NYT: Musk's purchase of Twitter is "on hold"

[SoonerPride]

Elon Musk says his takeover of Twitter is ‘on hold.’
https://www.nytimes.com/2022/05/13/business/elon-musk-says-his-takeover-of-twitter-is-on-hold.html?referringSource=articleShare

Elon Musk said his $44 billion bid to purchase Twitter was “temporarily on hold” until he could get more details to confirm that spam and fake accounts represent less than 5 percent of the social network’s total users.

Mr. Musk, the chief executive of Tesla, made the announcement in a pre-dawn tweet on Friday. He linked to a Reuters article published on May 2 about a regulatory filing by Twitter that included an estimate of the number of spam and fake accounts.

Shares in Twitter fell about 20 percent in premarket trading on Friday.

More at the link

Link to tweet

?s=20&t=6VeNei-j5E-xnmANe9wKBQ

[stonecutter357]

1. K&R ! lol

[HipChick]

2. Oh boy..

[Hugin]

3. It all depends on what Twitter's definition of "fake and spam accounts" is.

Pootie’s bots may not qualify as either for instance.

Wouldn’t some regulatory oversight be nice, Mr Libertarian?

Also, it’s not clear if he wants more fake and spam or less.

Anyway, it seems like a convenient excuse not to do something he didn’t intend to do to begin with or he’s manipulating the stock price down to a better fit for his budget. Don’t laugh he’s done it before and walked away with a tiny little fine. Because he’s, Musk.

[Tickle]

4. It may allow him

to pay less for twitter to

[SoonerPride]

5. As Tesla stock prices continues to fall his financing is falling apart

His financing scheme is collapsing.

I think he wants out of the deal.

[Hugin]

8. Yep

Seems like a possibility.

[TheBlackAdder]

19. Yes. The more fake accounts, the less real value the site has. And there's a ton of fake accounts.

[BumRushDaShow]

6. "Also, it's not clear if he wants more fake and spam or less."

If you think about it, this is the quandary.

On the surface, "more accounts" means "more eyeballs" means "more potential traffic" for businesses and "more incentive" for Twitter to charge a premium for the ads.

On the distaff side, if a huge chunk of those "more accounts" are nothing but worthless (in terms of potential customers) "bots and spammers", then there is little "value" to paying "more' for the privilege to advertise.

So Twitter itself may be trying to justify their ad pricing by claiming "less than 5% of the accounts are bots/spammers", which we all know is bullshit (we hear continually about how they have to keep going in and removing mass numbers of accounts and yet they keep returning).

Reuters had this little article at the end of last month that seems to sum up what might happen -

April 27, 202212:06 PM EDT
Last Updated 31 min ago

Breakingviews: Elon Musk probably won’t buy Twitter

By Lauren Silva Laughlin and Gina Chon



Four years ago, Elon Musk vowed to set up a peanut brittle company to take on Warren Buffett’s iconic U.S. confectioner See’s Candies. Then he changed his mind. It wouldn't be surprising if Musk's $44 billion deal to buy social network Twitter went the same way. Sure, the Tesla boss was clearly serious about acquiring Twitter as of recently. The financing from Morgan Stanley is shored up. The agreement includes a fee of $1 billion that he – or Twitter – would have to pay if they renege on the contract.

And Twitter’s lawyers even wedged in a so-called “specific performance” clause, which could theoretically force Musk to buy the company if he threatens to back out, though in practice this could probably be settled by adding to the break fee. There are good reasons for him to get cold feet. The biggest is Tesla. The electric-vehicle maker’s stock has fallen around a fifth since Musk first revealed his stake in Twitter, partly because Musk may sell shares to fund his new adventure. If Tesla’s stock bounces back – likely if the Twitter deal falls away – the $40 billion of recouped wealth would more than make up for the break fee.

(snip)

In reality, Musk’s absolutism probably won't survive a Twitter deal anyway. European Union Commissioner Thierry Breton told the Financial Times this week that the company must police illegal or harmful content or risk being banned. In the United States, where regulators are less aggressive, other technology firms could effectively create the same threat. Apple, for example, gets to decide which apps appear in its influential store.

One thing makes it easier for Musk to walk away before any of this becomes a problem: The market partly anticipates it already. Twitter’s stock is currently trading 11% below his offer price – a fairly wide spread for a deal with little antitrust pushback. Musk’s tweets criticizing some company actions – potentially flouting the merger agreement - already suggest he might be starting to lose interest. Most likely, Musk's attention will wander elsewhere. It wouldn't be the first time.

https://www.reuters.com/breakingviews/elon-musk-probably-wont-buy-twitter-2022-04-27/

From what I posted in another thread, the bitcoin meltdown just took down much of his Tesla value. Found another article about that -

Tesla's billion-dollar bitcoin bet may be under water as crypto crashes


Tim Levin
20 hours ago


In February 2021, Tesla made waves when it announced a $1.5 billion bitcoin investment, while most corporations wouldn't touch the volatile cryptocurrency with a ten-foot pole. But that ten-figure bet may be now under water as the crypto market at large plunges, erasing hundreds of billions in gains that investors have enjoyed as cryptocurrencies soared in recent years.

