[HN Gopher] Musk announces funding secured for Twitter buy
___________________________________________________________________
Musk announces funding secured for Twitter buy
Author : coloneltcb
Score : 407 points
Date : 2022-04-21 13:49 UTC (9 hours ago)
(HTM) web link (www.sec.gov)
(TXT) w3m dump (www.sec.gov)
| throwawayacc2 wrote:
| Is this scenario something that can happen, or am I missing
| something?
|
| An agent of Elons buys 15% of the stock triggering the poison
| pill.
|
| The agent declares publicly he is not an agent, has no intention
| of selling the stock to Elon, has no business with him, etc -
| Essentially avoiding being lumped with Elon in the same group.
|
| Does Elon now get to buy 85% of Twitter at a discount?
| tablespoon wrote:
| > Is this scenario something that can happen, or am I missing
| something?
|
| > An agent of Elons buys 15% of the stock triggering the poison
| pill.... The agent declares publicly he is not an agent...
|
| I'm guessing that would be some kind of fraud or at least a
| securities law violation.
| kjksf wrote:
| Poison pill is a scheme enacted by Twitter, not SEC or any
| government agency.
|
| It's not law therefore finding creative ways to go around
| that poison pill would not violate any laws.
| spoonjim wrote:
| Right, but the method of averting the poison pill described
| above would likely violate securities laws around
| coordinated behavior between market participants.
| tablespoon wrote:
| >>> An agent of Elons buys 15% of the stock triggering the
| poison pill.... The agent declares publicly he is not an
| agent...
|
| >> I'm guessing that would be some kind of fraud or at
| least a securities law violation.
|
| > It's not law therefore finding creative ways to go around
| that poison pill would not violate any laws.
|
| They would if those "creative ways" where _themselves_
| violations of the law. The issue isn 't subverting the
| poison pill, it's the lying and secret coordination.
|
| https://www.merriam-webster.com/dictionary/fraud
|
| > Definition of fraud
|
| > 1a : deceit, trickery specifically : intentional
| perversion of truth in order to induce another to part with
| something of value or to surrender a legal right was
| accused of credit card fraud
|
| > 1b : an act of deceiving or misrepresenting : trick
| automobile insurance frauds
| kjksf wrote:
| As we all know, Webster dictionary is all you need to
| know to pass a bar exam.
|
| In your hypothetical example, the agent doesn't have to
| say anything.
|
| If Larry Ellison buys 15% of Twitter as a favor to his
| buddy Musk, he is under no obligation to publicly state
| anything. All he has to do is to disclose any stake
| bigger than 5%, as per SEC rules.
|
| Twitter board has no power to question Ellison on his
| motivation.
|
| They can either trigger the poison pill or not.
|
| If they try to include Musk as part of the poison pill,
| they'll be sued by Musk and the burden of proof will be
| on Twitter board to demonstrate that Ellison is in
| cahoots with Musk.
|
| And when you're in front of a judge and the jury, it's a
| bit more complicated than "because I said so".
| throwawayacc2 wrote:
| If the agent doesn't sell that stock, can it be proven that
| he is actually an agent?
| robonerd wrote:
| In principle, sure. Why not? Sue him, subpoena the
| emails/etc and see if you can find some incriminating
| statements. There is no guarantee of success, but it
| _could_ work.
| elliekelly wrote:
| I'm guessing the shareholder rights plan adopted by the board
| includes a "wolf pack" provision to (mostly) address this
| scenario and also publicly declaring they're not colluding with
| Musk when they are, in fact, secretly colluding would
| absolutely be fraud.
|
| _But_ an interesting hypothetical: some wealthy benevolent
| complete stranger who has no ties to Musk whatsoever suddenly
| purchases 15% in order to trigger the poison pill and allow
| Musk to buy a huge stake at a discount. I don't _think_ that
| would be fraud. (Though I'm really not sure? And there are
| probably plenty of lawyers who could make a solid argument it
| is...) And I'm not sure why anyone would ever waste so much
| money on a random act of kindness(?) for Elon Musk but
| billionaires have definitely done dumber things with their
| money just for shits & giggles.
| vimy wrote:
| Let's say this happens and Musk buys a lot of the new shares
| so he now owns more than 15 % too. Does the pill get
| triggered again?
| elliekelly wrote:
| No there's usually language that it's triggered once and
| that there are no other shareholder rights plans currently
| in effect. And since the plan states the price at which
| shareholders are entitled to purchase shares whether or not
| it was triggered "again" would kind of be a moot point
| because the price wouldn't change and there are only so
| many authorized shares.
|
| And also it's a silly hypothetical (even for a
| hypothetical) because I didn't think it through at all: I'm
| pretty sure there is typically a cap on how many shares any
| one shareholder can buy when the pill is triggered. So it
| wouldn't really be any help to Musk except that the
| "threat" of the poison pill would be removed and maybe some
| investors would be happy to cash in by quickly buying the
| poison pill shares and then selling to Musk.
|
| Also, if it were triggered I think it would be a bit of a
| logistical nightmare and things would probably be in flux
| for a few days before anyone could say who owned how many
| shares with any certainty.
| exikyut wrote:
| I would think (hope?) that if that _were_ possible, the SEC et
| al would have sufficient awareness to do all due diligence
| possible to determine the provenance of the agent in question.
|
| Wait, what am I thinking. I don't need to worry about the
| SEC... the reputational boost associated with whoever
| identifies shady behavior first will be huge. _Everyone_ will
| be bounty-hunting this to death backwards inside out and upside
| down. It 's Twitter and it's umpty billion dollars.
| kjksf wrote:
| SEC has no mandate (nor should it be interested in) enforcing
| rules created by Twitter board.
|
| SEC enforces laws created by congress.
|
| "Poison pill" is not a law. It's a rule created by Twitter
| board.
|
| It merely says "if this happens, we'll do that".
|
| If anything, SEC should be looking into Twitter's board
| authority to sell stock at half price, which clearly harms
| shareholders.
|
| And one of the things SEC is supposed to do is to protect
| shareholders from harm, even if the harm comes from inside
| the house.
| aw1621107 wrote:
| IIRC that's not how the poison pill is set up. I believe it
| allows eligible shareholders to purchase $420 worth of _new_
| shares at a 50% discount per share of common stock they own
| (?), or allows the board to effectively double the number of
| outstanding shares for everyone but the entity (entities?)
| triggering the poison pill. No existing shares change hands.
|
| This means that the poison pill would not allow Elon to
| purchase large quantities of Twitter at a discounted price
| through the poison pill itself.
|
| Edit: Missed a provision of the poison pill allowing for
| doubling of existing shares without shareholders needing to
| purchase anything. Also try to clarify that the $420 of new
| stock may be per existing share owned, if I'm reading these
| documents correctly.
| cwp wrote:
| That's gotta tank the share price, though, right? Some
| shareholders will sell to avoid the dilution, and others will
| buy, but from the company rather than the market. So the
| market sees a bunch of sellers and few buyers.
| aw1621107 wrote:
| I honestly don't know the answer to your question; this is
| well outside my knowledge base. Looking at the 8-K Twitter
| filed [0]. It looks like the stock that shareholders may
| purchase through the poison pill are 1/1000 of a different
| class of stock (Series A Participating Preferred Stock, as
| opposed to common stock), though the intent is that that
| small fraction should be about the same value as a share of
| common stock. I have no clue what the effects on the market
| may be for this option.
|
| Also, I admittedly missed another provision of the poison
| pill - the board also has the ability to exchange an
| unexercised right for 1 share of common stock, effectively
| doubling outstanding shares for eligible shareholders
| without them needing to make an additional purchase. This
| may be more
|
| [0]: https://www.sec.gov/ix?doc=/Archives/edgar/data/141809
| 1/0001...
| numair wrote:
| In case anyone is wondering where Morgan Stanley is going to get
| the money for this debt deal, it will look a lot like this:
|
| https://twitter.com/pacday/status/985314558775410688/photo/1
|
| I'm joking, but I'm kind of not... We will see who is actually
| behind the package, but MUFG and friends have a habit of
| financing foreigners' adventures while keeping Japanese companies
| under-capitalized and starving. (For those not aware, MUFG owns a
| large part of Morgan Stanley, hence the photo above.)
| nyxtom wrote:
| That is a serious amount of debt financing and going into margin.
| This is significant risk for an asset that is unlikely to get
| significantly better in value. I wonder how much a collapse in
| Tesla stock would trigger a margin call.
| purephase wrote:
| I can't believe this asshole is spending billions so that Trump
| can get his Twitter account back.
| spikels wrote:
| Will be interesting to see if Musk has found a way around the
| poison pill. There are several theoretical techniques to avoid
| triggering them but as far as I know none have been tried in
| practice. There is also the issue of whether a company would
| actually follow thru and implement a poison pill as there would
| be lots of fallout.
|
| Anyone have a sense of what might happen?
| rangersanger wrote:
| Check out Matt Levine. He has a great series explaining some
| potential possibilities.
| https://www.bloomberg.com/opinion/authors/ARbTQlRLRjE/matthe...
| spikels wrote:
| Unfortunately paywalled and not sure which Levine article you
| mean.
|
| Edit: And as best I can tell Levine has been wrong on this
| situation at every step...
| vageli wrote:
| Likely this one: https://www.bloomberg.com/opinion/articles
| /2022-04-20/elon-c.... FWIW I believe you can read his
| content for free if you subscribe to his newsletter (or
| bloomberg's newsletter?).
| colinmhayes wrote:
| > And as best I can tell Levine has been wrong on this
| situation at every step
|
| Perhaps when it comes to the sincerity of Elon's actions,
| but I'm not aware of when he's been wrong when it comes to
| Elon's legal options.
| rangersanger wrote:
| Yeah, OP was asking for legal options and this spells
| them out. Additionally, Levine has been wrong about which
| option Elon will pick, but he's also generally been spot
| on about listing all potential options and also saying
| "this guy is unpredictable, so who knows."
| slenk wrote:
| What is the poison pill?
| ceejayoz wrote:
| If someone buys more than 15% of shares, they can issue more
| shares to other people to dilute them.
| emteycz wrote:
| I don't understand how that's not financial fraud.
| antiterra wrote:
| Because fraud requires deception and there's nothing
| deceptive about a poison pill that makes the news.
| runako wrote:
| What would be fraudulent about that? Companies issue &
| retire shares all the time, for lots of reasons.
| emteycz wrote:
| Yeah but they usually don't do it with the express
| purpose of screwing over an investor - and when they do,
| there are consequences (like FB).
| runako wrote:
| You're not making a case for this being fraud. Why would
| this be fraud rather than a sharp-elbow business tactic?
| "Fraud" has a concrete meaning; for this to be a fraud,
| one would need to be able to identify precisely of what
| Musk has been defrauded.
| danso wrote:
| The poison pill is fighting off a hostile takeover, by
| someone who has offered a first-and-final-offer. It would
| be screwing the other investors to have zero negotiations
| for a better deal.
