The IT Nerd

Yesterday an analyst suggested that Elon Musk may be looking for an off ramp from his attempt to buy Twitter by making the amount of bots on the platform an issue. Today he went further…. By Tweeting this:

Musk doesn’t say where he gets this 20% number from. But he is basically accusing Twitter’s current CEO Parag Agrawal of lying without using the word lying. That’s a very dangerous thing to say as Musk could get called on it if Twitter produces proof that backs up their claims. But the interesting point is that the deal cannot move forward until Twitter’s current CEO pony’s up proof. If he doesn’t, that’s Musk’s off ramp from the deal. Either that or is he trying to get a better deal.

This will be worth watching to see how this turns out.

When I posted this story last week about Elon Musk putting the deal to buy Twitter on hold while he validates that bots only make up 5% of the platform, I said this:

And he might be committed to the acquisition. But this to me seems that he might be looking for an off ramp.

And Wedbush agrees with that assessment. According to this story, here’s what the influential analyst Dan Ives had to say:

“Our view is while Musk is committed to the deal the massive pressure on Tesla’s stock since the deal, a changing stock market/risk environment the last month, and a number of other financing factors has caused Musk to get ‘cold feet’ on the Twitter deal with the bot issue not a new issue and likely more of a scapegoat to push for a lower price,” Wedbush said.

And:

“And Musk knows that, which is why in a changing market and with Tesla losing ~$300 billion of market cap since the deal we view the $44 billion Twitter deal as having less than a 50% [chance] to get done as of today,” 

And it will cost Musk $1 billion to walk away. So it will be interesting to see if he cuts that cheque. And what doesn’t help matters is this:

Really Elon? That’s not very mature. But that’s what you get when you deal with this guy. Which is why I believe that it’s only a matter of time before Musk finds any excuse to pull the plug on this deal and walk away. But he’s free to prove me wrong. Though I do not think he will do so.

Elon Musk’s attempt to purchase Twitter isn’t boring if you’re watching from the sidelines. I say that because here’s today’s plot twist:

This caused Twitter stock to plummet in after hours trading. Though as I am typing this, it seems to have recovered. Maybe this follow up Tweet has something to do with it:

And he might be committed to the acquisition. But this to me seems that he might be looking for an off ramp.

This is really starting to look like a real circus. Which isn’t a surprise given Musk’s track record.

It seems that current Twitter CEO Parag Agrawal is doing Elon Musk’s bidding even though the deal for Musk to buy Twitter isn’t done as far as I know. According to The Verge, this is happening:

The first move came as consumer product leader Kayvon Beykpour announced on Twitter that current CEO Parag Agrawal “asked me to leave after letting me know that he wants to take the team in a different direction.” 

Bruce Falck, the general manager of revenue and head of product for its business side, confirmed in a (now deleted) tweet that he was also fired by Agrawal.

Now Jay Sullivan, who we spoke to in March about Twitter’s plans to add 100 million daily users, will take over as both the head of product and interim head of revenue. These moves are occurring at the same time Elon Musk moves forward with his $44 billion purchase of Twitter, although he hasn’t taken ownership of the company yet.

Then this is also happening:

Twitter spokesperson Adrian Zamora confirmed the changes, saying in a statement to The Verge, “We can confirm that Kayvon Beykpour and Bruce Falck are leaving Twitter. Jay Sullivan is the new GM of Bluebird and interim GM of Goldbird. Effective this week, we are pausing most hiring and backfills, except for business critical roles. We are pulling back on non-labor costs to ensure we are being responsible and efficient.”

If you’re a Twitter employee, this is sure to send you running for the exits. But it should not be a surprise since Musk has said that he wants to slash jobs as part of his master plan. I fully expect that more news like this is inbound over the coming days. So stay tuned.

In a move that isn’t surprising, Elon Musk has stated that he will restore Donald Trump’s Twitter account if his deal to buy Twitter goes through:

Musk, speaking virtually at a Future of the Car summit hosted by the Financial Times, said Twitter’s Trump ban was a “morally bad decision” and “foolish in the extreme.” He said permanent bans of Twitter accounts should be rare and reserved for accounts that are scams or automated bots.

Twitter banned Trump’s account in January 2021 for “incitement of violence” following the Jan. 6 insurrection at the U.S. Capitol.

Musk’s view of free speech being absolute already rubs people the wrong way. This move if it goes through is sure to tick off a lot of people and maybe turn some against him. I’ll be watching Twitter to see what sort of reaction there is as it’s sure to be fast and furious.

This has to be embarrassing for Elon Musk who at this point is the de facto owner of Twitter. It seems that his pitch deck recently leaked, revealing what Musk wants to do with Twitter beyond just making it “the platform for free speech around the globe”. The New York Times (via Tesla North) has details, but let’s bullet point them right now:

• Quintuple Revenue to $26.4 Billion by 2028
• Hit 931 Million Total Users by 2028
• Job Cuts and Hiring Waves. I spoke about the former here.
• A secret project of some sort that will launch in 2023 and have 9 million users by the end of year one.