The price of bitcoin has plummeted 17% since Sunday, to around $29,000 for one coin as of Thursday morning — or roughly 55% from a November peak near $68,000. The downturn comes amid a similar skid in broader financial markets, leaving investors little room to hide and wait out the storm. Tesla amassed its bitcoin stake between January and early February 2021, when the currency was trading for anywhere between $29,000 and $40,000. On average, we can estimate that Tesla bought its coins somewhere in the middle, in the mid-$30,000 range.

(snip)

But after months of losses, bitcoin is now worth substantially less than what Tesla likely bought it for. As of March 31, Tesla said it held $1.26 billion in digital assets. Add that to the $272 million that the company made from previous sales, and you get slightly over $1.5 billion, meaning Tesla was just barely breaking even on its investment before bitcoin tumbled another 30%.

Still, it's possible the company cashed out its holdings at just the right time. We won't know the true damage, if there is any, until Tesla's next quarterly earnings report.

https://www.businessinsider.com/tesla-bitcoin-investment-cryptocurrency-crash-2022-5

[SoonerPride]

9. Both of those articles are great. Thank you.

I knew about the speculation that Musk wouldn’t actually buy Twitter but I didn’t know about Teslas heavy investment in crypto.

I knew Musk was a big proponent of crypto but didn’t know he ties up company shares in it. I thought he only “invested” (or gambled really) on it with his private funds.

It seems like malfeasance to use corporate dollars to sink into crypto currency.

[BumRushDaShow]

10. You are welcome!

I think for the ultra-billionaires, cryptocurrencies are a way to hide and launder their money. But since nothing is "backing it", the volatility danger is clear as day and you'd have to not be risk-averse to do what he attempted to do. But then in their case, they use the crypto "on paper" wealth as a leverage to buy more (vs the "old days" of taking on lots of debt to acquire "assets" to use as leverage to buy more).

Was just looking at this, which is mind-numbing - https://coinmarketcap.com/

[Hugin]

11. ...

There you go, filling in the gaps again, BR.



On an aside, crypto crashes seem to be a predictable front end to a wide stock decline. Probably because there are many out there who are using crypto and :shudder: digital-ape-drawings (NFTs) to fill in their margins. Seriously, what happened to lower-case-c-conservative banking? It’s a brave new world, my friend.

[BumRushDaShow]

21. This has become the

faux "on paper wealth" that they could use as leverage to buy more stuff (until it starts to disintegrate).

[TheBlackAdder]

20. Like Trump. He'll want more to lower the buying cost. After sale, claim less to inflate value.

[BumRushDaShow]

22. He had already agreed to a price and had lined up addition investors

meanwhile the stock has plummeted down to almost $41/share as of the last look -

Stocks making the biggest moves midday: Twitter, Affirm, Robinhood and more


Published Fri, May 13 202212:49 PM EDT
Tanaya Macheel
@tanayamac


TWTR-3.89 (-8.62%)
AFRM+5.35 (+29.63%)
HOOD+2.05 (+23.97%)


Check out the companies making headlines in midday trading.

Twitter — Shares of the social media platform slid 8% after Elon Musk said his take-private deal is on hold until he receives more information about how many fake accounts there are on Twitter. Still, Musk said he was “still committed to the acquisition.”

(snip)

https://www.cnbc.com/2022/05/13/stocks-making-the-biggest-moves-midday-twitter-affirm-robinhood-and-more.html

Twitter Inc TWTR:NYSE

FAST MONEY HALFTIME REPORT
RT Quote | Last NASDAQ LS, VOL From CTA | USD
Last | 12:58 PM EDT
41.21 -3.87 (-8.58%)
Volume
40,565,748
52 week range
31.30 - 73.34

https://www.cnbc.com/quotes/TWTR

He had offered to buy it at $54.20/share.

[ecstatic]

7. Lol! nt

[BumRushDaShow]

12. You are wearing the correct avatar

but may need to trade up to the next size.

[Buckeyeblue]

13. Sounds like he wants out to me

I never understood why he wanted Twitter. Social media is dying. But Tesla and SpaceX...very innovative. He's nuts. But his ideas on electric cars and reusable rockets are pretty good.