| mypalmike wrote:
| The poison pill clause is part of the shareholder
| contract, often specified in the articles of
| incorporation.
| danieldisu wrote:
| Oh, if they execute the poison pill there will be
| consequences, just not legal ones.
|
| Trust is a big part of stock value, if you don't trust
| the board is time to sell...
| slenk wrote:
| Ahh, thanks
| ascar wrote:
| That explanation sounds like they are just giving away
| shares, which they aren't. Other parties get the _right_ to
| buy additional new shares at a reduced rate.
| colinmhayes wrote:
| > Other parties get the _right_ to buy additional new
| shares at a reduced rate.
|
| This is effectively the same as giving away shares.
| ascar wrote:
| I think that oversimplifies the dynamics drastically.
|
| First off, even if buying the shares at the reduced rate
| is highly profitable, you do need the cash to buy them.
| With the 50% that are floating around here that's a
| significant amount of cash.
|
| Furthermore, with the dilution that's happening the stock
| price would also drop so while you gain on the reduced
| shares, you loose on money on your old shares unless Elon
| keeps buying.
|
| I just don't see that it's the same as giving away shares
| for free (which is just adding dilution without
| additional capital costs for the existing shareholder).
| Feels to me like an all parties lose situation if it's
| triggered.
| w23j wrote:
| The other shareholders don't need to have the money:
|
| "Another, perhaps more practical provision of the pill
| says that the board can just exchange each right for one
| share of stock, for free, meaning in essence that the
| board can double everyone else's number of shares of
| Twitter while holding Musk's constant, without asking
| anyone to put in more money." (From a recent Money
| Stuff.)
| cbm-vic-20 wrote:
| Which other people would get those shares? Would that be
| considered taxable income for the recipients? If I were a
| regular shareholder and my shares were diluted without
| compensation, I'd be pissed...
| lazyier wrote:
| > Which other people would get those shares?
|
| The offer is extended to existing shareholders.
|
| So if you own 10 stocks you will be allowed to purchase
| 10 more stocks at a vastly reduced cost.
|
| Something like that.
|
| This way you can screw over the corporate raider without
| screwing over existing stock holders.
| skellington wrote:
| The poison pill is blatantly unethical. The fact that it
| exists as a tactic where a company can target a specific
| shareholder and dilute them exclusively, while also
| diluting other shareholders who don't have the money to
| participate in the poison pill, is yet more proof that
| the SEC is a garbage organization.
| tptacek wrote:
| It's been settled corporate law for decades, and it
| serves a clear purpose: without poison pills, hostile
| buyers can also do blatantly unethical things, like
| coercive lowball bids that punish shareholders that don't
| tag along.
| w23j wrote:
| The other shareholders don't need to have the money:
|
| "Another, perhaps more practical provision of the pill
| says that the board can just exchange each right for one
| share of stock, for free, meaning in essence that the
| board can double everyone else's number of shares of
| Twitter while holding Musk's constant, without asking
| anyone to put in more money." (From a recent Money
| Stuff.)
|
| It also gives reasons why poison pills were allowed by
| the Delaware Supreme Court (and not the SEC).
| Ajedi32 wrote:
| That seems even worse then; it's effectively the board
| voting to steal shares from a major shareholder in order
| to increase their own relative stake in the company. How
| is that not illegal?
| w23j wrote:
| What used to happen before there were poison pills, was a
| corporate raider would say "I want to buy this company,
| and I offer 100$ per share. If not everybody agrees to
| sell to me, but I get more the 50% of shares I will
| replace the board and then offer a merger in which 30$
| per share are offered. The board (which I just
| instituted) will agree to my offer." That means after a
| raider has the majority of shares he can stiff the
| remaining minority shareholders. Of course people knew
| this on the initial offer and were therefore pressured to
| accept it or risk losing a lot of money later. I assume
| you agree that making this possible is not in the
| interest of sharedholders (or companies), although it
| made some people very wealthy back in the days. The
| Delaware Supreme Court considered, that such an extreme
| threat to shareholders justified extreme countermeasures
| such as the poison pill. (All of the above just tries to
| paraphrase Matt Levine, which I can really recommend if
| one wants to understand such things.)
| Siira wrote:
| Why would the newly installed board be allowed to allow a
| merger with such a low number?
|
| This seems to be the root problem, and it can happen in
| other scenarios when a coalition controls 51% of the
| shares. The law needs to protect the minority
| shareholders.
|
| This poison pill "solution" is just theft.
| spikels wrote:
| As far as I know it has never been done in practice but
| is sure seems like it would have a huge amount of fallout
| for existing shareholders. Would the board actually pull
| the trigger knowing this? On the other hand poison pills
| are widely used and have generally been considered a
| credible defense.
| tptacek wrote:
| They don't have to pull the trigger; it's already set up.
| These triggers never get pulled because it's irrational
| for a hostile acquirer to play chicken with them; it's
| like playing chicken with a brick wall.
| likpok wrote:
| Every other shareholder gets access to the shares. So the
| effect is: you can buy $420 worth of twitter stock for
| $210 unless you're elon musk or working in concert with
| elon musk.
|
| Some poison pills just give the shareholder extra shares
| -- it's basically a stock split except for the targeted
| shareholders.
| mannykannot wrote:
| As described above, it would be like a stock dividend or
| split (except for the 15%) - no income, no capital gains,
| no dilution.
|
| In reality, this poison pill is more complicated - from
| Matt Levine: "The main mechanism of the pill is that if
| Musk or anyone else acquires more than 15% of Twitter's
| stock, then every other Twitter shareholder will have the
| right to pay $210 to acquire $420 worth of Twitter stock
| (at then-current market prices)."
|
| He also points out that this is moot except in the highly
| unlikely event that it is triggered - in which case,
| someone screwed up really badly.
| 988747 wrote:
| So the discount for existing shareholders is only 50%?
| That still requires pretty significant investment from
| their side, what if they can't come up with enough money?
| Poison pill becomes uneffective, right?
| danso wrote:
| Why wouldn't existing shareholders buy heavily discounted
| stock, knowing that there's a good chance Musk will go
| all in and pay a premium for it?
| elcomet wrote:
| Maybe because they do not have the money, and because
| it's not certain that musk will go all in.
| duped wrote:
| https://www.cnbc.com/2022/04/15/twitter-board-adopts-
| poison-...
| xadhominemx wrote:
| He hasn't which is why he's angling for a tender offer
| spikels wrote:
| Are you thinking a tender offer somehow overcomes the poison
| pill?
| legitster wrote:
| From Matt Levine:
|
| "Musk can launch a tender offer to buy all of Twitter's
| stock for $54.20 in cash. (Or, of course, some higher
| number.) The tender offer is a public, binding document
| filed with the SEC, open to all shareholders, and it will
| be full of disclosures about his plans and, in particular,
| his financing. Shareholders will be able to read it and see
| if he has the money. If it looks like he does, then they
| will be able to decide if $54.20 is a good enough price. If
| they think it is, they will be able to tender into his
| offer, submitting their shares for purchase. He won't be
| able to buy them, though, because of the poison pill; the
| tender offer will be contingent on getting rid of the pill.
| But if like 90% of shareholders tender into his offer, then
| that is an important public-relations victory; he can go to
| the board and say "your shareholders want this deal, let
| them take it." And then the board might agree and get rid
| of the pill, and then the tender offer can close and he can
| buy the shares."
| xadhominemx wrote:
| Yes, if he launches a tender the offer goes to the
| shareholders. He wouldn't need to build a larger stake
| himself.
| spikels wrote:
| I don't think this is correct.
| xadhominemx wrote:
| It is correct. That is how a tender offer works.
| kpommerenke wrote:
| A tender offer is a means of building a large stake, so
| the poison pill would still be active. Therefore, he will
| not launch a tender offer.
| [deleted]
| xadhominemx wrote:
| Incorrect.
| lkfsfldkjfslk wrote:
| I hesitate to speculate on what Musk will do
| specifically, but often in a poison pill situation a
| tender offer will be contingent on the removal of the
| poison pill. The point of the tender offer is not to buy
| the shares immediately, but to incentivize shareholders
| to put pressure on the board to remove the poison pill,
| then complete the tender offer it's removed.
| ceejayoz wrote:
| The poison pill can be trivially (for certain definitions of
| trivial) avoided by having several allies buy 14% of shares
| each, I presume.
| xadhominemx wrote:
| You presume incorrectly. Any coordination would make Elon and
| his allies a "group" which would mean they are collectively
| treated as an individual.
| ceejayoz wrote:
| How do you prove people are in a group of this nature?
| xadhominemx wrote:
| You check to see if they are communicating.
| ceejayoz wrote:
| How do you that without a search warrant?
| [deleted]
| rootusrootus wrote:
| Ask, I guess. The people doing the communicating are
| perhaps committing fraud and endangering their own wealth
| and freedom if they lie. I'm willing to bet the SEC has
| regulations that apply to this situation already.
| xadhominemx wrote:
| If three large shareholders came in with a similar agenda
| but did not disclose group status, the SEC would
| investigate. First, the SEC would request that they turn
| over communications records. 99.9% of the time, they
| would. If they didn't, the SEC would seek a warrant.
| tptacek wrote:
| Again, first lines of the shareholder rights agreement. This
| is something the lawyers thought of approximately 3 minutes
| after poison pills were invented.
| ceejayoz wrote:
| https://www.law.cornell.edu/cfr/text/17/240.13d-5 seems to
| indicate they have to be explicitly coordinating to be
| legally defined as a "group" for this purpose (and
| Twitter's filing highlights this definition), which seems
| hard to prove. Twitter can't issue a search warrant, the
| participants would presumably not write any such deal down
| on paper, and the action is readily explicable by "I think
| the acquisition is gonna go through and he's offering a
| premium, so I'd profit".
| spikels wrote:
| The financing is in 3 pools. If each could buy 14% and Musk
| increases his stake to 14% without triggering the poison
| pill, that's 56% in total. If they had 56%, could they
| immediately gain control? This is getting interesting.
| baby-yoda wrote:
| I was wondering about this - what's to stop him from creating 3
| permanently sealed South Dakota trusts, acquiring 14% in each,
| and combined with his personal share calling a vote and
| immediately rejecting the poison pill and firing the board?
| tptacek wrote:
| The lawyers thought about that the day poison pills were
| invented. It's in the very first lines of the shareholder
| rights agreement.
| [deleted]
| boringg wrote:
| Wait what is a permanently sealed South Dakota trust? And how
| do I get one of those interesting sounding mechanisms.
| rootusrootus wrote:
| IIRC Twitter already has rules about shareholder votes, and
| it couldn't happen until next year at the earliest. There's
| no provision for shareholders to call for a vote at any
| random time.
| dahfizz wrote:
| Has the board formally rejected his offer yet? The poison pill
| only applies to a hostile takeover - i.e. if Elon just starts
| buying up all the shares in the market. If the board accepts
| his offer to buy the company, the poison pill does not take
| effect.
