What is the ending of Musk VS Twitter?

Since last month, Tesla, SpaceX CEO Elon Musk and Twitter’s acquisition drama has been the top topic of investor discussion, from high-profile acquisitions, takeover bids, to “shelving” “Deal, Musk’s behavior has led people to speculate: He doesn’t want to pay that much anymore.

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On Tuesday, local time, a 235-page SEC filing revealed early conversations between Twitter’s board of directors and the billionaire, providing us with more details on the deal. The following is a specific timeline. :

  • March 26: Musk reached out to Twitter founder, former CEO and one of the current directors Jack Dorsey to discuss “the future direction of social media,” including the benefits of open social protocols.
  • March 27: Musk tells Twitter executives he is considering options, including possible joining Twitter’s board, seeking to take Twitter private or starting a Twitter competitor. He also discussed with Twitter executives how he bought more than 5% of Twitter stock.
  • April 4: Musk announced that he had purchased a 9.2% stake in Twitter, equivalent to 73,486,938 shares of Twitter common stock at the time, valued at approximately $2.89 billion.
  • April 5: Twitter files with the SEC asking Musk to serve as a director until 2024.
  • April 11: Twitter CEO Parag Agrawal tweets that Musk will not be on Twitter’s board.
  • April 14: Musk offers to buy Twitter, saying he will pay $54.20 per share in cash, or about $43 billion, according to SEC filings.
  • April 15: Twitter lays out a defense — known in company terms as a poison pill — that would block Musk’s potential $43 billion hostile takeover.
  • April 21: In a federal securities filing, Musk said he did not have any equity partners involved in his Twitter takeover bid.
  • April 25: Twitter accepts Musk’s offer to buy the company for $54.20 per share, for about $44 billion, with Musk personally responsible for half of the acquisition financing.
  • May 10: Musk says he may revoke Twitter’s current permanent ban on former U.S. President Donald Trump.
  • May 14: Musk tweets that his $44 billion deal to buy Twitter is “on hold” as he wants to learn more about Twitter’s estimate that spam and fake accounts make up less than 5% of its users .
  • May 16: In a tweet, Twitter CEO Agrawal laid out how the social media found “less than 5%” of its users to be spam or fake accounts, and Musk responded with a “poo” meme. Later in the day, Musk said at the 2022 All-In Summit that a workable deal with Twitter at a lower price was “not impossible.” He also criticized Agrawal’s comments, saying the number of bots could be four to five times higher than what Twitter said, with a low estimate of 20 percent.
  • May 17: Musk says his takeover of Twitter “can’t go forward” because of his problems with fake and spam accounts.

Musk’s “Wishful Thinking”

Shares of Twitter have given up all of their gains since Musk first disclosed his 9% stake in the company early last month.

Twitter shares are trading below $54.20 per share at which Musk agreed to buy the company, market data show, and below the closing price of $39.31 on April 1, the last trading day before Musk revealed his minority stake.

This has investors questioning whether the acquisition can be successfully completed, after all, the deal is now very uneconomical for Musk.

But a drop in the stock price was not a valid reason to terminate the deal, and Musk turned his attention to whether Twitter had misrepresented its user numbers to regulators, calling on the SEC to investigate its true user ratio.

He tweeted: “Twitter claims over 95% of daily active users are real, uniquely human. Has anyone had this experience”? He then replied to @SEC in a tweet suggesting the SEC should start an investigation, saying: “Hi @SECGov, is anyone there?”

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The latest SEC filings show that Musk negotiated the Twitter deal over the weekends of April 23 and April 24 without conducting any due diligence. Then since signing the agreement on April 25, Musk has questioned the accuracy of Twitter’s public submissions that spam accounts make up less than 5 percent of its user base.

“Mr. Musk did not request a nondisclosure agreement or seek any non-public information about Twitter from Twitter,” Twitter said in the filing.

That means Musk was in a rush to seal the deal with a “best and final” offer, leading one to wonder if the shrewd entrepreneur had a plan.

Ann Lipton, a professor at Tulane University Law School, commented that Musk did not ask Twitter for information before signing the deal, which means he now has to prove the company’s public filings are wrong and pose significant long-term financial problems — This is a very high legal threshold.

Speaking at the All In summit in Miami, Musk said it was not “impossible” to negotiate a lower price for the acquisition amount, saying: “20% of fake/spam accounts, albeit 4 times what Twitter claims, But the real numbers could be *much higher*.” Musk did not elaborate on how the 20 percent figure was derived.

If Musk walked away from the acquisition, he would have to pay a “breakup fee” of $1 billion under the terms of the contract. But according to CNBC, citing professional reports, Musk could face losses in the billions of dollars, excluding potential breach of contract lawsuits and consequential damages from damage to his reputation.

Twitter falls into passive

Twitter has been in a very passive position since Musk began to publicly attack its policies against spam and bot accounts.

