, and goofy.
From our perspective, he's rarely wrong, and when he is, he owns it. Is he perfect? Hell no. But he accepts responsibility. He engages with the public, and his fans.... and his haters.
One thing is for sure so far, people who bet on him win.
We'd be so lucky to have Elon lead a communication/social platform.
This is a little silly. I returned a Model 3 after they told me I'd have to wait months to get body defects repaired. These were defects that were apparent within 2 days of having it. They refused to simply swap the car out. For a little while it seemed unclear that they were going to repair it at all... just abysmal service.
> I'm not an Elon apologist by any stretch
I'm sorry, but you really really are (and that's fine, people like what they like). You're practically fawning over him in this comment.
I think the opposite. He is in fact an excellent physicist. Like Nikola Tesla if Nikola Tesla both cared more about money, though he did a lot; and was better at getting money; and critically, if he had a predecessor who got fucked he could learn from (hence the name of the company, and why I say "Nikola Tesla" instead of "Tesla", because at this point the brand is bigger than its eponym). Only 99% sure about these statements, not absolute. And people remember Nikola Tesla because of the electricity, well he also designed the Tesla valve, a valve with no moving parts. Who knows what else.
So keep in mind while Elon Musk has a lot of monetary capital ie rich, and sure he's also still in the game of pushing the boundaries, he's not better than anyone. He's not better than you. So for there to be things he's that good at, to get to that level of success by the metrics most people are obsessed with, he has to be bad at other things. Well not exactly, it's not like skill points. In fact physics is highly analog, so that limits how good you can be at digital. They just naturally compete for neural resources.
So in fact, he's vulnerable to ML, he's been getting hacked by its promises for the longest time, Achilles heel. But you realize it cannot be any other way? You can't have an Iliad with no Achilles heel, it doesn't work as a story, like Superman without kryptonite, you can tell the story of Popeye without spinach but not Superman without kryptonite.
Like he sees demos and he's like "finally shit that actually works" and then it's like no, this is more shit that doesn't actually work, one-trick ponies, not even, one-trick PhD's disguised as ponies. Like he believes he needs PhDs because at some level he believes in credentials, when what he obviously needs are dropouts like him. Day one dropouts ideally. I mean if he wants inventors. If he wants to prove something is impossible, then yeah a PhD is the best. I don't know what the hell it is, maybe it's a recent thing, I believe in the idea of a PhD, I like people with PhDs.
I think it's because they're intelligent, they're not stupid enough to try to fly by flapping their arms. They don't do one single flap. No idea what happens if you flap your arms. Sounds stupid right? That's how aviation came into existence, guys would try flying off the Eiffel tower with a bird costume, splat. But then less stupid guys said, OK you can't use your arms, you need wings in a stronger structure, and that's why airplane wings are called wings. They're not actually wings, that's a really weird metaphor for birds' arms. And it was strictly necessary for guys to go splat for there to be gliders and all the rest.
Because the market can stay irrational longer than you can stay solvent.
It would be stupid to buy a stock even if there was a 100 % guarantee for a stock to increase 2 % in 1 year as there are other basically risk free options available.
So it is possible and common for a stock to be lower then what people expect it to be worth. A really good example of this is when you have a powerful CEO or a person with more voting rights who might hold up a deal for their personal ambition. Think about Shari Redstone at Viacom. Most people think the company is worth more but difficult to sell because she wants to run it awhile to show she can.
Twitter is worth a lot but difficult to sell for all the reasons this deal is showing. Supposedly Disney thought about buying it but realized it would be very controversial. When it takes a long time for the right buyer to show up investors trade the stock at a discount. It happens all the time in media stocks. (Full disclosure: I have Twitter stock)
Even if the optimal price that's some supernatural being will suggest is lower than current price, it is still the decision of the share holders.
Optimism and hopes are worth a price, you are in ycombinator.com, a major buyer of optimism and hopes.
One can easily imagine how useful it's for such a country like Saudi Arabia to control the #1 worldwide media platform without being too exposed on the frontline (i.e. as a large, but not too much, shareholder).
Which clearly isn't how things work.
This is not exactly true. Everyone holding Twitter believes that it will outperform the next best available asset. This can mean that it will decline less than cash (i.e. inflation) and decline less than other stocks. In our current market, this means people believe that Twitter has a good forward looking IRR, but it does not mean that all holders believe that the stock price should be $70.
>To make a successful hostile bid, you need to pay not just "more than the current price", but "more than the holders of 50% of current shares believe the company to be worth".
Again, this comes back to IRR terms. Sure Twitter may be worth $100/share ten years from now, but most people would take $50 today than $100 then.
