Everyone currently holding $TWTR believes that the true value is greater than the current price.
To make a successful hostile bid, you need to pay not just "more than the current price", but "more than the holders of 50% of current shares believe the company to be worth". Usually bidders use analyst price targets to guess at the distribution of holders' internal price targets.
This is what makes it so difficult, and why this bid is very likely to be rejected.
(This is easier to explain with a white board, tbh.)
If the shareholders are rational and believe the true value is greater than current price, why aren't people buying until it asymptotically approaches that price?
Optimism and hopes for future gains aren't priced in because they are fantasy and not yet material.
I believe a lot of my long positions are worth more than their current price, doesn't mean I'm going to spend all my money buying them up to that price.
If I lock in a 20% gain today that's nice, but I might believe with high confidence that it'll rise 50% in the next year. Then Elon's bid doesn't move me that much.
If they believed this, they wouldn't be selling at the current spot, sellers would all be putting their asks ~46% above spot (discounting time value of money), and the market would move.
That risk and upside is already priced in if you believe in market efficiency.
> If they believed this, they wouldn't be selling at the current spot…
They’re not. You’re mixing up the market as a whole and the owners of a majority of shares.
The ask price is the lowest ask. If you buy a lot of something, you reach further into the order book and the price is going to be higher. If you want a 51% stake, then a lot higher.
Depends on the index fund and the rules / guidance they follow to balance.
Many of them are passive, and only adjust once a quarter or once a year. Additionally, big spikes by one stock match drops in other stocks, aka they're not likely to make a big sale because one stock (twitter) had a good day.
The market is large and has plenty of participants with different strategies. There are people selling at the going price, and there are people who are not. The trading price is a good reference price, but it's not the "right price" for everyone.
it is also the price of what is currently for sale, most shares of most companies are not actively for sale at their current price.
Every market participant has a buy price and a sell price for one share influenced by their personal opinions and the state of the whole market; each at a different level and trading price is only calculated on actual trades. So all the shareholders that are unwilling to sell for any of the current offers do not influence it.
Yet if you were to buy 100% of the shares then you would eventually have to climb up to their price.
This is an interesting point I never really thought about. There is a distribution of buy prices and another distribution of sell prices. But if we plot these on the price axis there will be NO overlap because all shares in that region have been traded. I wonder if there's a way to sample these distributions to get the bigger picture.
I don't anyone would find your squishy confidence it's worth 50% more than current value any more credible than shorters who think it's worth 50% less. Both seem like fringe opinions without much foundation.
> I don't anyone would find your squishy confidence it's worth 50% more than current value any more credible than shorters who think it's worth 50% less
It's not my opinion that TWTR is worth 50% more. Please don't understand it as such. It's an example of what someone long TWTR could be thinking when they simultaneously hold their position and want to reject the Musk takeover.
I don't think it's worth continuing this thread anymore though. Have a great day.
you may believe that your positions are worth more than their current price but the reality is that they aren't otherwise they would be selling at the higher price. the price of an asset is its true value
If you can buy 1 share at $1, that means that yes.
But a controlling interest in something almost always requires more than 1 share. It may require millions or billions of shares.
And once folks figure out that they’re the couple percent that will block that controlling interest, their own prices tend to change.
That volume of shares also means you can't just buy from the person who is happy to sell right now, you need to convince folks who don't plan to sell ever, or aren't in a hurry, or don't need money right now. Their prices tend to be different too.
And just like buying a tank of gas is different than buying an oil field, the value propositions and likely price discussions are different.
If you can buy an oil field of gas one tank at a time, more power to you - but you’ll likely quickly discover it doesn’t scale the way you want.
These guys are literally betting that it'll go up 100% to that mythical $77. If they actually believed HALF this amount was going to happen, they'd be buying until it reached $50-60. Instead, we see Goldman Sachs saying that $30 is their sell price.
A dollar in the hand is worth a LOT of imaginary gambling dollars.
This can only be described as political/ideological or a huge gamble that Musk would come back with an even bigger offer rather than walk away. Neither of these seem to be in the best interest of shareholders.