| [deleted]
| thoughtstheseus wrote:
| It's a another step toward Human + AI agents. Musk will give
| users the ability to choose, modify, and control their own
| algorithms.
| rootusrootus wrote:
| > Musk will give users the ability to choose, modify, and
| control their own algorithms.
|
| Like he does his existing customers or employees?
|
| I can never understand how some people still have such
| unbridled optimism about what Elon Musk will do next, given how
| ample the evidence is that he won't. He has quite a track
| record to base predictions on.
| once_inc wrote:
| I doubt the board is going to agree. Musk might want to buy, but
| they will actively thwart his efforts, even if that's not in the
| interest of shareholders.
| cpr wrote:
| Which goes to underline Musk's point that the board doesn't
| have the interests of shareholders in mind.
|
| Clearly, the cabal is not interested in losing control of the
| public narrative.
| mytailorisrich wrote:
| Which is a breach of their fiduciary duties.
| dev_tty01 wrote:
| Which is historically very difficult to prove and enforce.
| likpok wrote:
| Courts have traditionally given the board wide leeway to
| decide what is best. There was the one case (Dodge v. Ford
| Motor Co) that held otherwise but it's been walked back in
| recent years.
| justusthane wrote:
| As I understand it, it's not. The whole thing about
| fiduciary duty is a bit of a meme. The board can argue that
| they believe that Musk will run Twitter into the ground and
| in the long term not selling is a better financial move,
| and due to the Business Judgement Rule, the court is likely
| to side with them (whether or not they're actually right).
| motohagiography wrote:
| > The whole thing about fiduciary duty is a bit of a
| meme.
|
| Fiduciary duty is very much a thing. The Twitter board
| with such a tiny amount of equity may incur risk from
| "honest services fraud," if they block shareholders from
| recieving the material and obvious value of the offer.
|
| https://en.wikipedia.org/wiki/Honest_services_fraud
| ahtihn wrote:
| > The board can argue that they believe that Musk will
| run Twitter into the ground
|
| They can't argue that because it would be completely
| irrelevant to current shareholders.
|
| They can argue that the long term value is higher than
| Musk's offer.
| mytailorisrich wrote:
| Not working in the interests of the shareholders is a
| breach of the board's fiduciary duties (which is simply
| what I commented based on the parent comment I was
| replying to).
|
| The issue is indeed always to determine whether a course
| of action is knowingly not in the interests of the
| shareholders.
| bombcar wrote:
| It's likely going to come down to what Jack, as the largest
| remaining individual shareholder, says.
| spikels wrote:
| He only owns a few percent and has limited cash to buy more.
| leetcodesucks wrote:
| Nobody said he would buy more though
| spikels wrote:
| He has a tiny stake and can't increase it. Therefore Jack
| has negligible power at this point.
| bombcar wrote:
| The point is nobody _else_ has even a percent, and as a
| founder he can greatly shift the narrative.
|
| Board goes against Musk, shareholders may sleep.
|
| Board goes against Musk _and the founder_ , shareholders
| may awake.
| sudden_dystopia wrote:
| I love that this document is dated 4/20, just a coincidence I'm
| sure!
| andrew_ wrote:
| IIRC that's the date his offer to the board expired. And yes
| also because 420.
| m1117 wrote:
| Such a bald move
| gavinray wrote:
| Can someone who understands finance ELI5 the section about the
| financing: > "To finance the Proposed Transaction
| or a Potential Offer, entities related to the Reporting Person
| have received commitment letters committing to provide an
| aggregate of approximately $46.5 billion as follows:"
|
| What follows seems like Elon is "paying" for Twitter with...
| imaginary money.
|
| "A debt commitment letter"
|
| "A separate debt commitment letter"
|
| "An equity commitment letter"
|
| Am I understanding it correctly that effectively $0 is coming
| out-of-pocket for purchasing Twitter?
|
| Why can't anyone do this? I'll promise you a bunch of debt and
| equity, too.
| martincmartin wrote:
| It's like buying a house with a mortgage. You wouldn't say
| you're buying a $1MM house for $200k just because you had a 20%
| down payment.
| colechristensen wrote:
| Elon has a lot of equity in ownership of tsla, spacex, etc, no
| doubt plenty of other things. Instead of selling for cash and
| buying Twitter with cash, he's taking out loans based on assets
| he owns.
|
| On top of that there will probably be "imaginary money" where a
| bank will give him money to buy Twitter with Twitter as
| collateral, but not the whole thing, just part. I.e. loans
| against his personal capital will provide a kind of down
| payment for loans against the value of Twitter.
|
| In this scale it's called leverage, banks loaning you a
| multiple of assets you're willing to risk.
|
| It is quite common for people with extreme net worth to take
| loans out against assets instead of selling them.
| justinsaccount wrote:
| > It is quite common for people with extreme net worth to
| take loans out against assets instead of selling them.
|
| Especially when selling those assets would require paying
| capital gains taxes.
| asdfqwertzxcv wrote:
| Doubly so when the interest on these loans is tax
| deductible. This is why he and most other wealthy people
| pay 0 taxes - he never has a taxable event, like selling
| stock. He just uses his stock as collateral to take out
| loans and writes off the interest.
| KptMarchewa wrote:
| At the end, where does he get money to pay interest?
| colinmhayes wrote:
| More loans. As long as the stock's value is going up he
| can pull more equity out
| Kylekramer wrote:
| This is where the weird negativity around billionaires
| taking loans is odd, even as someone who doesn't
| particularly like Musk. Sure, if their stock holdings
| keeps increasing in value, they can handle the loans
| easily and come out ahead on the deal. But that isn't a
| given, so what is the issue?
|
| Reed Hastings would currently being losing a lot under
| this scheme.
| colinmhayes wrote:
| Personally, my issue is that taking loans against equity
| is the reason billionaires don't pay any income tax.
| Sure, they should be able to take loans in order to keep
| their voting share, but not as a tax loophole.
| HWR_14 wrote:
| > Sure, they should be able to take loans in order to
| keep their voting share
|
| Why is that?
| ItsMonkk wrote:
| For a long time this always felt awkward to me but I was
| never able to pin-point exactly what was wrong. Then I
| found georgism, with its claims of not needing any income
| and capital gains taxes, and it was even harder to
| quantify.
|
| But I think now I've been able to work it out. There's
| actually two different types of loans but we treat them
| equally. The first is the nice type, the 'I built a
| factory, used that factory to pay back the loan with
| interest', that loan is a positive sum loan, the company
| wins, the bank wins, and the community wins. The second
| are loans for land, loans for stock, and other similar
| loans - these are zero-sum loans. The company can win,
| the bank can win, but someone is losing, and as is the
| community.
|
| And so the real problem with this if you track how the
| money flows - a possible scenario is that a company might
| take out a bond, use the money for that bond to buy its
| own stock. The people who sold that stock and got that
| money might then go out and buy a house, the people who
| sold that house - you betcha, put that stock into an
| index fund, which includes a larger and larger share of
| the companies buying their own shares. Now that their
| share price is raised, they have more equity, and can
| once again take out another bond to do it again. It's a
| positive feedback loop. Each cycle is inflating the
| bubble. Valuations end up not being based on actual
| productivity, but on assumptions as to how money will
| flow through the markets.
|
| We're at a stage now that the stock market flows of funds
| is only positive because of the stock buybacks. Companies
| that aren't buying back their stocks are going out of
| business. The Russel 5000 is getting punished despite the
| s&p recovering. We're at a stage now where north of 40%
| of all money is being held behind passive flows. We're
| now seeing the consequences of that with things like
| Netflix - when the stock does drop, it drops quickly and
| massively. Average volatility might be down considerably,
| but peak volatility is up massively.
| colechristensen wrote:
| The issue is that loans are ways of realizing gains on
| investments that aren't taxed.
|
| A proposal to correct this is to require that when you
| use an asset as collateral for a loan you have to
| reassess its value and pay capital gains taxes on the
| increased basis between when you acquired it and took out
| the loan.
|
| Basically there needs to be friction and taxation with
| equity transactions like these loans.
| kjksf wrote:
| Margin loan against your stock is more like a line of
| credit.
|
| Once you upgrade your brokerage account to include margin
| loans you're allowed to borrow up to, say, 40% of the
| value of your stock (I simplify, the exact rate is
| dynamic).
|
| Say you have $1 million in stock.
|
| You're allowed to borrow up to $400k. You have a line of
| credit of $400k.
|
| Say you borrow $100k. And in this context "borrowing" is
| simply transferring money from your brokerage account to
| your bank account. There's no additional paperwork as in
| most loans.
|
| Let's say over 5 years you accumulate $10k interest
| (interest rates are really low, can be below 2% right
| now).
|
| You don't have to "repay" that $10k or the principal. You
| now owe $110k which is well below $400k limit.
|
| It's a line of credit, you can still borrow additional
| $290k.
|
| In the limit that line of credit would only have to be
| settled when you die.
| Sohcahtoa82 wrote:
| I'm assuming they sell just enough stock to pay the
| interest.
|
| If the interest paid is tax deductible, then the selling
| of the stock won't result in a tax needing to be paid.
| davej wrote:
| Musk paid the largest tax bill in history last year.
| bombcar wrote:
| Facts are not needed, sir. Feelings matter most.
|
| We know that no companies pay tax (ignore the billions
| paid in tax), and no rich people pay tax (ignore the
| billions paid in tax), so therefor all taxes must be paid
| by me personally.
|
| Or so the arguments go.
| HWR_14 wrote:
| If you had a signed letter that GS was willing to loan you $43
| billion, you'd get taken seriously too. If you want to bid on a
| house, you'll need a signed letter promising a loan of (house
| price) on it from a bank to be taken seriously (or cash
| reserves)
| jollybean wrote:
| It means between himself, and a group of others, he has
| collected enough money to buy Twitter, as evidenced by the
| letters of intent.
|
| Those are legit. Banks don't sign notes without some intent.
| They can back out, but they are not meaningless.
|
| It's important so that the current shareholders and the board
| know that Musk's bid is legitimate, and not something he's just
| making up.
|
| In order for the banks and others to back him in this bid, he
| will have had to provide with with a lot of info.
|
| This could be a big PR move, but Musk will have had to hire
| very expensive bankers to actually go through this as if it
| were a real thing.
|
| "Why can't you do this?"
|
| Because Goldman and other Private Equity firms won't back you
| (well, assuming they won't). And they won't give you a letter
| to the board of Twitter saying they will.
| bombcar wrote:
| Yeah, the costs to do this are running in the millions, even
| if nothing ever happens. It was basically a foregone
| conclusion that Musk _can_ do this, but each bank has to do a
| bunch of work inside to make sure they 're not exposing
| themselves in ways they don't want to.
| jollybean wrote:
| Not a foregone conclusion. It's complicated. And banks
| definitely have to do their due diligence.
|
| If it was Buffet then it would be 'almost a foregone
| conclusion'.
|
| Not with musk.
|
| Musk has gained $10-30M in free publicity thus far. He's
| made the front pages of the news everywhere in the world.