>This is what makes it so difficult, and why this bid is very likely to be rejected.
The bid is likely to be rejected b/c it's likely made in bad faith. Read the SEC release and count how many times it says ' non-binding'
"Funding was indeed secured. I should say I do not have respect for the SEC in that situation. I don’t mean to blame everyone at the SEC, but certainly the San Francisco office. The SEC knew that funding was secured. They pursued an active public investigation, nonetheless. I was forced to concede to the SEC unlawfully."
How many times is “non-binding” said in the document?
I must assume this statement is just a personal opinion rather that an SEC ruling.
That is not the mainstream understanding of this “offer” though and that’s the point I’m trying to make.
Source: https://www.wsj.com/articles/elon-musk-offers-to-buy-rest-of...
This is meaningless because stock price is denominated in dollars. Inflation expectation means that the stock price is going up; that is, be worth more in dollars. Anyone choosing to hold a stock prefers that stock more than the dollar price it would fetch. Otherwise they would sell.
He sells and the price falls.
Then he announces a new platform and the price falls again.
Paul Graham thinks he would be able to compete:
"It is obvious. It's also obvious that Elon could draw an initial set of users that was more than big enough to have sufficient network effects on day 1."
https://twitter.com/paulg/status/1507782349924274180
"I'd try it the first day. Wouldn't you? Sum that pattern across Twitter, and you've got quite a lot of users on day 1."
https://twitter.com/paulg/status/1507855287130243085
"You don't need to get everyone to switch right away. All you need, to start with, is a critical mass of users — enough so that people don't feel they're talking to a void. You'd very likely have that from the start. Then it grows."
The other big reason is balancing the greater good vs unrestricted access, which has taken years to accommodate.
Musk is just an ego-centric billionaire with a lot of money and an unproven belief that Twitter could be better with his proposed changes. I’d bet he’s thoroughly aware that those changes could destroy the platform.
I believe the offer is rejected and the other top ten shareholders (all hedge funds) buy up anything he dumps and the price remains stable.
Paul Graham on building a new Twitter: "A decent team could reverse engineer a version 1 in a month."
No global corporation will allow that in their midst. You’re a fool if you think there is any long term viability to those psychotic beliefs.
This would be "obvious" about Trump, too, no?
Perhaps your claim is that Musk would have a better chance of making something that scales and can accept all those users from day 1, but then that's also a much more expensive bet for Musk to make with higher up-front pre-launch cost.
Being able to launch a product with more than enough resources is almost intertwined with drawing in users. Truth Social never had the bare minimum expectations. Something that is not given to most people since most aren’t abnormally focused on grifting and so on for such a big venture.
The SPAC stock is still holding strong snd it self making no sense day to day. It went up 7%+ on news Fox joined two weeks ago. The next day when this was found to be false. It didn’t even drop 1-2%.
Truth will fail no doubt. However all the SPAC, other investing and political insiders and the Trump family themselves still have a realistic shot of cashing out pretty well. Nothing close to if it was competently rolled out, but tens of millions to hundreds of millions going to many diff insiders is still a ton. Trump’s cash out should still be huge and would probably give him his largest cash stock pile ever (before it goes to pay debts off)
The motivation may be different. Is it any better? Or change anything for the better in terms of social media success?
Trump’s popularity may be larger, but it’s also more isolated and siloed. The total possible user base for a social network of almost any billionaire will be larger than Trump’s. Not that most would ever get close to reaching that amount or getting numbers more than Trump. Just that the addressable market is bigger.
Musk is not nearly as trashed in the media and could leverage promoting an alternative while still on twitter. Obviously there does need to be something that is at least reasonably differentiating from twitter, and I think that is the real challenge as just saying it is twitter but more free is not as tangible.
Because he's not spending $43bn on some infrastructure, but for the >200mn daily users. That's $210 for every user.
Additionally, with all due respect to Paul, his logic here is absurd. "I'd be interested so that means everyone must be" is the wrong line of thinking for a product launch like this. Everyone is _interested_ in something the first day, but whether or not that's enough to build on is another matter. So many social networks had massive first day signups. I was "interested" in Byte on the first day. I signed up, posted a few bytes, and stopped using the app after a week. Parler, Gab, Truth, had "interest" too. The problem is that critical mass of users he describes are all just talking to themselves in their insular group (elon fans) just as the right-wing networks had their conspiracy theorists etc. It's enough to have users, but its not enough to promote long term growth. I know it's not something _i'd_ be interested in, which refutes his point because its purely anecdotal.