I don't think investors are totally rational, but here's a simplified example. If you think there's a 90% chance that a stock price will triple and a 10% chance that it will drop to zero, you could resist a takeover bid and still not want to put all of your money into it.
If you're gambling with your stock, under what circumstances would you not take a massive 20% ROI and turn it over into a new stock?
In my opinion, the real reason behind the board's decision is ideological. If Someone with their ideology made the same offer, I'd bet big that they'd be announcing their acceptance and talking about the bright future for the company.
Screwing your shareholders over for ideology would not sit well with a jury. I'd love for them to go to discovery over this and see what the board REALLY said.
The current shareholders, who vote on this, think that the current value is higher than what is being offered to them to sell. Those are the ones that Elon has to convince with his higher offer.
Well, along with if they don't sell to him it feels like he will become create a Twitter competitor with up a budget of up to $42 billion to spend - which based on his past successes he will efficiently spend.
>
The company had an income of $438 million, including a $101 million "positive impact" from the sale of Bitcoin, and $518 million from selling zero-emission regulatory credits to other automakers. That means Tesla continues to lose money making and selling vehicles.
Sorry you're so glum. Buy a Tesla. It'll put a smile on your face.
-Space access is leading the world. Satellites bring freedom, access, and peace.
-Cars are the safest, fastest, and smartest you can drive.
-Tunnels solve waaaay more problems than they create. Hyperloop isn't so much an 'active' project, see tunnels.
-Robots are extension of AI work for self driving.
-Brain project will help those with physical disabilities, and learning.
-Solar roof and battery at home is wicked cool and useful.
I'm leaving stuff out. Don't know if they take a loss on their cars, but if so that's very common for hardware manufacturers.
I'm not an Elon apologist by any stretch, but you have objectively bad takes here. I can only imagine you just don't like his personality.
Are his companies not leading in Space access? Clean energy? Transportation? Maximizing life? Fun.
The guy is a workhorse He innovates at every turn. He hires the best, and expects the best. He has done a marvelous job incentivizing great engineering, science, and research. Their goals are lofty. He thinks long-term. His teams are largely motivated for the right reasons, and he helps make many of his employees very wealthy.
His intentions are good. He's an environmentalist. He loves Earth. He loves people. He's positive and optimistic for the future. He can be abstract, artistic, and goofy.
From our perspective, he's rarely wrong, and when he is, he owns it. Is he perfect? Hell no. But he accepts responsibility. He engages with the public, and his fans.... and his haters.
One thing is for sure so far, people who bet on him win.
We'd be so lucky to have Elon lead a communication/social platform.
This is a little silly. I returned a Model 3 after they told me I'd have to wait months to get body defects repaired. These were defects that were apparent within 2 days of having it. They refused to simply swap the car out. For a little while it seemed unclear that they were going to repair it at all... just abysmal service.
> I'm not an Elon apologist by any stretch
I'm sorry, but you really really are (and that's fine, people like what they like). You're practically fawning over him in this comment.
> We'd be so lucky to have Elon lead a communication/social platform.
I think the opposite. He is in fact an excellent physicist. Like Nikola Tesla if Nikola Tesla both cared more about money, though he did a lot; and was better at getting money; and critically, if he had a predecessor who got fucked he could learn from (hence the name of the company, and why I say "Nikola Tesla" instead of "Tesla", because at this point the brand is bigger than its eponym). Only 99% sure about these statements, not absolute. And people remember Nikola Tesla because of the electricity, well he also designed the Tesla valve, a valve with no moving parts. Who knows what else.
So keep in mind while Elon Musk has a lot of monetary capital ie rich, and sure he's also still in the game of pushing the boundaries, he's not better than anyone. He's not better than you. So for there to be things he's that good at, to get to that level of success by the metrics most people are obsessed with, he has to be bad at other things. Well not exactly, it's not like skill points. In fact physics is highly analog, so that limits how good you can be at digital. They just naturally compete for neural resources.