The first is a poor record of misestimating daily user numbers for three consecutive years. Twitter admitted in its first-quarter earnings report that it had inflated the number of users by 1.4 million to 1.9 million over the past three years.

Twitter revealed: “In March 2019, we introduced a feature that allowed people to link multiple separate accounts together for easy switching between accounts, when a bug Actions resulted in all linked accounts being counted towards mDAU (Monetizable Daily Active Users).”

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A new report from market research firm SparkToro suggests that Twitter may be making more fake accounts than it discloses — although they use a different method than Twitter and include accounts that the company excludes in its estimates.

SparkToro said its analysis of a representative sample of active Twitter accounts found that 19 percent met its conservative definition of what it calls fake or spam accounts. But SparkToro makes it clear that its definition of a fake account includes all accounts that tweet irregularly, which is common on Twitter to send news updates, stock price changes, etc., as Twitter provides developers with building automated bots Tool of.

On the other hand is the prospect of future development. Compared with other social media platforms such as Facebook and Tiktok, Twitter’s growth has been embarrassed.

The company reported operating income of $1.2 billion in the first quarter, up 16% from a year earlier, while costs and expenses rose 35% in the same period, resulting in an operating loss of $128 million. The numbers would have been even uglier had it not been for a $970 million profit from the sale of its MoPub subsidiary in January.

Uncertainty about the outlook has forced the departure of several executives, including Ilya Brown, VP of Product Management, Katrina Lane, VP of Twitter Services, Max Schmeiser, Head of Data Science, Kayvon Beykpour, Head of Consumer, and Head of Revenue Products Bruce Falck.

Executives are also considering compensation, with the social media company saying it is suspending most hiring and cutting non-labor costs. Reuters previously reported that Musk told banks when raising money for the acquisition that he would cut executive and board pay after the acquisition and push the company to reduce other costs.

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Twitter said on Tuesday that it remained committed to closing the deal at the agreed price, which it expects to close in 2022.

Twitter is now valued at just over $29 billion, about $15 billion less than Musk’s agreed-upon takeover price, market data shows.

Left and right factions

Conservatives on Twitter, who see Musk as a “savior,” have speculated that former President Donald Trump and his allies’ Twitter ban could be lifted if Musk bought Twitter.

During the Trump era, Twitter banned many far-right individuals, including extremist groups, from using the platform, with some Trump supporters accused of spreading lies, inciting or advocating violence, “harmful activity” or other violations of Twitter’s rules. And being banned, this is considered a systematic censorship of conservatives by the entire platform.

With the departure of his most ardent followers, the “interaction” between the American left and the right has diminished and Twitter has become “boring” in Trump’s view, launching his social platform in February this year TRUTH Social, and told Fox News on Monday: “I’m not going back to Twitter, I’m sticking to the truth.”

What is the endgame?

1. The transaction is carried out as agreed

This may be the best-case scenario for shareholders. But only eight of the 37 analysts covering Twitter’s stock raised their price targets to Musk’s $54.20 takeover price, according to Yahoo Finance, suggesting most analysts are still unsure whether the deal will go as planned.

2. Musk walks away from the deal

Analysts said that if Musk walked away from a bid, Twitter would have to be assessed on its fundamentals, a prospect that could lead to continued weakness in the stock price.

Truist Securities estimates that Twitter shares will fall into the low $20s or $30s, based on pre-offer trading.

CFRA sees a larger potential decline, with analyst Angelo Zino writing in a note: “If a deal doesn’t materialize at all, we see significant downside risk to the company given our independent valuation of the company at around $26.” .

Twitter’s board could sue to try to force Musk to complete the deal, but it would be a long and costly process.

3. Musk buys at a low price

This is the most likely compromise. Without a rival bid, Musk could have a “considerable advantage,” said Jean-Francois Comte, managing partner at corporate merger and arbitrage advisory firm Lutetia Capital.

Take, for example, LVMH’s deal with Tiffany & Co., which bought the jewelry retailer for a whopping $131.50 per share, down from the original $135 per share. LVMH had said it could not complete the deal, citing demands from the French government in its trade dispute with the United States.

In addition, Advent International Corp. successfully acquired Forescout Technologies Inc. for an original price of less than $1.9 billion, blaming the pandemic.

“Recent comments from Musk suggest he is trying to negotiate a lower bid,” Jefferies equity analyst Brent Thill wrote in a report titled “Finding a scapegoat; a lower bid?”

Wedbush Securities analyst Dan Ives was also skeptical of Musk’s actions in a note to clients, saying: “Our view is that Tesla stock has been under tremendous pressure since trading, the changing stock market over the last month. /Risk environment and some other financing factors (equity financing) have led Musk to turn his attention to Twitter’s handling of bots, but this is not a new problem and may be more of a scapegoat for pulling down Twitter’s stock price.”

“The soap opera will continue this week, so bring popcorn and a bench with you because there may be more twists and turns in this Twitter/Musk drama,” Ives said.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/what-is-the-ending-of-musk-vs-twitter/
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