The Twitter Plot Thickens

In traditional Elon Musk fashion, we may be up for a very interesting roller coaster ride with his recent tender offer to the board of Twitter and its shareholders to buy the company for $43 billion and take it private.

A move that seems a bit "up for debate" on Wall Street considering that Twitter shares are trading lower instead of the typical higher we would expect when buyouts and mergers come to the table, depending on who is doing the buying and what the prospects of that might be.

Essentially what happens is, in the eyes of investors, they know that the first offer is not generally final—they expect counteroffers that can send the price of their shares soaring.

Obviously investors want to make money, and if they have confidence a deal may happen, they are going to buy into that in order to cash in handsomely.

But there are legitimate questions of course. Can Elon Musk really afford to buy the company? Will the board accept the offer? What would the future of Twitter actually be under an Elon Musk leadership and does it jive with the philosophy of the company's founders, users and other shareholders? Do investors believe that Elon Musk can truly "unlock" the future potential, and therefore value, of the company's platform?

While Elon Musk is without question the richest man in the world, the fact is that most of his wealth is illiquid. In other words, it is tied up in his ownership of Tesla and Space X, and as things go, simply selling shares to free up money is not as easy a thing to do as some might think.

Even if he were to sell the $43 billion he would need of Tesla shares, the tax burden on that sale would be massive. Not to mention the potential fallout in Tesla's own stock from such a lare sale of shares.

It also seems apparent that investors are leaning toward "the board will reject the offer," and thus, if there is no deal, there will be no massive upward swing on the price of Twitter shares.

Musk has also been a bit elusive to share what he actually plans to do, or how the funding he says is secured has actually been secured.

Does he have a pool of investors? Where exactly will the $43 billion come from and how? He said clearly it was a cash offer. So, how does the cash offer get paid? From what?

He did say that if the board rejects the offer there is a Plan B, but he also declined to say what that Plan B is. Could it be possible that maybe Tesla or Space X would buy the company somehow? Or is Elon Musk alluding that he will simply acquire more shares of Twitter on the open market and increase his position?

It's hard to say since in his letter to the board he also said that if the board were to reject his offer he would "reconsider his current position." Does that mean he sells his shares or buys more?

I said yesterday that Musk essentially already owns Twitter. And that remains to be true considering his 9.2% stake in the company which makes him the largest shareholder at present. But whether or not he actually "owns" Twitter is what is up for debate.

Certainly with his current position he can sway the board enormously. Increasing his position could sway the board further. But ultimately, by just being a shareholder, his influence is limited. The board does not have to answer to even its largest shareholder ultimately.

Even a large shareholder like Elon Musk can't walk into the corporate office and fire the CEO for example. He can't go into the Chief of Operations and demand policy changes. He can't even automatically seat himself on the board.

Still, it is clear that Elon Musk has at least intent. What exactly that is is clear and unclear at the same time. It is, it goes without saying, a bit convoluted.

I do not own shares of Twitter and have no intention of buying any. In fact, I have no financial connection to Elon Musk at all—I do not own Tesla either, preferring Rivian in the EV space. But I do find the entire thing here that is unfolding to be entirely entertaining and interesting, and I am quite interested in where this all leads.

But again, this is Elon Musk. This is what he does. He likes to create a bit of confusion and chaos in an otherwise structured space. Remember back in 2018 when he got into trouble with the SEC for suggesting he would buy Tesla outright and take it private?

Does he really have an interest in owning and changing the face of Twitter? Or is this just another of Musk's ever famous antics to stir the pot?

To be continued...

Lead image courtesy of Pixabay, user s7akti. Elon Musk Entrepreneur Businessman - Free image on Pixabay