It will lower the value to institutional investors that they pulled the “poison pill” move, because it means that management is entrenched and they can’t remove the board if they needed to. Elon isn’t the only one who is barred from buying a controlling stake in the company.

$TWTR has been trending down over the last year. When he bought, the price went up 27%, signaling that people thought his involvement would be positive for the company. If he says "twitter is hopeless" and pulls out, the sentiment will be that nothing can save twitter.

this is incorrect. the price going up is a reflection of the market's believe about the % likelihood of a deal.

for example at market close of $45.08, the market is betting there is a $45.08/$54.20 = 83% chance that this transaction goes through.

there are certainly individual stockholders who are buying because they like his involvement, but that is tiny compared to people buying and selling a very near-term bet

> at market close of $45.08, the market is betting there is a $45.08/$54.20 = 83% chance that this transaction goes through.

This assumes the price without the transactions goes to $0.00!

Correct, and furthermore, Musk's offer was made after he announced his stake in the company, which is what caused the price of the stock to rise. Him offering to buy it outright barely affected the share price:

> The social media company’s shares were little changed at $45.81 in New York on Thursday, a sign there’s skepticism that one of the platform’s most outspoken users will succeed in his takeover attempt. -- Bloomberg

So while the news of a major stakeholder with the power to join the board and affect how things are run did cause a significant blip in Twitter's stock price, the attempt to buy it outright doesn't seem to have affected things much. Even if we (incorrectly) assumed that all of the rise from ~$40 to ~$45 is associated with the possibility of Musk paying $54 a share, that suggests the market assigns only a ~36% chance of the deal going through.

yes, there are many factors that can influence a valuation. and in different price ranges, different factors will have different weights. since the price is not $0 today and is relatively close to the potential transaction price, the % likelihood of a transaction has much more influence.

I think the comment is more about the fact that your calculation of 83% doesn't make sense. However, I agree with you that likelihood of the deal going through is definitely impacting the short term valuation.

I keep seeing this sentiment, and it seems like wishful thinking.. The paper is out there on how to defeat the poison pill: trigger the pill, let the stock tank, offer at a lower price per share but at the same market value plus what was put into the company to acquire the new stock by the diluters. Full market price is full market price. Look at Musk's investment in automation at Tesla he knows how to play the long game. ttps://scholarship.law.nd.edu/cgi/viewcontent.cgi?article=1102&context=law_faculty_scholarship

No, it's not. It's people that want to buy, so they can sell it at a premium to Musk later. It's pure speculation.

Yup that tracks. Thanks!

If he honestly wants to buy it which given the hoops he's jumping through seems to be the case then it's not 'manipulation' at all. Every move Elon makes is going to change the price. I think we all know he's not 'in it for the money' so it'd be pretty hard to make the case for manipulation. He really wants it. And if everyone else thinks Twitter would be better off with Elon as owner the stock goes up. And if he gives up trying, the stock goes down. That's not manipulation, that's sentiment.

I also believe that Musk will walk away and the stock will tank.

Musk’s recent stock purchase and discussion about joining the board made the price jump significantly. You’re right that there’s no obvious reason that his involvement should change Twitter’s value, but the market appears to think otherwise. If he walks away, at a minimum, I would expect that the stock price will drop to what it was before he started playing around.

But if he walks away, I believe he’ll also do something to make the stock drop more. For instance, he’ll stop Tweeting, which should have a measurable impact on the number of people actually using Twitter regularly.

I’ve muted him, and I’m sure many other people have. Honestly if he leaves and that makes some of his fans leave too, I don’t see how that would do that much except for slightly raise the quality of conversations across the board!

They might sell 100% to someone else before that happens, like Microsoft or the Saudis.

> For instance, he’ll stop Tweeting, which should have a measurable impact on the number of people actually using Twitter regularly.

There are that many people whose engagement depends entirely upon whether Elon Musk is actively tweeting? I don't use Twitter much, but that seems pretty amazing if true.

You might be imagining the wrong model, its not the people that'll leave if Elon Musk does, but the entire cesspool around repackaging hot takes and reactions to his actions and tweets goes away too. I have a feeling its a lot of content that would dry up.

Thanks. That makes sense and I see it now.

1. The possibility that Musk would bid for the company, nonzero before all of this, goes to zero.

2. The market observes a very capable businessman, after discussion with management, deems it incompetent and value-destructive.

3. Said businessman, with a track record of remarkable success in a variety of ventures and demonstrated skill with social media, may launch a competitor service.