|
| He can hardly lose here.
|
| And I'm not a Musk fanboy or anything.
| bombcar wrote:
| One difference is Buffet rarely if ever buys _anything_ ,
| _Berkshire_ buys things. And I dare say Berkshire has
| everything ready to go.
|
| In this case _Musk_ is buying _using_ TSLA (and SpaceX?)
| shares as collateral, not having TSLA buy.
| jeltz wrote:
| Way more people than Musk can do this. You just need a bank
| that trusts your ability to pay and who thinks the size of the
| transaction is worth their time.
| ajross wrote:
| > Why can't anyone do this?
|
| Everyone _can_ do this. Just call your bank and get commitment
| from them to issue you a $40B loan! Those "commitment letters"
| are contracts. It's a known bank with known assets saying it's
| promised to issue a loan in the stated amount for the stated
| purpose.
|
| It's the same thing that happens when you make an offer on a
| house. You don't generally come to them with the money "out of
| pocket", you show them documentation from your bank that
| details your mortgage contract. But the mortgage doesn't
| actually exist yet because you don't own the home. It will
| execute at the same time as the purchase, generally through
| some kind of escrow process.
|
| Things aren't any different, fundamentally, even five orders of
| magnitudes higher.
| xwdv wrote:
| You can. If you have a stock portfolio and your broker allows
| you to do margin loans you could just withdraw say $12k from
| your account as a loan without selling any shares and go buy a
| jet ski.
|
| But if you don't have sufficient collateral your broker will
| just tell you to get fucked.
| jjoonathan wrote:
| Because the people who wrote those letters don't trust you to
| pay up if stonks go down by 100x your net worth. They trust
| Elon, though, because he has more net worth.
|
| I'm taking a broad definition of "trust" that includes "we can
| sue you and recover the money."
| a4isms wrote:
| 80s Junk Bond King (and convicted felon*) Michael Milkin
| tells this story.
|
| He was once talking to an ambitions entrepreneur about
| funding a buyout with junk, and the entrepreneur asked, "This
| is a lot of money. How do you know I'll replay it?"
|
| Milkin says he replied, "Because if you miss even a single
| payment, I'll call your debt and take not just the company,
| but every single asset you own."
|
| ------
|
| * That would be _presidentially pardoned_ convicted felon
| Michael Milkin. The rules for "righting injustice through
| pardons" are very different for the rich than the comfortably
| well off, much less those living paycheque to paycheque.
| kmonsen wrote:
| Pardoned by Trump. We should name and shame each one until
| this stops.
| itsoktocry wrote:
| > _We should name and shame each one until this stops._
|
| Why should it stop? Do you not believe in redemption?
| Milken has done (and continues to do) a lot of great
| charity work with his fortune.
|
| Besides, if you look at what Milken was actually
| convicted of, it's pretty tame, especially by today's
| standards. And he spent _two years_ in prison for it.
| What more do you want?
| HWR_14 wrote:
| None of which means he deserved a pardon.
| a4isms wrote:
| I actually like what you're saying, but there is a
| problem here that is larger than whether it is just that
| Mr. Milken deserves a pardon. The problem is that justice
| unequally applied is injustice.
|
| So if we are saying, "Everyone convicted of a felony who
| serves their time and who then rehabilitates themselves
| should be pardoned," I'm all for it. And in my
| jurisdiction (Canada), people can apply for Federal
| pardons, and many receive them. There is a standard way
| to do it, a standard procedure to follow, and in theory,
| everyone is treated equally by the system.
|
| The injustice comes in if there is a special fast-track
| for a pardon one gets by hob-nobbing with your fellow
| wealthy oligarchs, one of whom is elected President and
| gives you a personal pardon. That's a bad look that
| suggests that all felons are equal, but some felons are
| more equal than others.
|
| Likewise, I am extremely leery of talking about "doing
| great charity work." Reputation laundering is my
| preferred term, and again this is not something available
| to all citizens. Nobody gives a crap if some felon
| donates $1,000 to a soup kitchen, but donate $1,000,000
| and you get called a "philanthropist."
|
| I'm all for charity and doing good works, but I'm not for
| giving philanthropists anything special in terms of
| justice that people who can't afford to be
| philanthropists get.
|
| IMO, the answer is not to burn Milken's pardon, it's to
| pardon more convicted felons who do their time and then
| turn their backs on whatever criminal acts they used to
| commit.
| bombcar wrote:
| Yeah we need more pardons not less, and we need blanket
| laws that forbid making hiring, etc decisions based on
| convictions (AND forbid lawsuits around hiring) more than
| X years ago.
|
| People are afraid to expose themselves to liability for
| hiring a felon, even if said felony is ages ago, because
| if something goes wrong everyone will say "well you
| shouldn't have hired a felon."
| gavinray wrote:
| Ah, so it's a reputation/wealth-based thing. That makes
| sense.
|
| By that logic though -- if you're a billionaire, could you
| try to buy every profitable company on borrowed money?
|
| Eventually you'd make the money back and since you don't have
| to pay anything out of pocket, you effectively have $INFINITY
| dollars to bargain with.
| rsstack wrote:
| When he requests debt from the banks he needs to show that
| his current owned assets are worth more than his current
| debt _and_ the new requested debt. They wouldn't loan the
| hypothetical billionaire infinity dollars, unless the
| billionaire has infinity dollars in assets that aren't
| offset by previous debt.
| s1artibartfast wrote:
| Banks don't like loaning multiple times with the same
| collateral
| bombcar wrote:
| The "make the money back" part is what prevents it.
|
| Musk has 100 billion of TSLA say.
|
| He mortgages it to buy TWTR. Now he has 100 billion of
| TSLA, -40 billion loan against it, and 40 billion of TWTR.
| He could mortgage TWTR and buy something else, but it would
| have to be smaller, because the banks won't loan 100% of
| the value of the thing.
|
| Or he'd have to make another $40 billion and pay off the
| first loan to mortgage it again.
|
| Think of it as trying to use mortgage properties in
| monopoly to continue buying other properties.
| KptMarchewa wrote:
| >He could mortgage TWTR and buy something else, but it
| would have to be smaller, because the banks won't loan
| 100% of the value of the thing.
|
| Unless you're on robinhood:
| https://www.bnnbloomberg.ca/robinhood-traders-discover-
| glitc...
| bombcar wrote:
| Robinhood is the exception that proves all the rules.
|
| Maybe we'll see a wallstreetbets post "Musk couldn't take
| TWTR private but I did via robin hood bug"
| leetcodesucks wrote:
| Trump and Gordon Gekko did this
| shkkmo wrote:
| Each new loan would have increased scrutiny due to the
| other loans you carry.
| pydry wrote:
| You could try but it'd probably work out for you about as
| well as when the hunt brothers tried to buy up all the
| silver on earth.
| nabla9 wrote:
| It's not reputation based. Musk as requested secured enough
| loans to pay with cash. His ownership in SpaceX/Tesla is
| the collateral (as well as his Twitter shares if he buys
| them).
|
| He has no "infinity" of anything. It's called leverage and
| it probably maxes out around 60-70% of everything he owns.
| newaccount2021 wrote:
| mritchie712 wrote:
| Do you think it's reasonable Elon could secure the funding if
| he wants to? I'm quite confident he can and I think most
| reasonable people would agree.
|
| however, I'm not confident "anyone" could secure the funding,
| so they can't "do this"
| ep103 wrote:
| I am not confident, no.
| emteycz wrote:
| That's so unreasonable you should go more into it or just
| leave it. It's literally the richest man of Earth, banks
| are falling over themselves to stuff him their money.
| [deleted]
| kasey_junk wrote:
| Matt Levine went into it yesterday why funding the
| Twitter purchase might be hard for Elon Musk.
|
| https://www.bloomberg.com/opinion/articles/2022-04-20/elo
| n-c...
|
| The long and short of it is that the people who would
| lend him money may not trust him due to his previous (and
| erratic) statements.
| KptMarchewa wrote:
| He literally provided SEC a guarantee from Morgan Stanley
| to lend him the money. That's what OP posted.
| MrMan wrote:
| Not all the money
| bombcar wrote:
| Matt Levine is great but he's just an entertainer, and
| not even a day later we have evidence filed with the SEC
| that he is wrong.
| dahfizz wrote:
| well, you are incorrect. Per TFA, Morgan Stanley has agreed
| to lend Musk the money.
| mritchie712 wrote:
| say more.
|
| he has a net worth over 200B, why couldnt he raise 40B?
| mcculley wrote:
| Rich people generally get that way by learning how to
| effectively leverage other people's money.
| [deleted]
| ryzvonusef wrote:
| why not?
|
| I feel Elon Musk could literally mint NFT of his face and
| sell them to raise the cash
| hiq wrote:
| Exhibit D looks like he's borrowing some money (12.5B USD) with
| TSLA as collateral, unless I'm misreading it.
| rguillebert wrote:
| That's literally what people do when they buy a house, except
| in that case, that debt is probably backed by Elon's Tesla
| stock.
| a4isms wrote:
| Yes, but the hoi-polloi don't get to write off their mortgage
| interest as a tax deduction.
|
| "The rich have all of the money and pay none of the taxes.
| The middle class pay all of the taxes and have none of the
| money. The poor are there just to scare the shit out of the
| middle class so they keep going to those jobs."
|
| --George Carlin, 1937-2008
|
| UPDATE:
|
| As some replies have pointed out mortgage interest on a
| primary residence is permitted in some form in six countries:
| _The Netherlands, Switzerland, the United States, Belgium,
| Denmark, and Ireland_. If you live in one of these six
| countries, my comment does not apply to you. If you live in
| any of the nearly 200 other countries in the world, it does.
|
| YMMV: "Your Mortgage-interest-deductiblity May Vary."
| [deleted]
| mason55 wrote:
| > _Yes, but the hoi-polloi don 't get to write off their
| mortgage interest as a tax deduction._
|
| What a strange example to pick. That's, like, THE major
| write-off that most people have. It just gets obfuscated by
| the fact that most people don't go over the standard
| deduction.
| bombcar wrote:
| That second part is huge and people don't account for it
| correctly. It really hasn't mattered much in the era of
| super-low loan rates, but the amount that your mortgage
| is deductible is _only_ the difference between the
| standard deduction and the itemized deduction.
|
| My mortgage interest became "worthless" for that when the
| standard deduction was raised. I'm still _better_ off
| than before, but that particular part of the benefit is
| gone.
| PopAlongKid wrote:
| The standard deduction for California did not change,
| unlike the temporary change on the federal side enacted
| for 8 years beginning with 2018. Also CA did not change
| the limits on the amount and type of loan interest that
| is deductible.
|
| Since California by many measures is large enough to
| equate to a "country", It would be fair to add it to the
| list of places where primary residence (and a second home
| too) mortgage interest is largely deductible.
