Twitter: Famous Secret War

 "Love me tenderly"

　　On April 16, Elon Musk tweeted this thoughtlessly, adding a few jumping notes, looking like he was purely enjoying Elvis' hit of the same name; but Elon Musk is the most famous second-year teen on the planet, and he sometimes loves this kind of plain encryption puzzle game that makes the world dance with him, forced to guess his mind and his mood.

　　The witty media immediately pointed out that in addition to the meaning of "gentle" in English, tender will also appear in financial proper nouns. The so-called Tender offer refers to the acquisition by the acquirer by issuing a written opinion to the shareholders of the target company to purchase the shares held by the company, and in accordance with the acquisition conditions, price, period and other provisions stipulated in the legally announced acquisition offer. , the acquisition method of acquiring the shares of the target company.

　　And Musk recently planned to acquire one of the world's largest social media platforms, Twitter.

Is Musk serious?

　　Musk's desire to acquire Twitter initially seemed like a pure "mouth gun".

　　On April 4, 2022, Elon Musk revealed that his Twitter stake reached 9.2%, making him Twitter's largest outside shareholder. At the beginning, he decided to join the Twitter board of directors. The new Twitter CEO Parag Agrawal announced the news. Musk also responded by saying that he was looking forward to working with Parag Agrawal and the Twitter board of directors in the future. Major improvements to Twitter in a few months. Then just a week later, on April 10, Musk reversed that decision. The most unexpected thing happened on April 14th, the day Musk gave a TED talk, and at that speech, Musk announced without warning that he was going to buy the rest of Twitter and push Twitter to go private. .

　　At this time, most people still think that Musk is not particularly serious. After all, as the 50-year-old richest man in the world and a well-known middle-schooler, Musk's willfulness is as dazzling as his wealth and talent; and in the repeated process of joining or not joining the Twitter board, Musk also launched a Twitter campaign. Several votes, including asking netizens if they agreed that the "w" in Twitter's name should be dropped and become titter, meaning "soft laugh", made it sound like he was buying Twitter Even more unreliable.

　　Of course Musk has the ability to acquire Twitter. His offer for Twitter was $54.20 per share, meaning he valued Twitter at about $43 billion, well above Twitter's market value of $36 billion at the time. And what about Musk himself? He was worth $208 billion at the time of the offer, mostly from his Tesla stock holdings, but it also meant that money wasn't an issue for him.

　　So what's the problem?

Musk's motivation

　　The motive for Musk's acquisition of Twitter has always been ambiguous to the outside world.

　　As a social platform, Twitter is a mess from a business point of view. Its user data is far less than that of rivals Facebook and TikTok, and its feature updates are often untouched and often annoyed. existing users. And its advertising strategy has not changed much since its inception in 2006. However, Twitter remains "a battleground" in social and cultural debates, so Twitter's decision to block former US President Donald Trump's account sparked an uproar, even after it was made After the decision, Twitter is still the most used platform for people to express their opinions.

　　So today's Twitter is like this: chaotic, undervalued, but hugely influential. This makes it a precarious prey, and if it is taken over by some private capital, will it be transformed into a more stance-oriented propaganda tool by its new boss, or will the new boss say a word Why don't you just close this platform? In order to avoid this risk, the Twitter board itself hardly holds much Twitter stock, and when they invited Musk to join, they also asked him not to hold more than 14.9% of the shares in his personal capacity or as a member of the group, so as not to have too large a stake. The right to speak.

　　Since Musk made a takeover offer on April 14, Twitter's share price has fallen from $45.08 per share to $38.29 (the closing price of the US East on May 20), a cumulative decline of more than 15%; what's worse, Tesla La's shares have fallen more than 25% over the same period.

　　Musk initially accepted the restriction, but after a few days, he changed his mind.

　　Musk, who claimed that his reason for trying to buy Twitter was not for money, said he wanted to reform Twitter and return it to its original vision of becoming a "civic square for free speech." Considering that Musk himself is a Trump supporter who has been banned from Twitter, the Twitter board's concerns are all the more justified.

dark battle choose side

　　Founder Jack Dorsey, who just stepped down as Twitter's CEO once again, sided with Musk, slamming Twitter while praising Musk for "deeply caring about our world and Twitter's role in it." The board's "dysfunction" in the face of Musk. Later, Twitter stated in its SEC filing that Musk had approached Dorsey as early as March 26 to "discuss the future of social media, including the benefits of open source social media protocols." The so-called open source social media protocol is a dream that Dorsey has been trying to achieve. He believes that social media should be decentralized, and open source protocols help avoid social media being controlled by any individual or company. Dorsey had consulted and discussed the issue several times with other members of Twitter's board of directors before approaching Musk, according to the Twitter filing.

