🔒 Elon's Push-Me-Pull-Me deal with Twitter is (apparently) back on. At $54.20 a share it's a high price to pay for a shitty business, albeit with a great brand. Can Elon pull it off? Here's what I think...
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Musk's Twitter Deal Is Back On
Push-Me-Pull-Me: I was eating a curry in the beautiful Portuguese town of Tavira on Tuesday night with friends when the news broke - Elon Musk had changed his mind again and will now be going ahead with buying Twitter for $54.20 a share.
- Most other times I'd have jumped for my phone (even though I'm now 10 weeks without social media on it, thanks to Charles Radclyffe). But not this time.
Why? TBH, I wasn't surprised. It felt like it was inevitable and just a matter of time. Especially after the release of Elon Musk's personal communications in the run up to the lawsuit hearing in the Delaware Court of Chancery in two weeks time.
➕ The reality is that Musk had no choice but to honour the deal that he instigated. Twitter had called his bluff and you can bet that Musk's lawyers were telling him "you're going to lose" in the Chancery court. (Because he was.)
➕ He probably didn't fancy being in the public eye for once. For a man who courts publicity at every opportunity, Musk wouldn't want the attention as he sat under oath facing awkward questions from Twitter's lawyers.
- Given the recent disclosure of some of Elon's texts, plus his bizarre tweets that appear sympathetic to Russia, can you imagine the questions from the Twitter lawyers?
Which I find ironic given that Elon wants to own the so-called "public square" (Twitter) but isn't so keen on the "public eye" when it's not on his terms (but maybe that's just me being unkind and cynical).
➕ This is good news for Twitter shareholders (including me).
Twitter is a great brand and a shitty business. It is probably worth no more than $20 a share. Musk has offered $54.20. I'd swop a £20 note for a £50 everytime!
➕ But not so good news for Tesla shareholders (stock down about 10% since Tuesday).
I don't see anything in this for Tesla shareholders. Having said that, they've benefitted for years from Elon's free marketing to his 107 million Twitter fanbase, the global press and commentators like me, that read and analyse every tweet.
BTW, General Motors spend around $2 billion a year on marketing, they don't get anything like the attention of Tesla and nobody knows who their CEO is.
➕ This has to happen fast. Musk's renewed offer is contingent on the financing, but that was arranged 6 months ago and I doubt he would have done what he's done this week without it in place.
BUT: The fly in the ointment will be the $13 billion or so that is debt commitments made before the recent interest rate hikes, so that debt is going to be expensive now. Someone will get burnt.
➕ If it happens really fast, expect to see Donald Trump on Twitter in time for the mid-terms. As soon as Trump is back on Twitter, that'll be toast for Truth Social. Who? Exactly!
Longer Term: I see trouble in store for Musk.
- He's already extremely time constrained and challenged with issues about relaunching SpaceX rockets and the growing competition for Tesla.
- He's got to pay down the $13 billion of debt he's taking on as well as generate whatever returns his backers expect.
- He's got to grow Twitter's topline and attract greater numbers of users as well as clean up the platform. In a text with Twitter chair Bret Taylor, disclosed in court filings last week, Musk said: “It is better, in my opinion, to take Twitter private, restructure, and return to the public markets once that is done.”
- But that means investment. Not only does he have the debt to pay, he's got to bring innovation to Twitter. Something it has not seen much of in a decade.