So in fact, he's vulnerable to ML, he's been getting hacked by its promises for the longest time, Achilles heel. But you realize it cannot be any other way? You can't have an Iliad with no Achilles heel, it doesn't work as a story, like Superman without kryptonite, you can tell the story of Popeye without spinach but not Superman without kryptonite.
Like he sees demos and he's like "finally shit that actually works" and then it's like no, this is more shit that doesn't actually work, one-trick ponies, not even, one-trick PhD's disguised as ponies. Like he believes he needs PhDs because at some level he believes in credentials, when what he obviously needs are dropouts like him. Day one dropouts ideally. I mean if he wants inventors. If he wants to prove something is impossible, then yeah a PhD is the best. I don't know what the hell it is, maybe it's a recent thing, I believe in the idea of a PhD, I like people with PhDs.
I think it's because they're intelligent, they're not stupid enough to try to fly by flapping their arms. They don't do one single flap. No idea what happens if you flap your arms. Sounds stupid right? That's how aviation came into existence, guys would try flying off the Eiffel tower with a bird costume, splat. But then less stupid guys said, OK you can't use your arms, you need wings in a stronger structure, and that's why airplane wings are called wings. They're not actually wings, that's a really weird metaphor for birds' arms. And it was strictly necessary for guys to go splat for there to be gliders and all the rest.
People usually want to earn money, so it's a good idea to buy low and sell high. You don't want to buy close to the price you think it will reach. Not only because of the risk of it being wrong, but also because other options exists that is believed to make more money compared to the risk.
It would be stupid to buy a stock even if there was a 100 % guarantee for a stock to increase 2 % in 1 year as there are other basically risk free options available.
All shareholders may believe the true value is greater than the current price but still not buy or sell at the true value price because they don't know when the company will sell for the true value. You see this when a company makes a bid for another company but the deal hasn't gone through yet. It sometimes trades for a little more or a little less, and that's when a deal has been accepted. When it's a little less, that's because there is some legal risk that the deal won't go through. When it is a little more that is because someone thinks the deal will get held up and renegotiated (like another bidder might show up).
So it is possible and common for a stock to be lower then what people expect it to be worth. A really good example of this is when you have a powerful CEO or a person with more voting rights who might hold up a deal for their personal ambition. Think about Shari Redstone at Viacom. Most people think the company is worth more but difficult to sell because she wants to run it awhile to show she can.
Twitter is worth a lot but difficult to sell for all the reasons this deal is showing. Supposedly Disney thought about buying it but realized it would be very controversial. When it takes a long time for the right buyer to show up investors trade the stock at a discount. It happens all the time in media stocks. (Full disclosure: I have Twitter stock)
His point is, that at least half of the share holders are not happy selling for that price. Selling is a personal decision, and if at least half are not happy to be forced to sell, I don't see it being a good idea.
Even if the optimal price that's some supernatural being will suggest is lower than current price, it is still the decision of the share holders.
Optimism and hopes are worth a price, you are in ycombinator.com, a major buyer of optimism and hopes.
One can easily imagine how useful it's for such a country like Saudi Arabia to control the #1 worldwide media platform without being too exposed on the frontline (i.e. as a large, but not too much, shareholder).
>Everyone currently holding $TWTR believes that the true value is greater than the current price.
This is not exactly true. Everyone holding Twitter believes that it will outperform the next best available asset. This can mean that it will decline less than cash (i.e. inflation) and decline less than other stocks. In our current market, this means people believe that Twitter has a good forward looking IRR, but it does not mean that all holders believe that the stock price should be $70.
>To make a successful hostile bid, you need to pay not just "more than the current price", but "more than the holders of 50% of current shares believe the company to be worth".
Again, this comes back to IRR terms. Sure Twitter may be worth $100/share ten years from now, but most people would take $50 today than $100 then.
>This is what makes it so difficult, and why this bid is very likely to be rejected.
The bid is likely to be rejected b/c it's likely made in bad faith. Read the SEC release and count how many times it says ' non-binding'
How was Musk's offer - a public disclosure with few conditions or contingencies, made in bad faith? At face value, it does not violate basic standards of honesty or appear to deliberately mislead.
