Elon Musk says $44 billion Twitter deal will complete if it shows bot-counting method,...

Bobbydpue

Posts: 375   +246
A correction... Elon actually needed less than $20B in cash. Most of the funding is coming from other investors and banks: https://www.cnbc.com/2022/05/05/lar...-binance-to-help-musk-to-pay-for-twitter.html

That's a major reason the Twitter valuation actually became important to be correct, because Elon Musk is not the only person who has to agree on a proper valuation. So if Twitter was lying about anything, it needed to be addressed otherwise the deal would fall apart because Elon was representing others too in this offer.
Nope Elon signed the purchase agreement it's too late to back out now. He should know by now that due diligence is done before signing anything and not after. It makes no sense to ask questions after a deal has been made and signed.
 

Bobbydpue

Posts: 375   +246
Only to the logic-challenged. Twitter never denied that bots were a huge problem. Their claim was that ad revenue was unaffected, because bot prevalence was largely "an illusion", based on their outsized effect on traffic,

But Twitter stated they could accurately count bots. And they made public pronouncements to that effect, statements that materially affect the value of the company. If a dealer tells you a car has leather seats, walnut trim, and 500 horsepower, then, contract or not, you're not obligated to purchase when you find it's cloth and plastic, powered by a lawn mower engine.

The deal includes several due diligence clauses. You can see the actual SEC filings on EDGAR.
Your analogy isn't an accurate comparison. A closer comparison would be an agreement to sell a specific car worth a specific amount at the time with no data about the car's specs. Elon agreed to buy this car, but only waited until after he signed the agreement to purchase it to ask questions about it. Due diligence is done before agreeing to make a purchase.

Also how can Elon or anyone say Twitter's assessment of bots is or isn't accurate? There isn't anyway to determine 100% what is or isn't a bot since there isn't an efficient way to check every single account for whether the account is being controlled by a bot, human, dog, or a cat.

All of this was covered in Legal Eagle's YouTube video on this purchase.
 

Endymio

Posts: 1,827   +1,895
Elon already signed the agreement to purchase Twitter the time to do due diligence was before he signed the agreement and not after.
Stuff and nonsense. In this day of the Information Age, how are people so perennially misinformed?

"Due diligence is the time a buyer has after signing a contract to assure themselves they are getting the asset they are paying for..."

Furthermore, even ignoring due diligence, if a seller has made intentional misrepresentations, no contract is valid. Period. This has been a basic tenet of contract law since long the US existed. It takes only seconds to verify this on the Internet. Why not do so?

"...A misrepresentation is a false statement of a material fact made by one party which affects the other party's decision in agreeing to a contract. If the misrepresentation is discovered, the contract can be declared void and, depending on the situation, the adversely impacted party may seek damages....Misrepresentation is a basis for contract breach in transactions, no matter the size. Misrepresentation may also occur where a fiduciary fails to disclose material facts of which they have knowledge. "
 

waclark

Posts: 590   +366
Imagine unironically thinking that the only reason why musk is going to buy it is so he could make a twitter a better place... The only reason why he didn't want to buy it and was BSing is because his stocks dropped like almost by -50% and now TSL is almost back to 900$ which is why he is again saying "I will buy it"...
Never said it was the "only" reason. And, I never said it wasn't a business decision to buy Twitter. I think Musk deserves to know the true number of bots, especially since the valuation of the company is partly based on that. Whether he will improve Twitter or destroy it remains to be seen.
 

Kirby1

Posts: 176   +288
Imagine that Musk is right, that Twitter has totally fabricated their numbers. Proving that would be a good day for humanity because these social platforms have run unchallenged for too long. Can't wait for Musk to own Twitter.
If u need elon musk to prove to u thst twitter is stupid, then you're stupid.
 

waclark

Posts: 590   +366
If u need elon musk to prove to u thst twitter is stupid, then you're stupid.
Well, I don't "need" him to prove anything to me. However, I think he is right to ask for clarification on how those numbers are derived. Nothing stupid about that.
 

m3tavision

Posts: 851   +620
Elon already signed the agreement to purchase Twitter the time to do due diligence was before he signed the agreement and not after. It's too late.
The agreement specifically states that during the inquiry process they can look at the books... his lawyer was denied and told to Trust their numbers.

This is widely reported.. sorry about your feelings
 

waclark

Posts: 590   +366
1. Didn't Musk originally say he was buying Twitter in order to fix the huge bot problem? Now he won't buy it because there are too many bots. This almost sounds like circular Trump logic on the surface.
Taking care of the bot problem is something he (might) do after the sale completes. Wanting to know how many bots are on the platform is more about the purchase price.
2. Counting bots on any large platform is not as easy as people think. Not being able to accurately count bots doesn't necessarily mean Twitter was lying. Does Twitter have more than 5% bots? Almost certainly, but Musk should've looked into that more closely before signing onto the deal.
If I recall, Musk is asking for info on how they derive the 5% number. Twitter says they can't reveal that. You can't necessarily "look into" the numbers deep enough before you have a sales offer on the table. It's kind of like buying a house, you make an offer to buy but based on an inspection. You can't inspect the house prior to creating a contract to buy the property, at least not without the owners approval. I don't see Twitter letting me rummage through their data while I work up a counter offer to Musk's.
3. Musk is only as rich as the value of Tesla stock, since most of his riches are tied to that company. When he bought his original stake in Twitter he had to sell Tesla stock, which caused Tesla's values to drop considerably (especially when Tesla traders got worried he would be more focused on Twitter in the future rather than Tesla)

4. Now if he were to actually pay the $44 billion for the rest of Twitter it would probably cost him closer to $100 billion overall when you factor in how much his net worth would drop after selling a ton of Tesla stock to get the money for it.

5. Considering everything I listed it's no wonder Musk wants to weasel his way out of the deal, and wants to do it in a way that makes him look like he's in the right/hero and makes Twitter look like they lied/villains.
A bit of a cynical view. I think Musk is asking the right question and asking to validate those numbers. Those numbers of bots drive the value of Twitter in some respect. Why is Twitter being so defensive about revealing the numbers? Who stands to gain more in this deal? As you said, Musk might lose wealth through a reduction in Tesla stock value. But Agrawal, on the other hand, stands to come out very well if the deal goes through. And yet you think Musk is the villain here?
At the end of the day, his offer was astronomical in the first place. Twitter was way, way overvalued and still is now, even though its stock price dropped considerably since April when Musk made his offer.

My guess is that once Musk got more access to the company's internals he realized his offer was crazy and Twitter isn't worth even a fraction of what he offered. He can flap his gums all day and throw as many Twitter tantrums as he wants, he won't be getting out of this mess easily or without a huge penalty.
Time will tell, but if Twitter purposefully misrepresented the numbers Musk will walk away with no penalty. Twitter's market cap right now is just under $34B. Revenue increased 36% 20-21 and 17% 21-22. I'd say it's very close to the $44B offer that Musk made. He's likely to get a lower price if he wins in court, because he'll show that the value is lower due to a higher percentage of bots than reported.