Fireside Chat, Interview, Podcast
E76: Elon vs. Twitter
- If markets remain closed for Good Friday, the stock portfolio is predicted to rise and resurrect.
- The Twitter board's poison pill is anticipated as a defensive tactic to render an acquisition by Elon Musk economically unfeasible.
- Board members and advisors are expected to attempt to avoid running an auction and keep all options available to maintain fiduciary flexibility.
- Public pressure and shareholders holding stock near $40 may be leveraged by Elon Musk to secure a 20% return by selling to him at $54.
- Directors face the risk of personal liability and prolonged court proceedings if they reject the offer, with D&O insurance deemed insufficient to cover potential equity losses of $10 to $15 billion.
- Historically, no board member has paid personal liability unless they benefited outside the company, a precedent cited as a mitigating factor.
- The board may claim they can return the stock price to $70 based on market recovery and internal plans, arguing revenue will exceed $54 per share within 12 to 18 months.
- It is predicted that the board will reject the offer to preserve their power and access to an exclusive club, leading to lawsuits and years of legal embroilment.
- The board is expected to run a "go shop" process to find a better price, but no buyer is anticipated to clear regulatory hurdles in a short timeframe, specifically for entities with $43 billion.
- Major tech companies including Comcast, Disney, Apple, Facebook, and Google are viewed as unlikely to pursue a takeover due to regulatory impossibility.
- The current administration is predicted not to intervene to stop Musk, though it may support a Big Tech acquisition to prevent a return to free speech.
- Elon Musk's acquisition of Twitter is forecast to result in the immediate removal of CEO Parag Agrawal.
- Musk is expected to resolve bot and spam problems within 30 days or over a weekend by deploying AI teams.
- If the board rejects the offer, a strategic process is predicted to take longer than 30 days, causing Musk to eventually abandon the effort.
- In 90 days, the absence of a better bidder is expected to lead to a stalemate and a decline in stock value.
- The market is interpreted as having voted against the deal's completion, evidenced by the stock price failing to reach the acquisition price.
- A board rejection could cause the stock to collapse, forcing Musk to lower his offer before winning the deal by the end of the year.
- Shareholders who bought stock at $50 hoping for a rise to $54 may lose significant value if the stock drops to $34 following a rejection.
- The poison pill is predicted to prevail within 30 days, resulting in a downturn in Twitter stock.