"Funding was indeed secured. I should say I do not have respect for the SEC in that situation. I don’t mean to blame everyone at the SEC, but certainly the San Francisco office. The SEC knew that funding was secured. They pursued an active public investigation, nonetheless. I was forced to concede to the SEC unlawfully."
> Mr. Musk called the bid his “best and final offer,” adding that if his proposal isn’t accepted “I would need to reconsider my position as a shareholder.” Mr. Musk earlier this year built a position of more than 9% in Twitter.
> This can mean that it will decline less than cash (i.e. inflation)
This is meaningless because stock price is denominated in dollars. Inflation expectation means that the stock price is going up; that is, be worth more in dollars. Anyone choosing to hold a stock prefers that stock more than the dollar price it would fetch. Otherwise they would sell.
Holding a volatile and risky asset implies that the holder thinks there is a significant win available to offset the costs of the risks. It's reasonable to assume that projected price is far above market.
the problem is that said "new platform" is doomed to fail, just as every free speech twitter competitor before it (gab, parler, truth, etc). this is an idea thats been attempted numerous times but doesnt succeed because no one wants a platform where they can be harassed. so im not inclined to believe that the share price of twitter will fall once he makes a competitor, because if free speech was truly a differentiator (versus decentralization / federation e.g. mastodon), then these other networks would have actually seen continuous use, but at the end of the day everyone still uses twitter
Even just him announcing a new platform would scare twitter investors. If successful it'd drive twitter even further down.
Paul Graham thinks he would be able to compete:
"It is obvious. It's also obvious that Elon could draw an initial set of users that was more than big enough to have sufficient network effects on day 1."
"You don't need to get everyone to switch right away. All you need, to start with, is a critical mass of users — enough so that people don't feel they're talking to a void. You'd very likely have that from the start. Then it grows."
I doubt Musk has the patience for building or owning a graph based technology business. The complexities of Twitter’s architecture are not trivial and a huge reason it’s not been successfully disrupted.
The other big reason is balancing the greater good vs unrestricted access, which has taken years to accommodate.
Musk is just an ego-centric billionaire with a lot of money and an unproven belief that Twitter could be better with his proposed changes. I’d bet he’s thoroughly aware that those changes could destroy the platform.
I believe the offer is rejected and the other top ten shareholders (all hedge funds) buy up anything he dumps and the price remains stable.
Twitter is complex. But not nearly as complex a building a mass produced EV, charging and servicing infrastructure and space company. You have a bug in twitter? Easy try something new. Bug in either of the others? People DIE. Twitter will barely be remembered next to MY___________ in a few years. It's blank for a reason.
I'd argue Twitter is just as complex, because Twitter's product is its users and the content they create, where the others are governed by the laws of physics and making a good car (i have one, they're good!). What you have is a bunch of engineers on twitter going "ah yes, its just a social network feed! I wrote that in CS244 as my class project. how hard could it be", forgetting that twitter is an international network with tens of thousands of hyper targeted communities that feed off each other, diplomats that negotiate with governments and communities, etc. Not to say that this is impossible for anyone else to make, but it's a lot harder than just launching a site with your hundred engineers. i'd recommend reading platformer.news for a good
This is laughable. Social graphs are not trivial. It may not be as complex as landing a rocket booster on a platform, but it’s definitely as complex as monitoring a car.
Twitter had 100M MAU after 3 years and it was still operated entirely by just 300 people. So it’s not that hard. Musk could easily recruit 300 engineers and cost will be peanuts to him. Additionally, early growth of Twitter was driven by various celebrities signing up and bringing their audience to the platform. Here Musk has unique advantage as he has huge celeb network which can be convinced to move over or at least cross post. He can count on enabling slew of features like edit button, more chars, easily verified accounts etc to lure many users. Musk can hang in for years and easily eat up the cost. Earlier competitions did not had these advantages.
It’s not been successfully disrupted because a disrupter came and went viral, and AWS literally deleted their servers as they were becoming the most downloaded app
It will tank the price because other people will sell if he does. I don't know if his threat is strictly illegal, but the feds have to reign in some of this behavior sooner or later or all of the Musk day-trader fanboys will think they too can get away with it. A few people can't, but the SEC can't deal with thousands of Musk's fanboys skirting the law.
