Musk. Twitter. Who Will Win?

"It's a shit show," said one Twitter employee.

FACT PATTERN

• Elon filed 3 forms with the SEC in the past month: 13G "Ownership Acquisition Statement" on 4/4, 13D "Acquisition Statement" on 4/5, and 13D/A "Acquisition Statement [Amended]" on 4/11
  
• 13Gs are filed by passive investors
  
• 13Ds are filed by active investors
  
• According to these statements, Musk first began acquiring what would become a 9.1% stake in Twitter on January 31, 2022
  
• In total, he acquired 73,115,038 shares for $2,643,595,318.00
  
• Twitter is currently trading at $47, which multiplied by 73,115,038 means his stake is now worth $3,436,406,786.00, representing an increase in market value of over $792 million
  
• While accumulating his stake in Twitter, musk criticized the company short of implying that he would try to compete with it
  
• Musk was required to disclose his Twitter holdings to the public within 10 days of acquiring 5% of the company
  
• Musk violated this requirement and must therefore pay a small fine to the SEC
  
• Musk has a history with the SEC
  
• The SEC doesn't like it when people fuck with the status quo, so they are looking to treat Musk like Shkreli (note: this is conjecture presented as fact)
  
• Musk initially filed as a passive investor (13G)
  
• Musk entered an agreement to join Twitter's Board of Directors
  
• This agreement is contingent on a background check & completion of a questionnaire on Musk's part. If Twitter decided that they want Musk to become a Board member, he was never required to accept the decision. The agreement also would prevent musk from acquiring more than 15% of Twitter.
  
• Musk then filed a 13D to reflect his status as an active investor, despite not yet becoming a board member, indicating that he meant to become a board member, ceteris paribus.
  
• Musk then amended the 13D to reflect that he "informed [Twitter] that he is not joining the Board" on April 9, 2022.
  
• After Musk informed Twitter that he is not joining the Board and before the amended 13D became public on April 11, 2022, Musk criticized Twitter on Twitter.
  
• Musk deleted some of the criticisms shortly thereafter.
  
• Musk has since been silent.
  
• Twitter stock increased by 1% after Musk filed the amended 13D.

With this in mind, what the fuck is going on? If we figure out the answer to that question, then we could become millionaires through trading Twitter stock.

There are a number of scenarios that could occur. Here's what I think will occur based on the fact pattern above:

Musk is a man of high ideals. His ideals are mostly a-political, but they lean towards the right on matters concerning free speech. This is evidenced by his remarks on Joe Rogan's podcast, the Babylon Bee's podcast, and his engagements with men like Jordan Peterson. Furthermore, Musk has criticized Twitter on multiple occasions for censoring conservatives and others under the rubric of hate speech and for not adhering to free speech principles in general. As a private platform, it is the right of the people to demand that Twitter adhere to free speech principles. Musk is making that demand, but he's doing more than that. He's leveraging the financial resources at his disposal to bring those ideals to fruition. Musk has been planning to influence Twitter's stance on free speech since at least January 31, 2022 (when he first began to acquire shares). Will he acquire more shares? Will he sell his existing shares? Will he do neither for an extended length of time? Whatever the outcome may be, the performance of Twitter stock is almost exclusively dependent on it.

Today, it's especially unclear how Twitter stock will perform since news broke that Musk is not joining the Board of Directors. Before Musk informed Twitter that he is not joining the Board (if we assume that Musk did in fact initiate the decline and that there was no undisclosed arrangement), his path forward was obvious: serve as an active investor while owning less than 15% of the company and fulfil his fiduciary duty to shareholders by refraining from criticizing the the platform, for example. He knew this was the case when he entered into the agreement with Twitter since he's been preparing for such an outcome since at least January 2022. There is no reason he would have accepted the agreement without meaning to accept the agreement. This implies that something happened between April 5 (when the non-amended 13D was filed and when he accepted the agreement) and the morning of April 9 (when he informed Twitter that he is not joining the Board) that caused him to renege on the agreement.