And if that wasn’t enough, he said this on…. Twitter:

If I’m a Twitter employee, this does not inspire confidence. Especially given that because of the pandemic, companies who want to retain talent are doing everything possible to create a healthy work/life balance for employees. Thus the leaking of this pitch deck might send people running to the exits to so that they can be someplace else when he takes over.

I really don’t see how any of this will be possible. But I am an IT Nerd, not an entrepreneur. Thus I may be missing something. Which will make seeing if Musk can pull this off (or not) something to watch.

I guess if you work for Twitter, you should sharpen up your CV. I say that because this Bloomberg report has that among other things that Elon Musk, the new owner of Twitter has on his to do list to get the company to make money:

On calls with teams of bankers before the deal was announced, Musk fielded questions on how he would generate financial returns at Twitter. While nothing is set in stone — and Musk himself had no access to Twitter’s non-public financials at the time — he specifically mentioned job cuts, said the people, who asked not to be identified as the details are private. He didn’t go into details about which departments or positions might be affected, the people said. 

Musk also discussed ideas to monetize the platform and boost cash flow, including potential subscription services to drive recurring revenue, they said. While he’s said little publicly about how he plans to drive growth, he suggested earlier this month that he isn’t preoccupied with money. “I don’t care about the economics at all,” Musk said at a TED conference after making his offer to buy the company.

Well, this will send employees to the exits in a hurry because they’ll use the logic that it’s better to leave on your own accord rather than be exited out by security. And the problem with that is that Musk will likely lose the people he needs to run this company. Then how does he realize a return on his investment? I’m not sure he’s thought this through. But then, I don’t really think that he thinks anything through based on his past behaviour.

This seriously isn’t going to end well. Mark my words.

I got up this morning to news that a deal was on the horizon. Now it’s official:

Twitter, Inc. (NYSE: TWTR) today announced that it has entered into a definitive agreement to be acquired by an entity wholly owned by Elon Musk, for $54.20 per share in cash in a transaction valued at approximately $44 billion. Upon completion of the transaction, Twitter will become a privately held company.

Under the terms of the agreement, Twitter stockholders will receive $54.20 in cash for each share of Twitter common stock that they own upon closing of the proposed transaction. The purchase price represents a 38% premium to Twitter’s closing stock price on April 1, 2022, which was the last trading day before Mr. Musk disclosed his approximately 9% stake in Twitter.

Here’s why Musk is buying Twitter:

“Free speech is the bedrock of a functioning democracy, and Twitter is the digital town square where matters vital to the future of humanity are debated,” said Mr. Musk. “I also want to make Twitter better than ever by enhancing the product with new features, making the algorithms open source to increase trust, defeating the spam bots, and authenticating all humans. Twitter has tremendous potential – I look forward to working with the company and the community of users to unlock it.”

We’ll see if that actually happens. I for one am skeptical that he’s capable of doing that as he quite the loose cannon who gets himself into trouble from time to time. But who knows? Maybe he’s smartened up? Or maybe Twitter is about to driven into the ground by Musk. We’re about to see which is going to happen.

It seems that the stars are aligning for Elon Musk to take over Twitter. Bloomberg is reporting via sources that this could happen as early as today:

Twitter Inc. is in the final stretch of negotiations about a $43 billion sale to Elon Musk that could rank as one of the biggest-ever leveraged buyouts of a listed company, people with knowledge of the matter said. 

The social media company is working to hammer out terms of a transaction and could reach an agreement as soon as Monday if negotiations go smoothly, according to the people, who asked not to be identified because the information is private. Musk is lining up partners for the acquisition and continues to speak to potential co-investors, one of the people said. 

Discussions between the billionaire Tesla Inc. founder and Twitter’s board about a takeover at $54.20 per share continued overnight into the early hours of Monday, the people said. Shares of Twitter jumped as much as 6.2% in pre-market U.S. trading Monday, hitting as high as $51.98.

Now whether this is a good thing for Twitter users is another question altogether. After all, Musk is best known for being a loose cannon. And having him at the helm of Twitter may not end well. But I guess we’ll have to if that’s the case. Assuming that this deal does close.

This keeps getting better and better. Elon Musk is apparently come up with a new plan involving partners which could be announced within days according to a NYPost report:

One possibility, the sources said: teaming with private-equity firm Silver Lake Partners, which was planning to co-invest with him in 2018 when he was considering taking Tesla private.

Silver Lake’s Co-CEO Egon Durban is a Twitter board member and led Musk’s deal team during the 2018 failed effort to take Tesla private, sources said. Silver Lake declined to comment.

Whether Musk would present Twitter with an entirely new offer — perhaps raising his current bid — or whether new partners would simply go in on a purchase with him isn’t clear. A Musk spokesperson declined to comment.

And about that “poison pill” strategy that Twitter has adopted. Well, he’s got a plan for that too:

For its part, Twitter on Friday adopted a so-called poison pill — a corporate move that prevents Musk from acquiring more than 15% of the company.

But that pill may not stop other entities or people from acquiring their own shares of up to 15% of the company. Those owners could partner with Musk to force a sale, make changes in the executive ranks or push for other overhauls of the company.

So clearly this isn’t a passing thing with Musk. He’s clearly in it to win. The question is, can he actually pull it off?