| a4isms wrote:
| I think this varies between jurisdictions. I believe it
| is deductible in the USA, but not here in the People's
| Republic of Kanuckistan, although there are ways around
| the limitation, depending on your appetite for the risk
| of a drawn-out battle with the Canada Revenue Agency.
|
| Up here, home mortgage interest is only deductible if the
| home is used to generate income, so it does not apply to
| people who use a home as their primary residence. But
| what if you have a home office? What if you use it as an
| AirBnB some of the time?
|
| If you ask a tax accountant whether Canadian home mortage
| interest is deductible, they will answer "a definite
| maybe." But it's actually "no" for most people who don't
| structure their home ownership around qualifying for a
| deduction.
| rguillebert wrote:
| https://en.wikipedia.org/wiki/Home_mortgage_interest_deduct
| i...
| a4isms wrote:
| According to the link:
|
| > The Netherlands, Switzerland, the United States,
| Belgium, Denmark, and Ireland allow some form of the
| deduction.
|
| That's six out of roughly 195 countries in the world.
| Perhaps you live in one of them, but billions don't.
| NineStarPoint wrote:
| The origin of this conversation is a US citizen who is
| purchasing a US company.
| mardifoufs wrote:
| Elon Musk lives in one of them though, si that's not very
| relevant. You should take it up to your own government if
| you want to make it happen wherever you live, not be
| against Musk doing the same
| unmole wrote:
| > The rich have all of the money and pay none of the taxes.
|
| This is demonstrably false. But then again, you don't
| expect factual accuracy from a comedian.
|
| > As some replies have pointed out mortgage interest on a
| primary residence is permitted in some form in six
| countries: The Netherlands, Switzerland, the United States,
| Belgium, Denmark, and Ireland.
|
| This Wikipedia sourced list is obviously not exhaustive.
| And interest deduction is allowed in the US which is the
| relevant case here.
| HWR_14 wrote:
| > mortgage interest on a primary residence is permitted in
| some form in six countries
|
| And China[1]. And India[2]. (Although I don't know either
| country's housing market and therefore don't know how to
| interpret upper limits).
|
| Between the US, China and India, it seems like most people
| and the biggest economies do that.
|
| [1] https://www.chinadaily.com.cn/a/201812/23/WS5c1e2dc0a31
| 07d4c... [2] https://www.bankbazaar.com/tax/mortgage-
| tax.html
| bombcar wrote:
| The debt is banks agreeing to loan Musk $3 billion because they
| know he's good for it. The second letter is banks agreeing to
| margin $12.5 billion against an unspecified amount of Musk's
| stock, and the last is Musk pledging the rest (or something
| like this).
|
| You can promise all you want, but you have to get the bank to
| be willing to pony up the money - but what you're describing
| can and does happen - leveraged buyouts were common in the
| past. https://en.wikipedia.org/wiki/Leveraged_buyout
|
| You find a company with no debt (say, TLSA) and you believe it
| is undervalued, so you convince banks to loan you enough money
| to buy TSLA and _pledge TLSA itself_ as the collateral. If the
| purchase goes through, you now own TLSA and a TLSA sized debt.
| If it doesn 't, nothing much happens.
| bko wrote:
| It's not that weird if you think about it.
|
| I don't have a million dollars, but I can buy a million
| dollar house. A bank promises to lend me a million dollars
| contingent on buying the house and then the loan will be
| collateralized by the house, which I don't own yet.
| belter wrote:
| Or a margin call, for Elon Musk if Tesla stock goes down in
| price, and he will be forced to sell billions in shares to
| pay for it.
|
| I wonder what Tesla shareholders think about all this ;-)
| bko wrote:
| They do. That's why they have a policy that you're not
| allowed to borrow more more than 25% the value of the
| stock
|
| > Tesla has a policy in place of letting directors and
| officers only borrow up to 25% of the value of their
| stock. And Elon Musk has already pledged about 88 million
| shares against indebtedness, according to Tesla's 2021
| proxy filing. That leaves him with only another 85
| million shares to raise debt with.
|
| https://www.barrons.com/articles/tesla-ceo-elon-musk-
| twitter...
| throwaway2037 wrote:
| Great find! Is this normal policy at other companies? On
| the surface, it seems like a good idea. If you pledge
| 100%, and the company share price takes a dive, you might
| be inclined to do crazy things with the company to try to
| recove the share price!
| bombcar wrote:
| Something akin to it is common, and the SEC may even
| require "large shareholders" to file when they've
| encumbered their shares, but I don't know the details.
| belter wrote:
| It's about the downward pressure on the stock if he has
| to sell, not only because of highly visible profile but
| the amount of shares pledged :-)
| bilbo0s wrote:
| Is there anything TSLA shareholders might try to protect
| themselves from this eventuality?
|
| Any sort of hedging strategies we can expect a lot of
| money to flow into?
| FerociousTimes wrote:
| What about repayments?
|
| You still have to pay off your debt to the lender according
| to the plan set out in the loan agreement, where will these
| come from?
|
| You haven't crossed the finish line by securing the loan,
| you cross it by transferring the title to your name and
| repaying the loan (principal + interests) fully.
| Teandw wrote:
| All the funds raised would become loans to Twitter -- So
| Twitter as a company would repay those loans.
| padobson wrote:
| This is a good analogy, but for it to apply to this
| situation, the house would have to be on property that has
| oil or lithium deposits. Once you have the property, it
| pays for itself, like the profits from Twitter would in
| this case.
|
| If it ends up not being profitable, the bank takes back the
| house (or Twitter, or more likely the TSLA stock Elon put
| up as collateral)
| bko wrote:
| I don't know if its that meaningful of a distinction. The
| property does generate profits in that you could rent it
| out. But yeah, you can finance traditional businesses
| like that. Buying with debt is generally a good idea
| because you juice your returns with someone else's money.
| Of course you give up some fixed amount and take first
| loss but in general debt is absolutely necessary to make
| the economics work.
|
| If you can buy a valuable asset for $1 and have a bank
| cover $9 and it yields 10% return, you're making $1 from
| $1 invested (minus interest) compared to someone that
| bought it outright (making $1 on $10 or 10% return). The
| bank has no upside. If you invest in something bad though
| or the rate is too high the math changes and you lose
| 100% if the asset ends up being worth <= $9. That's
| leverage
| padobson wrote:
| Yeah, fair enough. Musk could either "rent" Twitter and
| pay the money back with profits or "live in" Twitter and
| direct it toward some other purpose and use his other
| activities to pay back the debt. So my mineral rights
| addendum was unnecessary.
|
| On a related note, I always find the loans where the
| borrower takes on personal liability are in a completely
| separate category of risk. Anytime you put yourself in a
| situation where you could possibly ruin your future
| prospects or mortgage your future labor to a financial
| institution is much different than your net worth (and
| your investors' principal) simply going to zero.
| bombcar wrote:
| The biggest danger of leverage is the "margin call" or
| calling the loan - the most common form of leverage
| people are exposed to _prohibit_ this calling - if you
| buy a house today on a normal 30 year fixed mortgage in
| the USA, the bank _cannot_ call the loan if you continue
| to make payments, even if the house value drops _way_
| below the original amount collateralized.
|
| In some states, such as California, a _purchase_ loan is
| non-recourse, so you could walk away (and many did in the
| last housing downturn) and the bank can 't do anything
| beyond take the house.
|
| This means if you can weather the downturn you don't get
| wiped out, you borrowed 80% of the house to buy, put 20%
| down, it went down 30%, you were underwater, but
| continued to make payments, and now it's up 20% above
| where you started.
|
| Margin loans against stocks, etc do _not_ have this, so
| if you borrowed against $1k worth of stocks you had, and
| they dropped in value below what the bank wants you to
| keep as collateral, they can force you to sell at the
| lower price (or produce more cash /collateral). This
| means that with leverage you could be _right_ in the long
| term but wiped out in the short term.
| nyxtom wrote:
| Yea this seems like a significant amount of unnecessary
| risk for an asset that is unlikely to get better. I
| wonder how much of a recession/downturn would trigger a
| margin call for that amount.
| cuteboy19 wrote:
| If you rent it out, then the house can pay for itself,
| theoretically
| nonameiguess wrote:
| Frank McCourt's tenure as owner of the Los Angeles Dodgers is
| a good illustration of this dynamic. He purchased the team
| with effectively no cash, he and his family proceeded to
| treat it as a collateral asset to take out lines of credit to
| buy themselves personal luxury goods, bankrupted the team,
| then when the league forced him out, he sold for a profit and
| made a few billion dollars anyway thanks to the value of MLB
| television contracts and that's just the way being rich
| works, I guess.
| lotsofpulp wrote:
| That is the way that betting correctly on the future value
| of an asset works. There are many people who have lost
| money the same way because the value of the asset went down
| and so they walk away with nothing.
| mvid wrote:
| If the downside is walking away with nothing on a bet
| that you put nothing on, then I think it's always worth
| the risk
| lotsofpulp wrote:
| Sure, but those kinds of deals are rare, especially
| absent corruption.
|
| A cursory Wikipedia search shows the baseball team owner
| referenced above put up significant real estate as
| collateral.
| solveit wrote:
| Yes, all the downside falls on the lenders because that's
| how investing money works. If you can get someone to loan
| you hundreds of millions, you should (in a purely
| economic sense) take it because all you can lose is
| everything you have.
| spoonjim wrote:
| He used effectively no cash but pledged his Boston parking
| lots as collateral for the debt. So if he had defaulted on
| the debt his lenders would have gained ownership of the
| Dodgers AND of the Boston parking lots.
| mynegation wrote:
| Excellent explanation. To add to that - this is a typical
| example of an asymmetrical transaction for the lender(s). If
| Musk+Twitter are successful, lenders' upside is limited by
| the debt interest and if Musk+Twitter fail - they are left
| with a huge underperforming asset on the books. This is
| nothing new for the banks - essentially it is a potential
| foreclosure on a defaulted mortgage, just on a different
| scale, so the risk will be priced into the loan conditions.
| ragebol wrote:
| This is what I find funny about all those people shouting "No,
| Elon can't pay for taxes, it's all tied up in stocks!!1!"
|
| If you are stock-rich and you can buy stuff on the collateral
| for that: normal people can't really do that. Ordinary people
| have a much harder time buying more stuff than they have the
| cash for. Or at least on worse terms when they do take out a
| loan.
|
| Being rich is cheaper than being poor. Is it really so awful to
| change that?
| alecbz wrote:
| How would you change it?
|
| I imagine there's a reason people feel more comfortable
| lending to Elon than to people with a smaller amount of
| assets, and that it's not "lol fuck poor people".
| toomuchtodo wrote:
| Tax the proceeds at loan origination (1099-whatever filed
| by whomever is providing the cash based on pledged assets).
| How you pay the loan back if the collateral declines in
| value is your problem (or the bank's problem, depending on
| the amount in question).
|
| High level, it closes a financial engineering loophole
| (buy, borrow, die [1]). The taxable event is when you get
| liquid, and a loan is liquidity. The tax code requires a
| patch, that's all.
