MUSK VS. THE NAY $AYERS
Intrepid Twitter bid
THE list of suitors who have looked at buying Twitter — and then passed without a second thought — are too many to be counted on one hand, and possibly two or three.
That’s partly because for all of its relevance to breaking news, starting revolutions — and generally increasing one’s cortisol levels during breakfast, lunch and dinner — Twitter is a lousy business.
Yes, it gets eyeballs, but plenty of the wrong type. Let’s face it: Twitter is a weird social-media platform that attracts some of the worst elements of the human race: Trolls, the people behind all those bots, and ayatollahs are difficult to sell ads to.
Twitter’s progressive leaders and their programmers, meanwhile, have canceled too many conservative voices. Again, let’s face it: People who voted for Trump represent a lot of ad dollars.
The result, quarter after quarter, year after year, has been wonky revenue, sputtering user growth and virtually nonexistent profits. Amid all this, Twitter knew it needed to be sold and began a futile attempt to shop itself; Disney, Salesforce and more passed after looking at the books.
Then along came Elon Musk, the mercurial, visionary billionaire with a novel idea: Let’s take Twitter private and fix its business problems away from the constant public scrutiny.
Musk’s agenda may seem revolutionary, but only inside the progressive bubble that dominates media and tech: Let opposing viewpoints proliferate; verify users to combat trolling; maybe start charging a nominal fee, even if it hurts Twitter’s already-weak user growth (which continues to maintain an uncomfortable reliance on users who troll under weird pseudonyms).
Most of all: Long-suffering shareholders will finally get paid. Ignore the $77 high in the stock last year; that was primed along with the rest of the market by Jerome Powell’s money printing, which is over.
Twitter’s IPO priced at $26, settled its first day of trading at $44.90, about where it was before Musk said he would pony up $54.20 a share for the company. When the Fed starts to tighten, who knows how low Twitter will fall.
Sounds like a great deal
Last week, after days of speculation whether he was serious, Musk signaled he is officially offering shareholders a lifeline. He filed with regulators paperwork stating he would throw in $21 billion of his own net worth ($260 billion-plus) and finance the rest of the deal with debt that he has secured to reach his approximately $46 billion price tag.
Sounds like a great deal, particularly for those smart techies who run Twitter and sit on its board, right? Who else is willing to pay that kind of money for something that has never consistently made money? No one, it seems, because no one has so far stepped up to the plate.
But that logic only works outside the bubble that is Twitter and Silicon Valley’s ideological echo chamber. Yes, the tech geeks like to make money but only on their terms. As this column goes to press, Twitter is looking at spurning Musk’s bid. And the business media, ideological blinders firmly attached, is cheering it on.
I’m not sure how anyone with even a cursory knowledge of the way markets and finance are supposed to work can endorse one of the biggest insults to shareholder rights in recent memory, but that is exactly what’s happening.
For a change, it’s going to be fun rooting for the litigation-happy plaintiffs bar, which would be on firm ground suing Twitter management for blowing this deal for the sake of making sure Donald Trump’s Twitter account remains suspended.
Tough man to root for
Musk, of course, does make it tough to be on his side. Remember the crazy “pedo guy” tweet that got him sued, albeit unsuccessfully, for libel, or the infamous “funding secured” tweet to allegedly take Tesla private? On top of it all, he’s facing lots of pressure from regulators on accounting issues involving Tesla, as this column has noted.
But Musk is a survivor, having turned around Tesla and avoided bankruptcy even as he was launching ambitious space-travel plans and more. More than that, he will pay investors while he fixes things on his own dime along with few sophisticated lenders who know the odds.
In a world that’s supposed to be dominated — legally, mind you — by what’s good for shareholders, dissing Elon’s offer borders on being illegal. Even with the Twitter board putting up roadblocks (poison-pill takeover hurdles, claims that his bid is undervalued), shareholders should ultimately get their say.
Musk is strongly hinting he will launch a tender offer directly to investors. They will then have a choice of whether to stay with the people who have created no shareholder value, or side with one who has a track record of doing the opposite.
For all Elon’s craziness, this one should be a no-brainer.