Elon Musk’s “Best” Twitter Show Looks Fake

The Elon Musk-Twitter drama continues to take weird and unexpected turns at times, so whatever I write here may be moot soon after the ink dries up.

Talking absolutely about musk has always been a dangerous thing. He’s said to be genius-level smarts but he did some really stupid things (the weird tweets almost got him slandered for defamation and got him into trouble with the SEC). His child, the electric car giant, Tesla, was unfortunately mismanaged, plagued by production issues, and nearly declared bankruptcy. She miraculously survived and came back stronger, making him the richest man in the world.

Most recently, he’s best known for his “best and last” show of the financially shaky but ubiquitous social media company Twitter. Price: $44 billion, or $54.20 per share (which includes a bookmark; “4:20” is the “eating time” in weed-smoking culture). It was an exorbitant premium to its stock price at the time, even higher now after massive market selling.

The Twitter board eventually realized that Crazy Elon was offering a once-in-a-lifetime pay to his trapped investors and took the deal.

Musk was about to buy what he called the world’s public square. It would be king of all media by making Twitter private and fixing its multiple business flaws (despite its impact, it has neither cash flow nor profits).

So suddenly it wasn’t.

Somewhere along the line, he realized he was paying too much for a dog with fleas. He has suspended the deal indefinitely. The reason why he threatened to walk is hard to believe: There are too many fake accounts on Twitter that neither he nor anyone else can monetize. He also said that Twitter was hiding this bot issue, which amounted to fraud. He wants to take a deeper look at the books.

The Twitter logo appears on a banner at the company's headquarters in San Francisco, California on November 4, 2016.
Elon Musk said he is concerned about the large amounts of fake accounts on Twitter.
Josh Edelson/AFP via Getty Images

If he was really concerned about the bots, he wouldn’t waive his due diligence before signing the deal papers.

What’s Next? The business press has always been skeptical about Musk’s intentions because most Wall Street has been skeptical. This is why the stock never traded close to its bid price.

For what it’s worth, that’s the view of two bankers, one who worked with his Tesla board of directors, and the other at a company involved in his Twitter funding machinations.

Only on his terms

They say almost the same thing. Musk tells people that he still wants Twitter. He thinks he can make it work as a private company, clean up the bot problem and sell it at a profit sometime in the next five years.

But Musk wants the company (like anything else) on his terms, which are always in flux. He doesn’t read balance sheets but takes on his intuition and has no problem with traditional banking floating standards (ie your word is your bond) to get his prize. His intuition told him to wait for due diligence. He’s now telling him that despite signing a deal and leaving him on hold for a $1 billion breakup fee and possibly more damage, he can get Twitter on the table and agree to his terms, aka a much lower purchase price.

He may be right. Twitter first said it would enforce the terms of the initial deal, and possibly go to court, but now it appears he’s playing ball with Musk. It recently said it would hand over more data about the bot issue — a move that would mean a resumption of talks. Bankers tell me that the Twitter board knows that finding another suitor will be difficult even at around $40 per share now trading. Not only can the board accept anything, but it also can’t tell Musk to just hit the sand.

Tesla CEO Elon Musk attends the opening of the Tesla plant in Berlin-Brandenburg in Gruenheide, Germany, March 22, 2022.
Elon Musk could lose $1 billion if his Twitter deal falls.
Patrick Pool / Pool Photo via AP, File

So the thinking among my buddies is that Twitter agrees to a lower price, perhaps significantly lower, and that Crazy Elon is getting his public square, albeit much cheaper.

That means the deal is in effect, right? It seems so. But no one really knows with Crazy Elon.

Gensler goes gaga

Left-wing Securities and Exchange Commission Chairman Gary Gensler finally announced last week his intention to reform the stock market. Forget about the good deal small investors get now: commission-free trading and mobile apps that make stock trading smooth and inexpensive for beginners.

Gary Gensler, Chairman of the U.S. Securities and Exchange Commission (SEC), testifies during a House Committee on Financial Services Subsidiary Appropriations hearing on the Federal Trade Commission and the Securities and Exchange Commission's proposed budget request for fiscal year 2023 in Washington, DC, on May 18, 2022 .
Securities and Exchange Commission Gary Gensler goes after retail stock investors.
Samuel Corum – CNP / MEGA

He tells Gensler bad things at an investor conference that takes place where no one can see him; Many trades will not be traded on public exchanges. They are directed to special trading places known as dark pools. Investors think they are trading for free on Robinhood but they can be robbed without even knowing it.

Gensler has not provided any data showing that the markets are deceiving small investors with their current structure. It’s his intuition.

Turning the markets on a hunch is very dangerous. Especially when you are simply trying to polish your credentials in class warfare, as most observers believe. The good news (and bad news for Gensler): The proposed changes will likely take years to implement as Congress — likely in GOP hands after November — debates their merits.

By that time, it will all be over. His current president, Sleepy Joe Biden, is likely out of office, to be replaced by a sober Republican or Democrat who will resist “fixing” something that does not need reform.

Leave a Comment