|
| [1] https://youtu.be/8pBPZMUcsh0
| alecbz wrote:
| Oh, sure, I thought GP meant the opposite (make it easier
| for non-rich people to take loans on assets) but this
| makes more sense.
| ragebol wrote:
| Guess that is implied but not really what I meant. Poor
| people don't have much assets so it wouldn't do much.
|
| My issue with the whole "Elon has to pay taxes" thing is
| that there are loads of people (fans?) fighting over why
| he shouldn't have to. It's the richest dude in the world,
| he really doesn't need defending for everyday people.
|
| I also like the cool stuff he does, don't like the non-
| cool stuff he does, as I do with a lot of people really
| jcheng wrote:
| Would taxing the loan reset the cost basis, then? Or are
| you suggesting taxing the same gains twice (or more than
| twice if someone repeatedly takes out and pays back a
| loan against the same assets)?
|
| I agree buy, borrow, die is a problem but the "weird"
| feature of tax law that makes that possible is the step
| up in basis. (Getting rid of that has its own challenges
| I'm sure.)
| bombcar wrote:
| Given how fast heirs squander their wealth, it may not be
| worth the government fighting it too much, especially as
| the side-effects cause all sorts of howling (grandpa
| dies, dad inherits farm, has to sell it to pay the tax
| bill).
| toomuchtodo wrote:
| Shooting from the hip, sure, the broker could record this
| as a cost basis adjustment and report that attribute
| along with the rest of the form reported to the IRS.
| friedman23 wrote:
| > If you are stock-rich and you can buy stuff on the
| collateral for that: normal people can't really do that
|
| They do it with homes all of the time, what are you talking
| about?
| MockObject wrote:
| Has it ever not been so? Is it really possible to change it?
|
| https://en.wikipedia.org/wiki/Iron_law_of_oligarchy
| Sohcahtoa82 wrote:
| The problem of the rich not paying taxes because they're
| stock-rich and use the stock as collateral to take out loans
| to buy a new yacht could be solved by taxing unrealized
| gains.
|
| Of course, this tax increase could be offset by also allowing
| unrealized losses to act as a tax deduction.
| eadmund wrote:
| The thing about an unrealised gain is ... that is hasn't
| yet been realised. It doesn't exist yet. It could (and
| often does) vanish like smoke later on, and become a loss.
| When people propose to tax unrealised gains, do they also
| propose to reimburse those taxes when the gains become
| losses? Do they intend to continue taxing realised gains?
| Sohcahtoa82 wrote:
| > When people propose to tax unrealised gains, do they
| also propose to reimburse those taxes when the gains
| become losses?
|
| Did you only read the first line of my comment? I
| specifically said that unrealized losses should also be a
| tax deduction.
| eadmund wrote:
| I ... am a moron. Somehow completely missed that.
| bombcar wrote:
| They usually propose some sort of mark-to-market and tax
| the value, but outside of markets like the stock market,
| and somewhat the housing market, it can be _really really
| hard_ to determine the value of something.
|
| Should the 1st tweet NFT be taxed at its last sale price?
| The recent failed bid price?
| tomhoward wrote:
| He has paid huge taxes ($11B worth, the highest tax payment
| ever) when he converted capital to income last year.
|
| Nobody disputes that it's a nice idea to make life easier for
| the poor. The mechanics of how you actually do it are the
| hard part.
| ragebol wrote:
| As with anything, complaining is the easy part indeed. I
| don't have the answers either.
|
| The funny thing is that hoards of people will come to
| defend a rich dude who really doesn't need it while poor
| people constantly get fucked over and could use a little
| bit of defending.
|
| One improvement could be to just have a higher tax bracket
| (like the US had decades ago) and build more stuff for the
| common good. What doesn't help is that from my side of the
| big pond, the US sounds like a third world country if you
| are below middle-class. Can't judge if that is true for
| myself, but hey.
| bko wrote:
| No one is saying Musk literally can't afford to pay taxes. He
| can borrow against his ownership. But if you have a company
| that goes from 0 -> 100, and you get taxed 35% on that, and
| then the company goes from 100 -> 50, you kind of got
| screwed. That $100 is a made-up number.
|
| Suppose there is a company with 200 shares, half of which you
| own. The last trade price was $1 per share, meaning you have
| $100. But you can't necessarily dump your shares for $100
| because the $1 was based off the last trade. So on the margin
| you can sell a share for $1, but you won't necessarily be
| able to sell all 100 shares for $100.
|
| Imagine you own a home that went from being worth $1 million
| to $2 million. Did you MAKE $1 million? Should you pay taxes
| on that delta as soon as the home's value became $2 million?
| It makes more sense to wait until you sell it and pay taxes
| on the net you made. Otherwise it's more complicated and you
| could end up paying taxes on $1 million when you end up
| selling it for a lot less. You could have a tax credit I
| guess but you're unlikely to have the IRS cut you a check for
| the money you paid that turned out to never be actualized.
| rrrrrrrrrrrryan wrote:
| Yes, taxing unrealized gains as if they were income would
| be silly.
|
| Most proposals to tax giant piles of wealth in the market
| look nothing like what you've described. A wealth tax is
| more like: pay 1% per year on the current market value of
| your portfolio, if that amount is over $100 million.
|
| Money attracts money. Wealth taxes are an attempt for
| reverse that effect and _force_ some of that money to
| trickle down.
|
| That said, any attempt to implement a wealth tax will
| probably be struck down as unconstitutional because moneyed
| interests want it to be declared so.
| bko wrote:
| > Most proposals to tax giant piles of wealth in the
| market look nothing like what you've described
|
| Wealth tax is different and I think it makes more sense
| compared to unrealized capital gains. But its not true no
| one is proposing an unrealized capital gains tax
|
| > Biden's fiscal 2023 budget request released Monday
| would impose a 20% minimum tax on the unrealized capital
| gains for households worth at least $100 million.
|
| https://www.bloomberg.com/news/articles/2022-03-28/manchi
| n-p...
| danenania wrote:
| Doesn't this already happen to some extent with property
| taxes? You pay tax on the appraised value of the property.
| If it later goes down, you just pay less from that point
| onward. It doesn't seem like a problem.
|
| To me, taxing wealth and _only_ wealth seems like the most
| straightforward route to a truly progressive tax system.
| That's not to say it's simple or straightforward in an
| absolute sense, but neither is taxing income, is it?
|
| At a high level, taxing wealth instead of income or
| transactions ensures that rich people are paying their
| share, while maximizing upward mobility so that people can
| become rich more easily. Think about how much easier it
| would be to _become_ wealthy without income taxes, sales
| taxes, property taxes, taxes on corporate profits, etc.
| etc.
|
| This is what we should optimize for imho: making it as easy
| as possible to become wealthy. Sure, there details to
| figure out, as with any approach, and maybe some rich
| people will face some difficult choices or be forced to
| sell assets; I'm ok with that and it seems well worth the
| tradeoff.
| rrrrrrrrrrrryan wrote:
| Wealth taxes and land value taxes seem like the most sane
| way to fund social programs. Extract a bit of value from
| the people who have runaway wealth (but not so much that
| their wealth can't continue to grow), and use it to help
| the economically downtrodden become more upwardly mobile
| (education, healthcare, basic social safety nets.)
|
| Pair it with a hefty pigeuvian carbon tax and you could
| probably do away with income taxes entirely.
|
| (A nondistortionary VAT to replace sales taxes and
| corporate income taxes would be nice as well.)
| koprulusector wrote:
| Like Georgism? Which, by the way, imagines the land tax
| alone being enough to eliminate personal income taxes.
|
| https://en.wikipedia.org/wiki/Georgism
| rrrrrrrrrrrryan wrote:
| Yes, I am a Georgist.
| majormajor wrote:
| California famously insulates people from additional
| property tax burden on highly-appreciated real estate - and
| it's clearly still a popular policy among the people
| benefiting, but it gets a lot less defense from people who
| _don 't_ own those houses than the status quo here gets
| from people who aren't stock-based-billionaires.
|
| Wealth is closely correlated enough to power that it's
| worth encouraging people to turn those on-paper gains into
| liquid forms - even if only to avoid "losing" if the stock
| then slides back from 100 -> 50. _Especially_ since he can
| leverage it to spend in other ways!
| golemotron wrote:
| > If you are stock-rich and you can buy stuff on the
| collateral for that: normal people can't really do that.
| Ordinary people have a much harder time buying more stuff
| than they have the cash for. Or at least on worse terms when
| they do take out a loan. Being rich is cheaper than being
| poor. Is it really so awful to change that?
|
| What you are talking about is reputation and it will always
| be a part of the dynamic. It happens at the poverty level
| too. In any poor community there are people you trust and
| people you don't.
| benchtobedside wrote:
| This breaks down to:
|
| a) $21 billion of Elon's ("Reporting Person"; see item #1) own
| money
|
| b) $12.5 billion in margin loans arranged by Morgan Stanley
|
| c) $13 billion in debt from Morgan Stanley
| alecbz wrote:
| Can someone ELI5 margin loans? How is it different than using
| an asset as collateral?
| HWR_14 wrote:
| Margin loans use commonly traded commodities, normally
| stocks. Because they are easy to value (compared to a
| house) and liquid they are easier to get. However, because
| they are easy to value, they get compared to the loan value
| constantly. You'll be allowed to borrow X% of the values of
| your shares. If they go up, you can borrow more money. If
| they go down, you have to immediately pay off part of that
| loan. Since X < 100%, you can do so by selling shares (but
| of course, that decreases the amount of the collateral you
| have again), but you could also just deposit cash or pay it
| another way. They normally are more than happy for you to
| not have to sell shares if you deposit money.
| alecbz wrote:
| Ok that makes sense, but I thought his other loan from MS
| was _also_ using his stock as collateral?
|
| If you're MS, why would you want to treat stock as
| "normal" collateral instead of using a margin loan? Is
| that Elon only feels comfortable using so much of his
| stock for a margin loan, and wants to use the rest as
| "normal" collateral (but is then getting less favorable
| terms for it)?
| HWR_14 wrote:
| I have no idea why MS would choose to mix-and-match.
| Maybe the margin department has a global limit and that's
| hit by giving most of it to Musk? Maybe the margin
| department only covers the amount of Musk's stock they
| think they can sell in a margin call without causing the
| stock to tank? Maybe the other loan was using SpaceX
| stock (margin would only apply to public stock)?
|
| It's also possible that Elon is getting a lower rate for
| the non-margin loan, but at a much worse multiple
| (putting up far more shares as collateral).
|
| But that's all making stuff up.
| bri3d wrote:
| A margin loan is just a loan where securities are the
| collateral asset.
|
| The major feature of a margin loan versus other types of
| loans collateralized by assets is that the value of the
| underlying security (collateral) is tracked and depending
| on the terms of the margin loan, the lender has the right
| to issue a "margin call" demanding additional collateral or
| cash if the underlying securities have declined in value.
| These rules, called "house requirements," vary from lender
| to lender.