On April 10 (around 2:00 am GMT), Musk said that Twitter should convert its headquarters into a homeless shelter. On the same day, he proposed a slew of changes to Twitter's platform. He continued to make proposals throughout the weekend. His decision to not join the Board was made on the morning of April 9, so this means that after completing his work schedule on April 9, on late April 9/early April 10 (around 2:00 am GMT) he reflected on his experience at Twitter's HQ just before he went to bed. He deleted many of those tweets almost exactly 24 hours later, which implies that it was likely a personal decision made just before he went to sleep on late April 10/early April 11 that was unprompted by, for example, the SEC or Twitter executives.

Therefore, in my assessment, Musk's recent tweets and his removal thereof are not useful in predicting his next move. With this in mind, one of four things likely occurred between the dates at issue: 1. Musk gained some information (e.g., that he would have little influence over the company) that caused him to want to execute a hostile takeover, 2. Musk gained the same information that, instead of causing him to want to execute a hostile takeover, caused him to want to liquidate his holdings and start up his own company, 3. Musk learned that he could have just as much (or more) influence over the company without becoming a board member, giving him carte blanche to critizise Twitter, among other things, or 4. the SEC indicated to Musk's team that they would be taking a more serious enforcement action against him.

NUMBER 4
Of course, there are an infinitude of things that could have occurred, but these four seem most likely. Let me know what else you think could have happened. With respect to number four, an enforcement action beyond levying a simple fine for an untimely filing could materialize if the SEC couples that information with the fact that, while 1. late to file and 2. accumulating Twitter stock, Musk criticized Twitter's free speech practices. This indicated to many investors that Musk might try to compete with the platform, thus contributing to the stocks subpar performance. These actions could be viewed as manipulative in the eyes of the SEC. If the SEC indicated to Musk's team that they would take enforcement action against him for a matter beyond a simple fine, that could explain why Musk did not join the Board. Is this likely, though? I don't think so. The SEC would not be able to mount a successful prosecution based alone on the Tweets that Musk posted. He posts Tweets of that nature all the time, their impact on Twitter stock was probably negligible, and they indicated that he was going to take over Twitter just as much as they indicated that was going to compete with Twitter.

NUMBER 2
With respect to number 2, I don't think it likely that Musk would sell off his stake that he's been accumulating since January 2022. In all likelihood, he's been planning this out since at least late 2021 and possibly even as early as the date Trump was banned from Twitter. A competitive platform is also unlikely to be successful given the fact that 1. networking effects exist and 2. liberals would not join the platform. It's possible that liquidating his holdings is part of a contingency plan that he developed in 2021/2022, but there is no evidence that information was revealed to him that would warrant executing a contingency of the like.

NUMBER 3
While at Twitter's HQ, it's possible that Musk came to an informal arrangement. Musk could have determined between the dates at issue that joining the Board would be a poison pill: he would have comparatively little influence over the company, he would not have any leverage to take over the company until 2024, and he would have a fiduciary duty to shareholders. At HQ, he could have used his leverage (which is to say, his ability to renege on the agreement, take over company, and exercise complete control over it) to make them agree to be at his beck and call with respect to some products so long as he took care to modulate his conduct on the platform (since he would not be bound by fiduciary duty) and so long as he did not take over the company, of course. However, it's not obvious that an informal arrangement took place. It's also not obvious if such arrangements are common or legal.

NUMBER 1
If Musk tried to come to the informal arrangement above but Twitter did not agree to it, then it would make sense that he would execute a takeover. It would also make sense that Twitter would not agree to the arrangement because of they are trapped between a rock and a hard place, anyway. If they do not come to an informal arrangement, Musk will be able to leverage the resources at his disposal to make it so; if they do come to an arrangement, then he would accomplish what he sought to accomplish at a fraction of the cost. It's also possible that without trying to come to an arrangement, Musk decided to inform Twitter that he would not be taking the poison pill and would instead try to influence Twitter in other ways from a position outside of the Board of Directors. The market priced in a possible takeover on April 11 as Twitter gained over 1%, even as the broader market declined by over 2%. Taking over Twitter also seems like the type of surprise that is par for the course when dealing with Elon Musk. He has been slowly acquiring shares for months and declined an agreement that would have prevented him from taking over the company. Clearly, this is an option for Musk. And it's a risk that I'm willing to take.