[LiberalFighter]

14. Shouldn't it be...

Waiting to confirm that spam and fake statements represent less than 5 percent of Musk?

[LetMyPeopleVote]

15. Elon Musk tweeted that Twitter deal is temporarily on hold

It is clear that the margin loan structure would not work. This structure exposed both Twitter and Tesla. The new financing is not cheap https://www.bloomberg.com/news/articles/2022-05-12/musk-seeks-to-scrap-tesla-margin-loan-with-new-twitter-funding

The preferred equity may have a 20-year maturity and include a feature allowing interest to be paid in kind at a rate of 14%, the people said. That interest rate would be increased by 75 basis points in the seventh, eight and ninth year, they added. The financing may alternatively be structured with a 10% interest rate and warrants, one of the people said.

See also https://www.zerohedge.com/political/musk-looking-scrap-tesla-margin-loan-secure-new-twitter-funding

According to the report, the preferred equity may have a 20 year maturity, as well as a feature which would allow interest to be paid in kind at 14%. The rate would be raised by 75 basis points in the 7th, 8th and 9th year. Alternatively, the financing may be structured with a 10% interest rate plus warrants.

Musk has announced that this deal is on hold.

Link to tweet

https://www.washingtonpost.com/technology/2022/05/13/musk-twitter-bid/

Tesla has lost $400 billion in market value since Musk’s interest in Twitter became public in early April, driving a wedge in his acquisition plans at a time when he has committed $21 billion of his wealth to finance the purchase. Musk had planned to buy Twitter with a combination of loans and equity commitments, leveraging into the deal much of his stake in the world’s most valuable automaker — from which he derives most of his wealth.

Link to tweet

Musk’s net worth, which makes him the world’s richest man, has fallen by around $50 billion in recent weeks, according to Forbes’ real-time wealth index. And Tesla stock has shed nearly 30 percent of its value in just the past month.,,,,

Musk has leveraged much of his Tesla stock as collateral for his loans, making the recent economic downturn a particular issue for his bid. Tesla has warned of the risks it faces because of the amount of Tesla stock Musk has put down as collateral. Tesla stocks were trading at under $730 on Thursday, well below the more than $1,100 mark from early April. A drop by several hundred more dollars could trigger requirements that would force Musk to sell some shares, analysts said.

At one point last year, he had put down more than half of his shares as collateral, according to financial filings. Because the Twitter bid would only add to that percentage, Musk has faced pressure to reduce his equity commitment, according to people with knowledge of the matter who spoke on the condition of anonymity to discuss sensitive matters.

It will be interesting to see of Musk can pull off this deal. It is clear that this deal will not be financed based on margin loans using Tesla stock

[SoonerPride]

16. Really good information

Thank you.

[LetMyPeopleVote]

17. Elon Musk Shows Some Buyer's Remorse With Twitter

Musk will have to pay Twitter a breakup fee of $1 billion if calls off the deal. This was always a sketchy deal with suspect financing. The use of a margin loan never made sense, Musk likes the attention but making this transaction work in the real world may not be n the cards.

Link to tweet

https://www.bloomberg.com/opinion/articles/2022-05-13/elon-musk-shows-some-buyer-s-remorse-with-twitter

Elon Musk took to Twitter early Friday to say that his takeover of the company was “temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users.”....

I suspect Musk’s jitters about buying Twitter are all about the money and has nothing to do with how many bots are zooming around the platform. He just doesn’t want to say that. If the richest guy in the world wanted to be more honest about what’s going on, he might have to acknowledge that his primary credit card — his shares in Tesla Inc. — doesn’t have the buying power it once did.

Musk said last month that he wanted to buy Twitter for $43 billion — when he only had about $3 billion in cash on hand. Most of the fortune of the world’s richest man, which added up to some $259 billion at the time, was tied up in his Tesla shares. Since then, Tesla’s shares have lost about 36% of their value, and Musk’s net worth has fallen to about $215 billion......

After all, Musk’s tweet about how many fake accounts there are on Twitter linked to a Reuters news article that is 11 days old. If this was a possible deal-breaker for him, he could have said so then. But the stock market wasn’t unwinding as rapidly at the time, either.

Musk has been able to use his Twitter bid to secure more attention for all of the things he doesn’t like about it. He tweeted yesterday that although he would prefer “a less divisive candidate” for president in 2024, he thinks that Twitter should end its ban on former President Donald Trump. In that context, “less divisive” appears to be a polite way of saying “someone who hadn’t torched the Constitution and tried staging a coup.” But Musk doesn’t appear to be bothered by those nuances – which, of course, makes him a questionable steward of Twitter’s future.

[pwb]

18. Good. Even though I don't use it.

I hope Bill Gates bought some shares to stop the deal. We need our billionaire to stand up.