The list of suitors who considered buying Twitter, and then passed on without a second thought, is too many to count on the fingers of one hand, and possibly two or three.
That’s in part because, despite its relevance to breaking news, starting revolutions, and generally spiking cortisol levels during breakfast, lunch, and dinner, Twitter is lousy business.
Yes, he gets looks, but a lot of the wrong kind. Let’s face it: Twitter is a weird social media platform that attracts some of the worst elements of the human race: the trolls, the people behind all those bots, and the ayatollahs are hard to sell ads.
Meanwhile, Twitter’s progressive leaders and their programmers have canceled too many conservative voices. Once again, let’s be real: People who voted for Trump represent a lot of ad dollars.
The result, quarter after quarter, year after year, has been shaky revenue, rapid user growth, and virtually nonexistent profits. In the midst of all this, Twitter knew it needed to be sold and began a futile attempt to buy itself out; Disney, Salesforce and more passed after looking at the books.
Then came Elon Musk, the fickle, visionary billionaire with a novel idea: Let’s make Twitter private and fix its business problems away from constant public scrutiny.
Musk’s agenda may seem revolutionary, but only within the progressive bubble that dominates media and technology: let opposing viewpoints proliferate; verify users to combat trolling; perhaps start charging a nominal fee, even if it hurts Twitter’s already weak user growth (which continues to maintain an uneasy reliance on users trolling under strange pseudonyms).
Above all: the shareholders who have suffered for a long time will finally receive their payment. Ignore the $77 high in the stock last year; that was set up along with the rest of the market by Jerome Powell’s money printing, which is now over.
Twitter’s initial public offering, priced at $26, closed its first day of trading at $44.90, about where it was before Musk said he would pay $54.20 a share for the company. When the Fed starts to tighten, who knows how low Twitter will sink.
sounds like a good deal
Last week, after days of speculation about whether he was serious, Musk said he is officially offering shareholders a lifeline. He filed documents with regulators indicating that he would contribute $21 billion of his own net worth.
($260 billion more) and finance the remainder of the deal with debt it has secured to reach its target price of approximately $46 billion.
Sounds like a big deal, especially for those techies who run Twitter and sit on your dashboard, right? Who else is willing to pay that kind of money for something that has never consistently made money? It seems that no one, because so far no one has stepped forward.
But that logic only works outside the bubble that is Twitter and Silicon Valley’s ideological echo chamber. Yes, techies like to make money, but only on their terms. As this column goes to press, Twitter is considering rejecting Musk’s offer. And the business media, with ideological blinders firmly on, cheer him on.
I’m not sure how anyone with a cursory understanding 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’s exactly what’s happening. .
For a change, it’s going to be fun cheering on the litigation-happy plaintiffs’ bar, who would be on solid ground suing Twitter management for screwing up this deal to make sure Donald Trump’s Twitter account stays suspended.
Difficult man to support
Musk, of course, makes it difficult to be on his side. Remember the crazy “pedophile boy” tweet that got him sued, albeit unsuccessfully, for defamation, or the infamous “funding secured” tweet for allegedly taking Tesla private? On top of it all, he faces a lot of pressure from regulators on accounting issues related to Tesla, as noted in this column.
But Musk is a survivor, having turned Tesla around and avoided bankruptcy even as he was launching ambitious plans for space travel and more. More than that, he will pay off investors while he arranges things on his behalf along with a few sophisticated lenders who know the odds.
In a world that is supposed to be dominated, legally, mind you, by what’s good for shareholders, downplaying Elon’s offer borders on being illegal. Even with Twitter’s board putting up hurdles (poison pill acquisition hurdles, claims its offering is undervalued), shareholders should finally have their say.
Musk strongly hints that he will launch a takeover bid directly to investors. They will then have the option of staying with the people who have not created shareholder value, or siding with someone who has a history of doing the opposite.
For all of Elon’s craziness, this one should be a no-brainer.