　　On the other hand, Prince Alwaleed of Saudi Arabia clearly expressed his opposition to Musk’s tender offer. He holds 5.2% of Twitter’s shares and is one of Twitter’s most important individual shareholders. And his reason for objecting is that "Musk's offer is too low." He believes that Twitter's true value is far more than $43 billion.

　　Those retail investors who have made a lot of money with Musk in events such as GameStop are unsurprisingly on Musk’s side, especially for rookie investors who are highly susceptible to rhetoric and “memes”. , the stock market is the arena, Wall Street is the enemy, and Musk represents the right direction. So, Twitter's stock jumped 27% immediately after Musk announced that he owned 9.2%; according to Bloomberg, a 57-year-old retail investor read the news of Musk's takeover bid for Twitter , immediately bought 10,000 shares of Twitter, because he believed that Musk's investment vision would not let him down.

　　However, Kathy Wood, a female stock goddess who has always sympathized with Musk, did not stand with Musk this time. From the beginning of this year to the present, she instead sold the shares held by Ark Investments. 90% of the stock, Yahoo Finance said, costing the Ark investment hundreds of millions of dollars. Wood's own explanation is that the shaky relationship within Twitter's management following Dorsey's departure is not a sign of a steady rise in the stock, and that things will only get more complicated when Musk joins the power race. .

　　Perhaps the most interesting statement came from fans of Marvel and Iron Man: In recent years, some people have always called Elon Musk the "three-dimensional Iron Man", because Iron Man's characters introduced "genius, billionaire, playboy". , Philanthropist" seems to be perfectly applicable to Musk. But of course, the fans of the Paper Man will not buy it. When Musk jumped out to acquire and privatize Twitter, Iron Man fans immediately found new reasons to oppose him. Willful, irresponsible, Selfish, these adjectives were thrown on Musk's head.

Poison Pills and Financial Warfare

　　The center of the drama is naturally the surging capital.

　　In response to Musk's potential hostile takeover, Twitter's board unanimously passed a time-limited plan to safeguard shareholder rights, known as the "poison pill." Simply put, if someone (Musk's social security number reported here) acquires more than 15% of Twitter's outstanding common stock in a transaction that is not approved by the board, Twitter will allow other shareholders to buy additional shares at a discounted price, This dilutes the shares.

　　The poison pill plan cannot prevent Musk from launching a tender offer for Twitter. On the contrary, the implementation of this plan is more likely to force Musk to the negotiating table. Musk then got help from Morgan Stanley, he took out $21 billion worth of stock and other funds, and used some of his Tesla stock to mortgage $12.5 billion, and obtained Barclays, Bank of America and The $13 billion in financing provided by financial institutions such as Societe Generale means that Musk now has a total of $46.5 billion guaranteed to buy Twitter.

　　And what about Twitter? They urgently hired JPMorgan Chase as a consultant to the company and worked with Goldman Sachs to prepare for the next challenge. At the same time, several Republican members of the U.S. House of Representatives have asked Twitter to keep records of all communications with Musk, which means that if Republicans regain their majority in the 2022 midterm elections, they may investigate Twitter. Especially since Twitter rejected Musk's acquisition.

　　The incident has developed to this point, and it has been more ups and downs than TVB commercial war films. Musk still thinks that the excitement is not enough. On April 24, he started playing the guessing game again on Twitter, he wrote, "It's time to put everything down and move on", and when many people wondered if he really wanted to give up When acquiring Twitter, more than two hours later, he added: "(No more teasing Gates.)" - Yes, in addition to the Twitter secret war, Musk even had time to do things, he The chat record with Bill Gates was leaked recently, and it was him questioning why Gates was concerned about climate change while shorting Tesla: "Tesla is obviously the company that works hardest to solve the climate problem!" Musk himself The authenticity of this chat record has been confirmed.

　　Unexpectedly, on April 25, the plot took a turn, and Twitter suddenly announced that the board of directors agreed to sell the company to Musk for about $44 billion. "It's a very hard offer for Twitter to turn down," said Dan Ives, an analyst at Wedbush. "Twitter's true value is between $30 billion and $35 billion, but Musk is the richest man on the planet. , so he's happy. Twitter shareholders are probably drinking champagne at home by now."