> "It is obvious. It's also obvious that Elon could draw an initial set of users that was more than big enough to have sufficient network effects on day 1."
This would be "obvious" about Trump, too, no?
Perhaps your claim is that Musk would have a better chance of making something that scales and can accept all those users from day 1, but then that's also a much more expensive bet for Musk to make with higher up-front pre-launch cost.
Musk wouldn’t do such a blunder launching it. Truth Social with a sizeable war chest, took Mastadon (while [still] lying about it) with many months if not over a year to get it ready.
Being able to launch a product with more than enough resources is almost intertwined with drawing in users. Truth Social never had the bare minimum expectations. Something that is not given to most people since most aren’t abnormally focused on grifting and so on for such a big venture.
Another critical failure of Truth: Trump wasn't posting on it. Trump can't carry a platform he himself couldn't bother to use. Truth might've survived launch on that core difference alone, and an Elon-backed service might work if Elon himself actually uses it.
That is wildly baffling. Not only Trump not using it, but does that mean the dozens upon dozens of popular figures around him who his fans also like, are mostly not using it either?
The SPAC stock is still holding strong snd it self making no sense day to day. It went up 7%+ on news Fox joined two weeks ago. The next day when this was found to be false. It didn’t even drop 1-2%.
Truth will fail no doubt. However all the SPAC, other investing and political insiders and the Trump family themselves still have a realistic shot of cashing out pretty well. Nothing close to if it was competently rolled out, but tens of millions to hundreds of millions going to many diff insiders is still a ton. Trump’s cash out should still be huge and would probably give him his largest cash stock pile ever (before it goes to pay debts off)
Indeed, this will fall into the long history of Trump branded failures. The thing is it would be so difficult for him to avoid. The only "thing that doesn't scale" he'd have to do is talk on it for a while. How many of his followers would flock there if there was a non-zero chance to actually talk to him.
I'd argue Trump has more immediate, impressionable supporters than Elon and his twitter like platform is a complete bust. I'd also argue people don't switch, they add. Rarely is someone popular on a single media platform, they tend to use to all of the vertices to engage. There would have to be a value proposition, one that persuades users, the name Elon in my opinion isn't a large enough selling point on it's own.
I don't think Elon's fan base are any more capable or driven. I would argue Trump is vastly more popular on social media than Elon and that Trump supporters are at the very least motivated for reasons outside of billionaire worship and straight trolling.
Billionaire worship/trolling
vs
Blindly following regardless of the amt of double speak, hypocrisy, blindly rejecting things because they are not on your side and following things that go against your best interests + billionaire worship + allowing the amount of grifting that occurs...
The motivation may be different. Is it any better? Or change anything for the better in terms of social media success?
Trump’s popularity may be larger, but it’s also more isolated and siloed. The total possible user base for a social network of almost any billionaire will be larger than Trump’s. Not that most would ever get close to reaching that amount or getting numbers more than Trump. Just that the addressable market is bigger.
Trump was also kicked off of twitter while being excoriated in the media and then took, what, two years to launch something?
Musk is not nearly as trashed in the media and could leverage promoting an alternative while still on twitter. Obviously there does need to be something that is at least reasonably differentiating from twitter, and I think that is the real challenge as just saying it is twitter but more free is not as tangible.
I think Paul Graham overestimates Musk’s social media influence. He’s powerful on Twitter in large part due to Twitter. Same with Trump, btw. If it were so easy for Musk to recreate the network, why spend 43B on some infrastructure? Musk knows he’s muzzled outside of Twitter.
Would that not have been true about Truth Social? They would have had enough users on day 1 to get network effects, but it hasn't happened. You could blame technical issues, but as I understand, Trump isn't even on the platform and neither is Fox News. So why would a Musk Twitter clone work any better?
