Considering he said this was a big reason for his purchase, you'd think the world's smartest man would have had his team do this due diligence?
Instead, he mad an offer on a whim and put the deal together in a couple days. Brilliant.
How would he get access to that data beforehand?
Did you mean the richest? Or do you actually think he's the smartest?
I guess that would be a function of how much Twitter had told everyone their percentage was. Improving Twitter’s 5% bot problem is different than improving it with 30% bots.
But, since we consider him the smartest man, he might actually be playing a game. He knew they would lie, or were for years, and put a clause in the contract about it and they fell into a trap.
Not sure who gets to pay the contract breakup $1B fee? It may be Twitter. That would be embarrassing. But then, they shouldn’t have been telling lies, if it turns out to be the case.
What a genius ... oh shit, there isnt a secret bot trap in the contract.
https://www.sec.gov/Archives/edgar/data/0001418091/000119312...
> Section 4.7 Information Supplied. None of the information supplied or to be supplied by or on behalf of the Company or any of its Subsidiaries expressly for inclusion or incorporation by reference in the proxy statement relating to the matters to be submitted to the Company’s stockholders at the Company Stockholders’ Meeting (such proxy statement and any amendments or supplements thereto, the “Proxy Statement”) shall, at the time the Proxy Statement is first mailed to the Company’s stockholders and at the time of the Company Stockholders’ Meeting to be held in connection with the Merger, contain any untrue statement of material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading at such applicable time, except that no representation or warranty is made by the Company with respect to statements made therein based on information supplied, or required to be supplied, by Parent or its Representatives in writing expressly for inclusion therein. The Proxy Statement will comply as to form in all material respects with the provisions of the Securities Act and the Exchange Act, and the rules and regulations promulgated thereunder.
* As long as they used _a_ methodology,
* and that methodology spat out 5%,
* and there's no material information to indicate that anyone thought the methodology was inaccurate or otherwise wrong,
Then there's probably nothing actionable there.
A more hacker-newsy way to approach this would be to either find the clause yourself (and earn your upvotes the hard way), or perhaps admit your baseless speculation was, indeed, baseless.
Of course. But what's so extraordinary that a contract would have a clause about misrepresentation or providing false information in a purchase deal like this.
> A more hacker-newsy way to approach this would be to either find the clause yourself (and earn your upvotes the hard way).
Thanks, been here for 10+ years I am ok not harvesting upvotes. Maybe some other time. But ok, it's Friday, let's do a bit more search than just Ctrl+F "bot".
Twitter's 10-Q https://www.sec.gov/ix?doc=/Archives/edgar/data/1418091/0001...
> We have performed an internal review of a sample of accounts and estimate that the average of false or spam accounts during the first quarter of 2022 represented fewer than 5% of our mDAU during the quarter
(From page 5)
EX-2.1 AGREEMENT AND PLAN OF MERGER https://www.sec.gov/Archives/edgar/data/0001418091/000119312...
> [...] none of the Company SEC Documents at the time it was filed [...] contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, or are to be made, not misleading.
(Section 4.6.a)
> The consolidated financial statements (including all related notes) of the Company included in the Company SEC Documents fairly present in all material respects the consolidated financial position of the Company [...]
(Section 4.6.b)
> None of the information supplied or to be supplied by or on behalf of the Company or any of its Subsidiaries expressly for inclusion or incorporation by reference in the proxy statement relating to the matters to be submitted to the Company’s stockholders [...] [shall] contain any untrue statement of material fact or omit to state any material fact required to be stated therein ...
(Section 4.7)
> GP made a decent effort to try to find this clause
If Ctrl+F "bot" counts for a "decent effort", I don't know, I guess...
> We have performed an internal review of a sample of accounts and estimate that the average of false or spam accounts during the first quarter of 2022 represented fewer than 5% of our mDAU during the quarter. The false or spam accounts for a period represents the average of false or spam accounts in the samples during each monthly analysis period during the quarter.
> In making this determination, we applied significant judgment, so our estimation of false or spam accounts may not accurately represent the actual number of such accounts, and the actual number of false or spam accounts could be higher than we have estimated
Everything else is just window dressing.
You can crtl-f for "Specific Performance" and "Material Adverse Effect" in this thread for explanations of exactly how and why you're wrong
I assume you meant ctrl-f? So I did and still don't see it. Mind explaining a bit?
> You're just wrong. This is what happens when you try to play lawyer on the internet.