| bombcar wrote:
| As the other poster said, it's a special type of
| collateralized loan where since everything is known, it can
| be done automatically.
|
| You can get approved for a margin account at TD Ameritrade
| right now, and then later decide to margin some shares for
| whatever reason. The bank doesn't need to check your
| collateral because it knows how much it is worth at any
| given moment when the market is open.
|
| Mortgage loans are not nearly as formalized, and the bank
| will send out an appraiser to verify that the property is
| worth an amount that they're willing to loan against.
|
| And once you get past that, it becomes very hand-wavy;
| banks making loans to governments, non-profits, private
| companies, etc will all have their internal departments
| that make decisions about how much the risk is and what
| premium they'd need to charge.
| voldacar wrote:
| 1. banks loan elon money
|
| 2. elon uses this money to buy twitter
| laichzeit0 wrote:
| 3. Elon pays banks interest each month for said loan money
|
| 4. Interest is cheaper than tax Elon would pay if he sold
| those shares instead of borrowing against them.
| kjksf wrote:
| Re 4: Musk doesn't avoid the tax, merely delays it.
|
| By the time he has to pay it he'll also have to pay tax on
| the accumulated interest.
|
| He'll pay the interest AND the tax on the principal AND the
| interest.
| skinnymuch wrote:
| 4 is true but doesn't show how insane of a diff it is. The
| interest is going to be tiny. It isn't going to be 3% like
| what Robinhood charges for any one with at least $2K in
| Robinhood and $5/mo membership. If Elon is getting sub 1%
| interest rate. AND he gets to tax deduct that interest.
| It's near nothing.
| masturbayeser wrote:
| about a dozen answers have been posted here, each one missing
| the point
|
| people are conflating Musk's personal balance sheet with
| Twitter's. it's not clear to me whether any debt would be
| recourse to Musk--but in all likelihood, it wouldn't be.
| "recourse" is a term used to describe what collateralizes the
| loan. if the loan is recourse to Musk, he'll have to cover the
| cost if Twitter isn't spitting off enough cash flow to service
| the debt. if it's non-recourse, then the only collateral
| available to the creditors is Twitter and its assets
| (potentially subject to certain carve-outs). most rich people
| don't do recourse transactions as a risk mitigation measure.
| however, non-recourse debt is costlier because the universe of
| collateral available to the lender is slimmer
|
| why can't anyone do this? because Musk has been deemed a better
| sponsor / steward of capital than your average joe
| legitster wrote:
| It's very similar to buying a house - you don't get the
| mortgage first, you get a letter of pre-approval that says the
| bank is ready to give you a mortgage when you actually buy the
| thing.
| bombcar wrote:
| It's even technically more amusing (a pre-approval letter is
| just the bank saying eh probably we can do this; it's not
| even required) - the seller will say "We will sell if you
| have the money", the bank will say "we will give the money if
| the house is worth X and you have Y downpayment, you will say
| "I have Y down payment if the bank will give me the money"
| and the appraiser will say "I think the house is worth X+1-5%
| (it is always just above the amount needed)".
|
| Then you get a form of a financial standoff where each party
| checks that they're getting what they want, and you
| escrow/sign everything.
| csande17 wrote:
| > (including, with respect to the Margin Loan Facility a
| condition which requires that the borrower thereunder satisfy a
| maximum loan to value ratio of 20%, which is expected be
| satisfied by the contributions of a portion of Mr. Musk's
| unencumbered shares in Tesla, Inc. to such borrower)
|
| Musk is putting up some of his Tesla stock as collateral on the
| loans. The effect of this is pretty similar to if Musk had sold
| his Tesla stock and used the money to buy Twitter, but avoids
| some of the tax and regulatory consequences of doing that.
| andruby wrote:
| I assume he also retains the voting rights associated to the
| Tesla shares.
| throwawaycities wrote:
| Banks are chartered by the government, thus should be
| prohibited from giving loans against publicly traded stocks,
| at least at rates less than the applicable capital gains tax,
| otherwise these loans are nothing more than government
| sanctioned tax loopholes for the rich.
| georgeecollins wrote:
| This sounds like an interesting point but I don't
| understand it. Why is it worse to give a loan against a
| building for less than the capital gains rate then it is to
| do so for a public stock. Can you explain or link to an
| explanation?
|
| Thank you.
| throwawaycities wrote:
| Although they are both subject to capital gains taxes
| there are many differences between real estate and
| publicly traded stock.
|
| As a preliminary matter, as investment vehicles publicly
| traded stock is a liquid asset, whereas real estate is an
| illiquid asset. Generally one invests in liquid
| investments so that they can be readily converted into
| cash when needed.
|
| From the tax perspective a building/building owner would
| at all times be subject to continue paying property
| taxes. If there were some equivalent wealth tax for stock
| holders then at least society wouldn't lose out entirely
| on this kind of tax avoidance scheme designed for the
| rich, but I'd still probably prefer these billions in
| bank loans go to qualified home buyers before lending it
| to the world's richest man to circumvent a taxable event.
| eadmund wrote:
| Not really. The loan isn't really income: the borrower gets
| $X, but is also on the hook for $X plus interest. It
| _costs_ him money.
| hannasanarion wrote:
| It doesn't cost him anything, because the interest rate
| on the loan is virtually guaranteed to be less than the
| appreciation rate of the underlying asset.
| tofuahdude wrote:
| That isn't how these mechanisms work from a legal
| standpoint and ignores many of with-strings-attached
| realities of this kind of financing.
|
| On the flip side, selling the assets would have no
| strings attached to the cash.
|
| Further, it is definitely not guaranteed as you assert.
| bombcar wrote:
| This has only been true during our surprisingly low
| interest rate environment over the last 20+ years.
|
| It could change rapidly and people can get wiped out
| quite quickly when it does.
| hannasanarion wrote:
| Don't confuse consumer and central interest rates for
| discretionary loan interest rates. The ultra-rich have
| been taking out ultra-low interest stock-backed loans to
| cover their living costs and obligations for over a
| century, and no billionaire has ever been "wiped out" by
| interest loan.
| adolph wrote:
| > at least at rates less than the applicable capital gains
| tax
|
| So if you don't sell the stock and thus have no applicable
| capital gains tax, then you can be loaned NaN dollars?
| lotsofpulp wrote:
| The big difference is the lending terms will surely require
| the borrower to do something such as sell assets or deposit
| more money if the value of the collateral (and/or the asset
| being purchased) falls below a certain amount.
| im3w1l wrote:
| Borrowing against your shares is like taking out a mortgage
| on your home. You still get to live in it (dividend + voting
| rights), and you are still exposed to swings in value. And
| you can end up underwater.
| blip54321 wrote:
| It's a little bit different.
|
| Most of the ultra-wealthy live on debt. Here's the basic
| scheme:
|
| - Let's say I own $10B in startup.com stock, but haven't
| sold it. My income tax burden is $0.
|
| - If I sell the stock, and taxes are 40% in my country, I
| get $6B, and the government gets $4B.
|
| - If I keep the stock, and borrow against it, I pay no
| taxes, but I do pay finance fees (e.g. interest). The
| finance fees work out to less than taxes.
|
| The trick is to never realize gains or income. Debt lets
| you do that.
|
| One more trick is that a lot of purchases are
| "investments." If I buy a mansion, yacht, and Picasso on
| debt I can use them. When I'm bored of them, I sell them,
| and pay off that debt. I've probably made money on the
| mansion and Picasso, and lost money on the yacht.
|
| I've paid a little bit of interest and a little bit of tax,
| but much less than I would have otherwise.
| sokoloff wrote:
| What you describe sounds pretty much the same as "if I
| start with a paid off house and take out a mortgage on
| it..."
| hannasanarion wrote:
| One big difference is that you are constantly paying
| property taxes on the house, levied as a proportion of
| its total value, making the mere ownership of it a
| financial burden. Stock ownership comes with no such
| burden.
|
| Another is that, should the need arise, stock can be sold
| at the drop of a hat. It is liquid and fungible so a
| stock-collateralized loan is seen by banks to be a very
| safe investment. Houses are not.
| eadmund wrote:
| You left out the portion where you get the money to pay
| the principal and interest. Either you actually sell some
| of that stock, or you work a job to get that money.
| Either way you that income will be taxed.
| HWR_14 wrote:
| Or continually roll the debt over, borrowing more money
| and more money. Then, when you die, your estate can sell
| the assets to cover the debt, but that avoids taxes.
| thefreeman wrote:
| I'm no expert but in other parts of the thread people are
| saying that interest is tax deductible. So you sell just
| enough stock to cover the interest and the capital gains
| are not taxed because they are offset by the interest
| deduction.
| bombcar wrote:
| You still have to pay down principal at some point.
|
| In this case explicitly I suspect it has more to do with
| the uncertainty of the deal going through AND not wanting
| to incur the tax penalty ALONG with the share penalty
| (liquidating $30 billion in TSLA would affect its price
| for sure). If you sold the shares to raise the cash, paid
| the tax, and then the deal didn't go through and bought
| the shares back, you'd be out the tax (with a stepped-up
| cost basis to be sure).
| MockObject wrote:
| > - If I keep the stock, and borrow against it, I pay no
| taxes, but I do pay finance fees (e.g. interest). The
| finance fees work out to less than taxes.
|
| I'm not following the whole lifecycle. You borrow against
| your stock, spend that money, and then repay the loan
| using stock? Without having technically _sold_ the stock?
| HWR_14 wrote:
| > You borrow against your stock, spend that money, and
| then repay the loan using stock? Without having
| technically sold the stock?
|
| I know Ken Lay did that exact chain of events a lot to
| cash money out of Enron before it's bankruptcy.
| sokoloff wrote:
| You don't repay the loan using stock. You repay it with
| cash from other sources (possibly thrown off by the new
| investment) or you keep the loan open and continue to pay
| interest on it.
| aeyes wrote:
| You repay the loan with the next loan because you have
| $10b in stock but only took out a $10m loan. In the
| meantime the stock appreciates some more or you have more
| vested stock.
|
| I guess the risk here would be that the stock goes to 0,
| you get margin called AND you are now on the hook to pay
| taxes.
| kjksf wrote:
| You don't have to repay the loan (for a very loooong
| time).
|
| Let's say you have 10 million in stock.
|
| A typical margin account allows you to borrow up to, say,
| 40% of that. That's 4 million dollars.
|
| Let's say you borrow $1 million and spend it. Currently
| interest rate on a margin loan is under %2. So every year
| the amount you need to repay grows by $20k (2% of $1
| million, for simplicity I don't count compounding).
|
| So in 10 years that would be $1.2 million to repay. But
| you're authorized for $4 million.
|
| If in those 10 years the value of stock doubles to $20
| million, then you're authorized to borrow $8 million -
| the amount you can borrow grows faster than the amount
| you need to repay.
|
| To be clear: eventually you have to repay it but in the
| corner case it could be done when you die.