Clearly that's not the only reason or gmail would have been a flop too. I actually think that marketing choice was the only reason they got as much initial traction as they did, without it I think most of HN would never have heard of Clubhouse, rather than that it would have been more successful.
If the former president of the United States with a distortion field around his politics and the largest cable news network backing his every word couldn't succeed in launching a platform, I doubt Elon can. Unlike Elon, Trump has constantly blasted news networks and tech companies in the U.S. as being fake and run by lefties, to the point where his entire base believes it, and even that wasn't enough to migrate them off of twitter, because again, network effects. Twitter benefits by having everyone on it, and with no one to yell at Trump's audience is left to talk to themselves, which is boring.
Additionally, with all due respect to Paul, his logic here is absurd. "I'd be interested so that means everyone must be" is the wrong line of thinking for a product launch like this. Everyone is _interested_ in something the first day, but whether or not that's enough to build on is another matter. So many social networks had massive first day signups. I was "interested" in Byte on the first day. I signed up, posted a few bytes, and stopped using the app after a week. Parler, Gab, Truth, had "interest" too. The problem is that critical mass of users he describes are all just talking to themselves in their insular group (elon fans) just as the right-wing networks had their conspiracy theorists etc. It's enough to have users, but its not enough to promote long term growth. I know it's not something _i'd_ be interested in, which refutes his point because its purely anecdotal.
So, the only demographics that'd actually stick with an elon twitter competitor are: People who love elon musk and everything he creates, and people who are banned from twitter. If it shakes out to be anything like Gab and Parler, the later means the site is going to swarm with Nazis like every other free speech competitor to twitter, which as a jew is something i'm deeply uncomfortable with. There's not enough free speech in the world for me to put up with being harassed by people who share the views as the ones who murdered my great grandparents. And as much as people here enjoy grandstanding about free speech, its likely something you're uncomfortable with too, otherwise you'd be on those sites.
Basically, the product elon wants to make already exists and it has no users. If Trump (who had a significantly bigger following on twitter than Elon) wasnt enough, if big right wing stars like Milo werent enough, what's gonna be enough? Because copy pasting Truth and slapping Elon on the front... wont be.
Getting someone to onboard to a new platform is ultimately a sales job. Selling is about telling people who they want to be, not who they are.
A social media platform advertised as a politics-first/free-speech platform is the social media equivalent of a beer ad featuring a divorced balding man at last call in a dingy basement bar. No one aspires to bicker about politics with strangers on the internet, even though in reality that's the engagement that pays the bills.
It seems overly reductionist to ascribe the essence of 4chan to this one, singular idea. For example, m00t reports that 4chan was inspired by another image board he used to frequent. It is also hardly the first or only website to have light moderation.
The failure of those other platforms has nothing to do with free speech or lack there of. Twitter has a moat that you aren't going to be able to break by just trying to out Twitter them.
Every competitor has failed because it prioritized free speech above user experience. Almost all have had terrible UI's, terrible performance, lots of bugs.
BigTech owns the mindshare of how to build these platforms. Musk would actually have the resources to pay for the level of expertise and competence to build such a platform. However, it would be years in the making which might all become irrelevant with web3.
Or Musk could throw support behind web3 tech as ultimately free speech will only exist when controlled by no one including free speech advocates such as Musk.
I don't think the technical challenge is the blocker here. Lots of people on HN could build a really good version of Twitter in a month and be ready to tweak things as scale increases. (Nothing is an overnight success and you will have time. Twitter didn't even get it right for a couple years, remember the "fail whale"? The idea being right as much more important than choosing the right distributed database or whatever.) The reason people don't do that is because they don't know what they could do better than Twitter. People leave Twitter because nobody wants to read their tweets; you can't build a Twitter clone from people whose tweets nobody wants to read.
One idea that I have is that I noticed a lot of people went from blogging to making YouTube videos. I'm guessing YouTube is the sweet spot that balances monetization potential (they will find ads to put in your videos, and advertisers pay a lot for video ads) with a recommendation engine (that essentially forces people to watch your content; or more charitably, tells people that will like your content that they should take a look). Blogs didn't really have monetization or recommendation, and people were willing to switch media (text to video) just to get those two things! Now we have things like Substack bringing those to text, and people are taking advantage of that.