All three of these are bad signals for Twitter's future cash flows.

He will sell his 9%

He will start something to compete against Twitter.

Twitter will be stuck with their current management and cultural problems.

Nobody will switch from Twitter to some knock off he or anyone else makes.

(By “nobody” I mean both nearly 0% of users and only people who will not be missed on Twitter)

Loads of people said that about Twitter in 2006 when it was a "knock off." It's been proven wrong again and again. And Musk is the kind of guy who can create significantly large network effects and economies of scale.

Twitter has never been a knockoff experience, it was as different from the social media that succeeded before it as TikTok is from YouTube.

Meanwhile any number of near-exact replicas of it exist with a different flavor: freer speech, paid service, decentralized, specifically for particular political affiliations to name a few. None of them have made a dent.

But that just proves my point: they didn't make a dent because none of them had the network effects and economies of scale that a proposed alternative created by Musk would have.

Many founders & VCs have believed this, notable spectacular failures include Vessel & Quibi.

I don’t claim to know exactly what it takes to successfully achieve this but one or even several content / creator verticals won’t cut it IMO.

I hate to disagree with you but when was the last time you checked your MySpace page?

Facebook (the thing I think people will agree destroyed MySpace) was not started by someone fed up with MySpace saying “I’m going to make the same thing, but I’ll moderate it differently!” It was started before MySpace had reached peak popularity, by an entrepreneur with a totally different product vision and way of looking at the world. Elon’s hypothetical Twitter-clone would probably be more like Gab, Parler or the Trump thing: Twitter, but with less moderation and some sort of weird gimmick, like “starting midnight Tuesday, I’m giving a free Model 3 to the first 1000 people who sign up!” or “I’m hosting a quarter of the load on servers on StarLink satellites!”

Twitter won’t be destroyed by someone making a slightly different Twitter clone, it’ll be destroyed by something that re-imagines entirely in a way that also supplants it, and it’ll probably come from someone we don’t know yet.

Just to pile on here, Facebook was founded six months after MySpace.

Pop culture places MySpace somewhere contemporary with the rotary phone, but there were undoubtedly people who heard of and used The Facebook first.

Voat or diaspora are better comparisons

There is definitely a network effect around scale and populations of users.

Gettr seems to be making positive inroads on the conservative/libertarian population, particularly those for whom twitter is not an option due to previous banning/shadow-banning, and de-boosting.

As I expect there to be consolidation between truth social, gettr, parler, and others, think this will only get stronger.

Part of this is also that younger populations are preferring tiktok to Twitter imo.

Or just team up with the other big owners who think the value would go up with him at the helm and...

A lot of people in this thread share your opinion, but I'm a bit confused by it.

If the board acted against the usual shareholder interest (to make money) by turning down an offer 54% above premium, would it not be easy to claim that the board is not in it to make the average investor money on $TWTR?

Therefore, wouldn't the value of $TWTR as an investment be far far less than companies who do make it their primary goal?

That's not to even mention the 9% of Elon's stock that he claimed he would now sell.

Yeah but that analysis downplays the shareholders’ thoughts about the future. If they largely feel like Twitter’s real value is $100B, that it just hasn’t been realized yet, and that they think it can be realized, then it totally makes sense to turn Elon down.

In reality though, the shareholders are a giant mob of people with wildly varying views about Twitter’s place in society, its true value as an asset, its ability to achieve its true value, and just generally what the best way to “make the most money for the shareholders” is. So I don’t think it’s an open-and-shut case that the board betrayed the shareholders. It’s probably a muddy case that’ll play out in court over months or years.

> It is the _directors_ making decisions here, not the shareholders. Those directors were chosen by management, and -- newsflash! -- they are beholden to management.

Shareholders can appoint, remove or replace directors, or even the entire board.

Generally the board of directors is voted on by shareholders and supervises management. Is Twitter structured differently somehow?

Twitter’s board doesn’t have any obligation to maximise short-term profits for investors (or maximise profits generally) - there has always been a misconception that companies/directors had to by law but the actual laws are much more general.

But at the end of the day, if the board thinks that Twitter may be worth more long term than what Musk is proposing to buy it for, then it’s perfectly reasonable to argue that it’s in the shareholder’s interests not to sell it.

Musk has basically hinted that he might sell his 9% stake if the deal doesn't go through. a selloff of that volume would definitely change the value of Twitter.

No, only the price.

Stock prices are largely based on the emotional responses of humans, at least in the short term.