So, the only demographics that'd actually stick with an elon twitter competitor are: People who love elon musk and everything he creates, and people who are banned from twitter. If it shakes out to be anything like Gab and Parler, the later means the site is going to swarm with Nazis like every other free speech competitor to twitter, which as a jew is something i'm deeply uncomfortable with. There's not enough free speech in the world for me to put up with being harassed by people who share the views as the ones who murdered my great grandparents. And as much as people here enjoy grandstanding about free speech, its likely something you're uncomfortable with too, otherwise you'd be on those sites.
Basically, the product elon wants to make already exists and it has no users. If Trump (who had a significantly bigger following on twitter than Elon) wasnt enough, if big right wing stars like Milo werent enough, what's gonna be enough? Because copy pasting Truth and slapping Elon on the front... wont be.
I’m not sure whether it’s that, or that simply no one wants a platform everyone isn’t already on.
Personally I would absolutely not mind being “harassed” by text, if I was also able to exercise wide spectrum of free speech myself.
A social media platform advertised as a politics-first/free-speech platform is the social media equivalent of a beer ad featuring a divorced balding man at last call in a dingy basement bar. No one aspires to bicker about politics with strangers on the internet, even though in reality that's the engagement that pays the bills.
This is quite a controversial statement.
This is precisely the idea behind 4chan.
BigTech owns the mindshare of how to build these platforms. Musk would actually have the resources to pay for the level of expertise and competence to build such a platform. However, it would be years in the making which might all become irrelevant with web3.
Or Musk could throw support behind web3 tech as ultimately free speech will only exist when controlled by no one including free speech advocates such as Musk.
One idea that I have is that I noticed a lot of people went from blogging to making YouTube videos. I'm guessing YouTube is the sweet spot that balances monetization potential (they will find ads to put in your videos, and advertisers pay a lot for video ads) with a recommendation engine (that essentially forces people to watch your content; or more charitably, tells people that will like your content that they should take a look). Blogs didn't really have monetization or recommendation, and people were willing to switch media (text to video) just to get those two things! Now we have things like Substack bringing those to text, and people are taking advantage of that.
Maybe that's where the next Twitter wants to be? Paying smart people to write? That sounds a lot more appealing than "free speech" (which is great to have, but I don't really want to read anyone's free speech), which is all we've seen as the differentiation point for Twitter clones.
Oh, the hubris.
It doesn't need to be web3. It just needs to be somewhat transparent and minimally auditable. Web3 doesn't know what web3 is yet. Most is just garbage, sorry.
The real problem with competing platforms is that they don't offer anything to the main people they need to attract.
what does it even mean?
Everyone is on twitter, a few of the people you want to follow are on parler. You won't bother checking parler too much.
I can only add one minor point from a general and international perspective: 50% may not always be enough. At least in Sweden I think you need 90% to accept a bid before you can legally force the remaining 10% to sell their shares. Even if you accept that there will be minority shareholders you will need 67% before you can do some things, like e.g. issue new shares without giving minority owners right of first refusal.
I'm sure there's a lot of devils in the details all over the world, and I'd be surprised if there are none in the US.
I don't see how this is relevant. All stockholders of any non-dividend paying company believe the price of the stock will go up. Takeovers with relatively low premiums happen all the time. That being said, Musk is definitely bargain hunting. I think the bid shows he isn't that serious and has no idea how to answer the fundamental monetization questions.
It's hard to see how an owner of Twitter stock could rationally reject an offer with a guaranteed +38% return. For any serious investor, even if they believe Twitter is worth twice what it is now, they must have several other stocks they believe are also worth twice what they are now. And if Elon bought all of them out at +38% returns, that would be a tremendous year investing.
If it was a serious offer the market would have already valued TWTR at ~$54, but it has actually gone down after Musk announced his bid.
Information about a potential takeover bid is absolutely relevant, and it's generally reasonable to calculate the premium from before that news first existed.
What happened last week was information about a potential takeover bid.
gpm said the rest already as a reply.
As to the Saudi prince. Regardless of the topic. In any situation, it is hard to take the prince at face value knowing he pushed hard to successfully give the Kushners and co $2B[0]. If there’s more at play for the prince than short or medium term money, what he says is irrelevant then.
[0]: https://www.commondreams.org/news/2022/04/11/hes-cashing-kus... or https://www.marketwatch.com/story/jared-kushner-scores-2-bil...
To make a successful hostile bid, you need to pay not just "more than the current price", but "more than the holders of 50% of current shares believe the company to be worth". Usually bidders use analyst price targets to guess at the distribution of holders' internal price targets.
This is what makes it so difficult, and why this bid is very likely to be rejected.
(This is easier to explain with a white board, tbh.)