Yeah - but that's dumb bullshit. He can't legally pull out because of that.
He waived all of that to force Twitter to agree to the deal (because it'd be basically impossible for the board to reject it). This made sense at the time, because the board was looking for ways to weasel out of it because (imo) they politically don't like Musk. Then the market crashed and suddenly he was overpaying a ton for Twitter, then he complains about bots (this isn't new information from when he made the deal).
Whether or not the bots thing is true isn't even relevant based on the deal he put forward.
I think he earnestly wanted to buy Twitter for principled reasons around speech which I agree with. He structured the deal in such a way where Twitter's board couldn't reject it (because it was so favorable to shareholders). Then when the market tanked the deal way overpriced Twitter, but he had already committed to it so he's trying everything to get out of it. I suspect he actually believes the things he's arguing (he's always seemed pretty earnest to me), I just think he's wrong in this case and it's mostly driven by motivated reasoning.
That doesn't mean Twitter isn't a disaster, just that they're in the right with regard to him having to close the deal.
>I think he earnestly wanted to buy Twitter for principled reasons around speech which I agree with. He structured the deal in such a way where Twitter's board couldn't reject it (because it was so favorable to shareholders). Then when the market tanked the deal way overpriced Twitter, but he had already committed to it so he's trying everything to get out of it.
That's not how business valuations work (it's how speculation works). If Twitter was fairly valued by Elon Musk before the crash then it would be fairly valued now - the fundamentals of the business haven't changed.
I mean, okay. But it's not like he had $44B in cash lying around.
Implicitly, this was always, "I'm going to trade X% of Tesla for 100% of Twitter." Then the valuation of both Twitter and Tesla dropped, so to the extent that you think the "value" of a business is wholly determined by its fundamentals, then okay, they're both still the same "value" but now have lower prices.
Except that he hadn't sold the Tesla yet, so he was trading Tesla (at new lower price) for Twitter (at old higher price), and if you previously thought that X% of Tesla was worth Twitter, and Twitter is still worth the same thing, it's now X+Y% of Tesla.
Of course, it's not like the fundamentals of Twitter didn't change. Twitter's revenue comes from advertising, and it's entirely reasonable to believe that it was actually materially affected by the economic downturn, not just in terms of the speculation of the stock, but by how the business functions.
(None of this is to take the position that Musk ought to be able to back out of the deal: if the market had gone even hotter and now Musk could've traded less than X% of Tesla for the agreed upon, now conservative price for Twitter, it's not like the deal would've been renegotiated.)
One could argue that the value of a company is the sum of net present value of the future free cash flows it can produce. If the market crash is because of peope realizing there is a recession coming for example, it makes sense to update your expectations about the net present value of future cash flows - probably in sum a bit lower than before probably.
"If Twitter was fairly valued by Elon Musk before the crash then it would be fairly valued now"
That's a big if - I think a lot of this stuff is more speculation than any sort of fundamental cash flow valuation. A lot Twitter's actual value (its network effect and influence) is hard to measure anyway.
> That's not how business valuations work (it's how speculation works). If Twitter was fairly valued by Elon Musk before the crash then it would be fairly valued now - the fundamentals of the business haven't changed.
Some "fundamentals" of a business like twitter's value are:
1. Product/market fit, finances, etc. What you mean by "fundamentals" I think.
2. How easy it is for them to raise money (i.e. the "public sentiment" of VC towards their company and the industry)
3. How likely it is for regulation to stifle their growth, which is a derivative of public sentiment.
4. How much shares can be sold for, i.e. the public sentiment about how much it's worth.
5. Predicted future sentiment of their users and of advertisers, both of which impact expected future revenue.
2-5 all change with public sentiment, and a market crash changes public sentiment of many companies at once.
It's self-evident that elon musk is overpaying more now than before unless you insist that twitter's value is not actually related to 2-5 above, or 2-5 above should have been trivially predictable 100% accurately already as part of its "fundamentals", both of which seem obviously silly.
He waived all of that to force Twitter to agree to the deal (because it'd be basically impossible for the board to reject it). This made sense at the time, because the board was looking for ways to weasel out of it because (imo) they politically don't like Musk. Then the market crashed and suddenly he was overpaying a ton for Twitter, then he complains about bots (this isn't new information from when he made the deal).
Whether or not the bots thing is true isn't even relevant based on the deal he put forward.
I think he earnestly wanted to buy Twitter for principled reasons around speech which I agree with. He structured the deal in such a way where Twitter's board couldn't reject it (because it was so favorable to shareholders). Then when the market tanked the deal way overpriced Twitter, but he had already committed to it so he's trying everything to get out of it. I suspect he actually believes the things he's arguing (he's always seemed pretty earnest to me), I just think he's wrong in this case and it's mostly driven by motivated reasoning.
That doesn't mean Twitter isn't a disaster, just that they're in the right with regard to him having to close the deal.