Who the fuck cares about Twitter?

I fucking called it Analysis was on point. Perfect. Elon Musk TO BUY OUT TWITTER

Goes from $45 to $51. Free money 13% gain. Musk offers to buy out at $54.20. Will be a lot of risk arbitrage now

Here are my posts on stocktwits https://stocktwits.com/search/s/twtr?user=dukemoney101 I've been calling this for days. I posted one bearish post but that was before I did the analysis which obviously negates the bearish post regarding the SEC

Update:

I suspect that Twitter will decline Musk's offer, but in either case it's a win-win scenario for Musk. He has three options from this point forward, and there's a lot of money to be made depending on which one comes to fruition:

1. Twitter accepts Musk's offer. This is highly unlikely as it undermines existing management, evidenced through Musk's official letter disclosed through the SEC via Twitter. The only reason why they might accept the offer is because of 1. his threat to sell his 9.1% stake, thus bringing Twitter stock down over 30% from current levels and 2. because he might take over, anyway, if they decline, by purchasing majority stake. If Twitter accepts the offer, despite these countervailing interests, it would be a win for Musk, and there's a relatively small amount of upside from $51 to $54 but this gap is likely to widen until Twitter makes its decision.

https://d18rn0p25nwr6d.cloudfront.net/CIK-0001418091/aa412090-b7e5-470b-bfea-35d48c913951.pdf

2. Twitter declines Musk's offer and Musk decides to sell his 9.1% stake. That would be devastating to Twitter shareholders, which obviously gives Musk leverage and increases the probability that shareholders accept his proposal. However, it's unlikely that his leverage is significant enough for Twitter to go through with the deal. This would be a win for Musk because, if Twitter declines the offer, he would be able to sell into the stock at a premium as investors price in the possibility that he won't sell his 9.1% stake.

3. Twitter declines Musk's offer and Musk decides to INCREASE his stake in the company to perform a hostile takeover. This is what I think will occur, even though it seems far fetched at the moment. I think that Twitter WILL NOT accept Musk's proposal, at which point its price will tank as investors price in the possibility of Musk dumping his stake. Then, Musk will "reconsider his position as a shareholder." That doesn't just imply he might sell off his current 9.1% stake. It also implies he might BUY MAJORITY STAKE. That's what "reconsidering his position as a shareholder" likely means. He WILL reconsider it, but it won't be in the way most people expect. This, obviously, would be a win for Musk as he would be able to achieve his initial goals regarding free speech while also accumulating majority stake at a discount.

In summary, there is probably a lot of downside and it's not worth positioning long at all because of the risk (price tanks massively if offer is decline) and reward of just 5% from $51 to $54. But if Twitter does decline the offer, that is when it will be a good idea to position long

I like how some people are like, hail elon he reinvests all his wealth for humanities progress and science etc

meanwhile the retards offering 54billion so he can own twitter just so they dont filter his online posts xD

Looks like Musk doesn't want it. I took a short position at $34.80 after hours, then I took profit at $33.90. I re-entered my position at $34.60 and I will hold the position long-term, with the expectation that the deal will not go through and that, as a result, the share price will be at around $15 end of year, or at most around $30 end of year if the litigation is inconclusive for awhile.

Search edgar/SEC/Elon Musk and subscribe to his filings, then go to your gmail settings, then go to "Filters and Blocked Addresses," then create a new filter that forwards notifications from the SEC to your phone's email address which you can find out about on your carrier's website, in order to get notified via text before everybody else when shit goes down.

Edit: left position

Musk will win