Maybe that's where the next Twitter wants to be? Paying smart people to write? That sounds a lot more appealing than "free speech" (which is great to have, but I don't really want to read anyone's free speech), which is all we've seen as the differentiation point for Twitter clones.
The next step is a social media company that is (1) private (2) membership based (3) no reliance on huge ad contracts, just promoted content (4) can tell the difference between political opinion and hate speech (5) gets out of the way of legal public discourse.
It doesn't need to be web3. It just needs to be somewhat transparent and minimally auditable. Web3 doesn't know what web3 is yet. Most is just garbage, sorry.
Dan olsen has a great video about this, something along the lines of "platforms are not your friends" with the specific case of some YouTube competitor.
The real problem with competing platforms is that they don't offer anything to the main people they need to attract.
The guy has launched more than 2 companies. Last I checked there aren't any super tunnel sleds under LA fixing traffic there yet, and my car was supposed to be able to autonomously drive itself a solid 4 years before I got it. It's very easy to be in the mindset that elon never fails if you think all his failures are just very long delays
It would be funny if he's already selling his shares for a tidy billion dollar plus profit and has no intention to buy even if the board accepts his non-binding offer. Not sure if this would be legal.
You explained it perfectly, no white board needed.
I can only add one minor point from a general and international perspective: 50% may not always be enough. At least in Sweden I think you need 90% to accept a bid before you can legally force the remaining 10% to sell their shares. Even if you accept that there will be minority shareholders you will need 67% before you can do some things, like e.g. issue new shares without giving minority owners right of first refusal.
I'm sure there's a lot of devils in the details all over the world, and I'd be surprised if there are none in the US.
>Everyone currently holding $TWTR believes that the true value is greater than the current price.
I don't see how this is relevant. All stockholders of any non-dividend paying company believe the price of the stock will go up. Takeovers with relatively low premiums happen all the time. That being said, Musk is definitely bargain hunting. I think the bid shows he isn't that serious and has no idea how to answer the fundamental monetization questions.
Funds vote the way the fund managers choose. And they tend to do backroom deals with other shareholders to vote a particular way, and such deals can be pretty profitable for their golfing career...
You'd have to be really damn sure that Twitter is worth more than what Musk is paying.
It's hard to see how an owner of Twitter stock could rationally reject an offer with a guaranteed +38% return. For any serious investor, even if they believe Twitter is worth twice what it is now, they must have several other stocks they believe are also worth twice what they are now. And if Elon bought all of them out at +38% returns, that would be a tremendous year investing.
What happened last week is irrelevant. If I can sell my shares on the market today for $46 and Elon is offering $54, that's a ~17% premium. It's better than nothing but not nearly enough to convince >50% of shareholders to vote in his favor. Several major ones have already said no to the offer (https://www.reuters.com/technology/saudi-prince-alwaleed-bin...).
If it was a serious offer the market would have already valued TWTR at ~$54, but it has actually gone down after Musk announced his bid.
Information about a potential takeover bid is absolutely relevant, and it's generally reasonable to calculate the premium from before that news first existed.
What happened last week was information about a potential takeover bid.
It is not at all irrelevant. I would be surprised if any reputable financial source would think of this as a 17% premium and not include last week.
gpm said the rest already as a reply.
As to the Saudi prince. Regardless of the topic. In any situation, it is hard to take the prince at face value knowing he pushed hard to successfully give the Kushners and co $2B[0]. If there’s more at play for the prince than short or medium term money, what he says is irrelevant then.
It was 30 when the price was at 33 and musk wasn't on the picture. Someone's buy nearly 10% on the open market then bidding for a significant chunk of the rest is new info.
To make a successful hostile bid, you need to pay not just "more than the current price", but "more than the holders of 50% of current shares believe the company to be worth". Usually bidders use analyst price targets to guess at the distribution of holders' internal price targets.
This is what makes it so difficult, and why this bid is very likely to be rejected.
(This is easier to explain with a white board, tbh.)