Worse things have happened, surely. Not trying to find any supporting statements, then there are replies of "You didn't even try". Then providing some support and it's "how dare you, you're not even a lawyer".
Do people really think this was all a game to snag a $1B fee, publicly cause havoc and possibly precipitate the sinking of Twitter? Is that really what the world's richest man wants to drop everything to work on?
Seems like A LOT to go through for someone who has several very absorbing day jobs: Tesla + SpaceX + the micronauts rocket-tube thing + neuralink + ???
Is this mania?
He also had the bad luck to do this at the same time the bottom fell out of tech and people started questioning whether buying TSLA shares at $1000 was the best marginal use of their money.
Also interest rates going up significantly, making financing much more expensive.
Twitter being wrong about the number, or using a methodology Elon doesn’t like, isn’t enough.
What makes you think he didn't? So his team has a number, their team has a number.
The numbers diverge wildly.
Do you think smart people don't make decisions quickly?
That is interesting.
So it may be a question of just how dishonest Twitter has been, which could/should result in shareholders suing them as well.
But he did know it was a problem [1], so it's at least a bit shifty that now he pretends he suddenly says that it is a deal breaker. I suppose a court would have to decide if he has a right to back out or not without repercussions.
What does he gain by calling their bluff?
If you're selling me a house and saying it's one size but in practice it's another you bet I'm taking it up with you! I can be happy to buy it as is (depending on the case) but this says a lot about the seller.
I remember when he said he was going to do that, a good proportions of comments were about how he will slash a most of his Twitter followers by doing so. Did Elon himself thought there were less bots than what the majority of people believed?
Why wouldn't they wait until money is already on the table? I just don't see how they would have benefited by disclosing real numbers beforehand.
It's far more likely no one could have done due diligence outside of the executives and top engineers at Twitter.
Sure he may be employing this as a stalling tactic, but there’s no obligation for him to treat the Twitter folks with kid glove either. This is what high stakes negotiations are about.
- Buying Twitter is a bit different to buying a house. The offer price for shares is set, and (as far as I know) Elon can't move it without withdrawing and reoffering, which incurs all sorts of fun legal issues and penalties.
- If it's due diligence and Elon actually might withdraw from the deal then fair enough, but then it's not a bluff.
- If it's a bluff, and Elon still intends to buy, telling the world there are actually more spam/bots than the Twitter reported devalues the company. It doesn't seem like a great move as an investor.
His choices are: pay the original price, or pay the $1 billion cancellation fee. There might be a third choice: Twitter could offer to renegotiate, but they aren't obliged to. They could take the $1 billion instead.
It took me about 3 seconds to realize that after the stock market crashed, Elon wanted to get a better price. The 5% stuff is just a random excuse.
- "I'm going to buy twitter", buys a bunch of shares, has to report it
- Board says "No", adopts poison pill
- "Fine, I'll make you let me buy you" submits a contingent but binding offer to the board.
- Board says, well, our duty is to the shareholders, you're offering a big premium, we accept, here's a bunch of terms to keep you from backing out without paying them something.
- "Ha Ha!" shouts Elon, "I've proven I can buy anything now!"
- Yes, yes, say the banks as they bind him and his companies stock to the tender offer, you can buy that, we just want TSLA stock, that's fine.
- Stock market looks at the situation and says "wat", down-values TSLA because their CEO is spending his time buying... a social media platform?
- Musk starts to see the writing on the wall and realizes if he can't make twitter substantially more valuable in the short term, he's on the hook for a large chunk of his personal wealth (which hurts) but also a large chunk of his company (which hurts the ego) and starts to suffer buyers remorse.
- "Ha ha" says the board, you can get out any time you'd like, we'd just like our 10-digit check.
- looks for an escape clause - maybe you committed securities fraud Mr. Twitter? Check again for me would you?
I mean, broad strokes, this has been the saga in front of us - rich man wants to do something silly, gets told no, gets more determined, and fights tooth and nail, and finally, regrets his decision.
So now, _either_ he was short-sighted and wanted to buy a company he'd failed to do due diligence on and is trying to get out of the purchase that way, OR he has heap big buyers remorse, pays a billion and gets out of it that way, or he becomes the proud partial owner of a social media company with limited network effects. Who knows, but he had already staked up 7% or so beforehand - so 3B give or take, didn't back down looking into their numbers then, and only _after_ ponying up another 35B did he think, you know, maybe this is a bad idea.
But I just got an air popper, so please, let the show go on.
What if there's internal data indicating that it's closer to, like, 30%?