　　Musk then sold nearly 9 million Tesla shares for $8.5 billion; his billionaire friends Together, Oracle founder Larry Ellison, cryptocurrency platform Binance and venture capital firm Sequoia Capital contributed $7 billion to Musk’s fund to buy Twitter.

　　At the employee meeting held by Twitter, Musk answered various questions that employees were concerned about, including whether the acquisition would affect the work of employees, whether Twitter would unblock Trump’s account, and so on. Musk said he does hope to have Trump's Twitter account reinstated: "Because I think that was a mistake... Banning him from Twitter doesn't stop him from speaking out, it makes him more vocal among the right wing. The decision to ban is not only morally incorrect, but also quite stupid in terms of results."

　　Twitter suspended most hiring and HR, especially those involving "business decisions." . At the same time, Twitter also confirmed to CNN that executives such as their former general manager of customers and head of revenue products are already in the process of leaving.

　　Everything seems to be going well, and Musk is about to become the new owner of Twitter. On May 6, the "New York Times" reported that Musk claimed that Twitter's annual revenue will reach $26.4 billion by 2028, considering that Twitter's annual revenue in 2021 is only $5 billion, that is, Musk's goal is to grow fivefold within seven years.

Musk regrets it again?

　　But just a week later, things changed again. On May 13, Musk tweeted that the deal was now "on hold" and took aim at Twitter's fake account problem. In fact, in its financial report for the first quarter of this year, Twitter admitted that there are many "fake or spam accounts" on its platform, but their proportion is less than 5% of daily active users. Musk tweeted that they need to check the calculations to see if Twitter is actually under 5% of fake accounts, so trading needs to be suspended. Later, he said that his team was checking Twitter's calculation method, selecting 100 sample accounts and counting the fake accounts in it, "because that's how Twitter calculates itself."

　　Shares of Twitter fell 10% on the news. Musk tweeted again the next day, claiming that Twitter’s lawyers had warned him that he had breached a nondisclosure agreement — “Just because I leaked that they calculated a sample size of 100, and yes, it turned out to be true.” Speaking at the All In Podcast Summit, Ske said that Twitter's actual fake accounts accounted for as much as 20%. Although he did not publish his calculation method, this did not affect the continued decline of Twitter's stock price.

　　On the same day, Twitter CEO Agrawal sent 13 tweets, explaining in detail the problem of fake accounts and spam small advertisements on Twitter, and said that Twitter needs to deal with 500,000 fake accounts and millions of suspicious accounts every day. In response, Musk just replied with a "poo" expression.

　　Is Musk really wrestling with Twitter's fake accounts? not necessarily. Since Musk made a takeover offer on April 14, Twitter's share price has fallen from $45.08 per share to $38.29 (the closing price of the US East on May 20), a cumulative decline of more than 15%; what's worse, Tesla La's stock price fell by more than 25% over the same period, which not only shows that the market believes that Musk's acquisition of Twitter will cause damage to Tesla, but also that Musk's own assets are also greatly evaporating.

　　So, has Musk backed out? According to the agreement, if Musk ends the acquisition, he must pay Twitter as much as $1 billion in liquidated damages. In addition, Musk will face a breach of contract lawsuit from Twitter, which could also cost him billions more. However, Twitter's market value is now $29.2 billion, which is $6.8 billion less than when Musk made the takeover offer, and a gap of nearly $15 billion compared to the $44 billion purchase price. After all, even if it is compensation to Twitter A billion or even billions can be regarded as a "stop loss".

　　But Musk may not have completely abandoned the deal. Although he claimed on May 17 that "the transaction can no longer continue," Twitter has said that they are doing everything they can to promote the acquisition. In fact, Twitter is now in a difficult position: as a "beacon" in the hearts of individual investors in the US stock market, if Musk abandons the acquisition of Twitter at this stage, it will cause a huge blow to Twitter's stock price, and some analysts even believe that Twitter's stock price will fall. Entering the range of 20-30 US dollars, the overall market value will also fall to about 26 billion US dollars. Therefore, compared to the worst "acquisition termination", Twitter may agree to abandon the original $44 billion transaction price, reduce the price, and let Musk complete the acquisition as soon as possible. To sum up, Musk's current attitude may be just another form of dark battle in the market.