In that case, a buyout offer conditional on a DAU audit is certain to expose that data, and that's checkmate for TWTR.
Musk can then either buy it at a massive discount, or use the enormous amount of free press to launch a competitor with mandatory device attestation.
It's the buyer's responsibility to undergo due diligence before making serious, legally-binding offers. Musk is very clearly scraping for excuses now that he has buyer's remorse.
That's what I think he's actually trying to do, as part of his "master plan part III". Twitter is only valuable because of users - but they are not worth this incredible premium. He's seen how attempts at launching 'free speech' platforms have gone.
He can easily build a competitor for a fraction of the deal's price. He can easily outspend any company. But that doesn't guarantee users - eyeball time is a limited resource. However, if he torpedoes twitter, he can get a bunch of users from the wreckage.
And, you know, profit from some nice pump and dump in the meantime.
To adapt an adage - Musk has already established what the company is, now he's just negotiating the price.
Pretty sure users would notice if 1/3 of all tweets are computer-generated.
The pattern of behavior by Elon seems pretty strong support for the alternative.
The only support I see for this position is the assumption that musk is smarter than everyone else.
That may have been part of the original plan, but:
"Elon Musk is in talks to raise enough equity and preferred financing for his proposed buyout of Twitter to eliminate the need for any margin loan linked to his Tesla shares, according to people with knowledge of the matter. "[0]
[0] https://fortune.com/2022/05/12/elon-musk-avoid-tesla-margin-...
Given that the stock is near $700 right now, it's looking like a good deal.
https://www.forbes.com/sites/elizahaverstock/2021/12/15/elon...
Back then it was a Twitter poll to sell shares IIRC. Musk makes a big deal out of everything to lead his followers around
Musk's stock options became fully vested and matured. That forced a tax event on him last year.
Twitter board called his bluff and now he's trying to weasel out of it.
If you could save a few billion wouldn't you?
It's a negotiation, and with the markets turning, he's got all the cards.
The cost of reneging is only 1bn, and the company would probably lose half it's market cap if the deal fell through
Almost everything people believe about Musk is lies and BS. Do you have anything to back up what you're saying? Otherwise you're just adding more lies and BS on to the pile.
Why is wanting a better price such an issue? "The 5% stuff" is like when information surfaces about a faulty or inaccurate odometer reading on the used car you're about to buy. If tampered with, let's negotiate a new price.
This is unethical negotiating. If you make a bid, you better look beforehand, what you're bidding on. If your bidding has an effect on someone, you better be careful with it.
It's only unethical negotiating if the Twitter board hasn't put out inflated DAU numbers. Maybe the sudden firing of Kayvon Beykpour and Bruce Falck has raised some new suspicions about this question in Musk's mind?
> If you make a bid, you better look beforehand, what you're bidding on.
Well, looks like he did, but now questions whether what he was shown was actually truthful, no?
> If your bidding has an effect on someone, you better be careful with it.
So there are two times two possibilities: Musk genuinely has doubts about the DAU metric he hasn't had before in the force or he hasn't. Similarly there are two possibilities about the accuracy of the DAU metrics: they are within an excusable distance of the truth or they aren't. Assuming they aren't, regardless of Musk's true motives, why would Twitter deserve to be shielded from the fallout?
Musk made a serious, legally binding offer to buy with no contingencies for users (human, cyborg, bot, or otherwise). Now he wants out so he's using this bad faith argument to weasel out of the $1B escape clause.
Twitter has zero responsibility for needing to report which accounts are completely human or not human. Even if he genuinely cared about bots, Musk still screwed up by not doing due diligence before the offer.
And when I saw your comment implying you’re astonished about people not getting it, I meant to offer you, in good faith, one anecdotal data point in order to make you feel a little less puzzled.
That reference - "If our twitter bid succeeds, we will defeat the spam bots or die trying!" - does not assert your claim.
[1] https://www.bloomberg.com/opinion/articles/2022-05-13/elon-m...
If you want more accuracy, hire some people from say Amazon's Mechanical Turk and do 1000. 10k.
That seems like a difficult thing to determine.
I'm sorry, but what a worthless thing to say. I can't stand it when pundits say this.
He is asking for proof that spam and fake accounts are less than 5% of total users. He obviously believes the number is much higher[1]. This does not seem to be a deal killer - he is just calling their bluff[2]. Maybe they are right. Maybe not. We will see. Interesting times!
[1] https://twitter.com/elonmusk/status/1517215066550116354
[2] https://www.reuters.com/technology/twitter-estimates-spam-fa...