|
| There are of course caveats. If interest rate increases
| dramatically, then the amount to repay will grow much
| faster etc. but you can see how e.g. if you have $10
| million then you could borrow and spend $100k to live a
| good life and never have to sell your stock to fund your
| life (especially if stocks keep going up faster than
| interest rate, inflation and your spending habits)
| MockObject wrote:
| Very interesting. And the total income works out to more
| than, say, an index fund?
| throwawaycities wrote:
| Unlike a home a publicly traded stock is supposed to be
| immediately liquid. I really don't think the banks should
| be giving rich people loans against publicly traded stock
| to facilitate a tax avoidance scheme, these billions of
| dollars would have been better of being loaned to home
| buyers.
| kjksf wrote:
| You know how you only work for companies who pay you
| salary instead of companies who don't?
|
| Aligned self interest is the engine of capitalism.
|
| You don't care if society would be better of if you
| donate your time and skill to company X for free. You
| care that company Y will pay your for your time and skill
| and that's why you work company Y.
|
| The good of society doesn't enter your calculus. Only the
| good of throwawaycities
|
| Similarly the banks don't care what is optimal way to
| allocate capital for the good of society (apparently as
| decided by you).
|
| They care about their self interest. Their business is
| providing loans so they provide loans to people most
| likely to repay those loans.
|
| From the perspective of the bank, margin loans are the
| safest loans they can give because the collateral is
| fully liquid and under the control of the bank i.e. the
| moment the borrower crosses margin loan threshold, he
| gets margin call and the bank sells his stock to ensure
| the loan gets repaid.
|
| Study the wildly successful economies of communist
| countries to see what happens when people think they know
| better that free market what should or should not be
| allowed in the economy.
|
| So far good intentions have vastly inferior economical
| results than lightly regulated free market where, for
| example, participants decide what kind of loans they want
| to make.
| ricardobayes wrote:
| In a certain central european country they had 5% yield
| govermnent bonds, combined with 1-2% lombard loans for
| private banking clients they invented a financial perpetuum
| mobile.
| zzleeper wrote:
| His approach has been to leverage and leverage and leverage
| forever. Wonder where he would be in a parallel scenario
| with a recession in, say, 2018
| luciusdomitius wrote:
| Do you provably own quarter of trillion USD of equities? This
| is exactly what the very stupid people never seem to understand
| about wealth - net worth is not cash under the mattress (nor on
| a "Savings" account). Musk (as well as Bezos, Dorsey, etc for
| that matter) probably has less than a hundredth of a promile of
| his wealth in cash.
|
| One of the main reasons is that today's cash is in essence a
| rave-club bracelet - you need it for every day transacitons but
| as a store of value it is useless to harmful. The whole idea of
| today's currencies is for the financially illiterate people to
| get robbed of their savings. You don't become that wealthy by
| being that stupid.
|
| Edit: I used billion instead of trillion, apologies
| edgyquant wrote:
| > The whole idea of today's currencies is for the financially
| illiterate people to get robbed of their savings.
|
| No it isn't, the financially illiterate don't tend to have
| much savings anyway. The point of controlled inflation is to
| prevent the financially literate from hoarding cash as an
| appreciating asset and provide tooling to alleviate economic
| crisis. Considering your quote I'd question just how
| financially literate you yourself is.
| luciusdomitius wrote:
| Yes. I know very well that this is the justification (and a
| justification can be invented for anything). Now it is your
| turn to explain to me how does this fact contradict my
| statement that the drawback of such paradigm is that it
| makes it useless as a store of value?
|
| Hint: It doesn't - you just stated a completely separate
| fact as if it is logically incompatible with the original
| argument.
| zajio1am wrote:
| > Now it is your turn to explain to me how does this fact
| contradict my statement that the drawback of such
| paradigm is that it makes it useless as a store of value?
|
| Well, nobody contradicted that statement, as that is
| generally accepted. The contradicted statement is "The
| whole idea of today's currencies is for the financially
| illiterate people to get robbed of their savings.", which
| as (i parse it) is a statement about purpose of such
| properties of today currencies, so it is contradicted by
| a different statement about purpose of these properties:
| "The point of controlled inflation is to prevent the
| financially literate from hoarding cash as ..."
| colinmhayes wrote:
| That's not a drawback, it's basically the whole point.
| Cash is designed to be a bad store of value in the long
| run because the government wants you to spend it or
| invest it. Cash is a good store of value in the short and
| medium run so that people accept it in return for goods
| and services but a bad one in the long run so that it
| doesn't make sense to hoard it.
| rswail wrote:
| Cash is not a store of value, it's a mechanism of
| exchange. It never has been a store of value.
|
| It's supposed to be _safe_ but if it has zero risk, then
| it has zero return.
|
| Inflation is a bit like maintaining the pressure in the
| pipe of the flow of money.
|
| Inflation also has the effect of discounting debt, which
| means it is good for _borrowers_ , not _lenders_. Most
| people are borrowers, in terms of things like house
| mortgages and other debts. That 's a good thing, but you
| also don't want wages to have to grow too fast with
| prices.
| JohnJamesRambo wrote:
| Watch how fast his numbers fall if he tried to sell a
| fraction of it.
|
| Watch how fast it falls when people realize how absurd it is
| for Tesla to be the sixth largest company in the world by
| market cap, with a trillion dollar valuation. The meme voting
| era of stocks is coming to a close. The weighing portion of
| the cycle is coming and it will not be kind.
| nightski wrote:
| Being uninformed does not make one "very stupid".
| luciusdomitius wrote:
| Not being aware of it and not admitting being uninformed
| does make you 'very stupid' though.
| tuvan wrote:
| Hah it's great. We had a national scandal along these lines.
|
| 1- Saudi company borrows $7B from Turkish banks to buy 55% of
| Turkey's largest internet and telephone provider.
|
| 2- Drive the provider into $4B debt (it was debt free when
| bought)
|
| 3- Pay the new holding company $9B in dividends
|
| 4- Don't pay the initial money borrowed to purchase the
| company.
|
| 5- Somehow borrow another $4B from Turkish banks to pay the new
| debt, and pocket that money as well.
|
| 6- Government creates a consortium of banks to bail the
| provider because its too big to fail.
|
| Outcome: Provider is in debt, banks lost all the money, banks
| needs to spend unknown amount to get the provider back into a
| functioning state.
| throwaway2037 wrote:
| Yeah, sadly private equity does the same frequently.
| Sometimes, I cannot belive it is legal!
| tmaly wrote:
| Toys'R'Us comes to mind.
| bombcar wrote:
| What's the quote? If you owe the bank $1m the bank owns
| you, if you owe the bank $1 billion, you own the bank?
| TechBro8615 wrote:
| Not to be _that guy_ , but anyone actually can do this with
| DeFi exchanges using a flash loan. You can borrow infinite
| capital with no collateral, as long as you can pay it back
| (plus fees) before the end of the current transaction.
| User23 wrote:
| > What follows seems like Elon is "paying" for Twitter with...
| imaginary money.
|
| The vast majority of money is "imaginary" in the sense that
| it's just liabilities on some bank's balance sheet, AKA bank
| deposits.
|
| > Why can't anyone do this? I'll promise you a bunch of debt
| and equity, too.
|
| Anyone can do this. Nothing is stopping you from writing me a
| note for $1,000,000 and me writing you a note for $1,000,000.
| This leaves us both a million richer in assets and a million
| poorer in liabilities. At that point even hinkier stuff can
| happen like me using your note as collateral on a loan to
| further expand my balance sheet. The tricky part is getting
| third parties to accept our IOUs. US Banks have no such trouble
| thanks to their membership in the Federal Reserve system. This
| is one major reason why a banking license is such a huge deal.
| [deleted]
| tofuahdude wrote:
| > Why can't anyone do this?
|
| The dude does own 200B + worth of publicly traded equities.
| shmatt wrote:
| I feel bad for Twitter employees or potential employees right
| now.
|
| You KNOW Musk has no intention on converting unvested RSUs to
| cash. He'll either get rid of them completely while giving
| everyone a 10% raise (common Twitter TC is 50% cash 50% RSU) or
| keep everyones cash the same, and tell them their RSUs are now
| amazing options that will be worth soooo much when Twitter gets
| relisted in the future
| runako wrote:
| Likely also will make deep staff cuts, especially to areas
| related to content moderation, display algorithms, etc. If this
| succeeds, I would not be surprised to see a 50% headcount
| reduction as one of the earliest actions.
| Laremere wrote:
| Why would I "know" that? SpaceX is a private company founded by
| Musk and levels.fyi indicates Software Engineers there receive
| a hefty amount of stock:
| https://www.levels.fyi/?compare=SpaceX&track=Software%20Engi...
| shmatt wrote:
| levels.fyi lets private company employees list their stock
| option worth as what ever they like, its self reporting
|
| More often these stock options for non-publicly traded
| companies are not liquid until they IPO. Which a startup
| engineer at SpaceX completely expects
|
| But the Twitter employees didn't join a startup, and have
| compared their TC to other liquid comps offered to them.
| Their leases and mortgages would be based on their liquid
| comp, which could be cut in half overnight until the next IPO
| WORMS_EAT_WORMS wrote:
| He's definitely going to burn a ton of existing employees
| (basically kick them out), and then incentivize new ones with
| aggressive packages.
|
| It sucks and I wouldn't wish it on my worse enemy. It does make
| sense though since the mission and culture will be night and
| day different and would never mesh.
| hunterb123 wrote:
| Foremost, I don't feel bad for anyone that works at Twitter.
|
| But the scenario that you KNOW is going to happen doesn't seem
| likely.
| lucasmullens wrote:
| If employee compensation is 50% RSUs (which have a public value
| and can be sold immediately once vested, basically making them
| as good as salary) then what you're saying is Elon might give
| everyone a 50% pay-cut.
|
| I guess I can only speak for myself at Google which has a
| similar high percentage of pay as RSUs, but if they suddenly
| took away everyone's stock grants, nearly everyone would quit.
| boringg wrote:
| To be fair to Musk he made a lot of people at TSLA very wealthy
| when everyone in the valley was complaining how poor the TSLA
| comp packages were vs how hard the worked. I mean I don't think
| Elon saw TSLA take this much of a rocket ride but employees did
| pretty damn well on their stock.
| notyourwork wrote:
| > He'll either get rid of them completely while giving everyone
| a 10% raise (common Twitter TC is 50% cash 50% RSU)
|
| Is that possible? I guess it is but wow, I would be beyond
| livid if my compensation changed due to this.
| jontas wrote:
| Private companies can still issue RSUs and have internal
| liquidity events for shareholders.
| paxys wrote:
| And who is going to provide that liquidity? Musk is already
| taking on $20B+ in debt for the purchase.
| legitster wrote:
| I hope everyone has been following along with Matt Levine's
| excellent newsletter:
| https://www.bloomberg.com/opinion/articles/2022-04-20/elon-c...
|
| > This leaves Musk two main options. One is to negotiate with
| Twitter's board and try to strike a friendly deal. This might be
| hard because the board probably wants more money than Musk is
| willing to pay, and also because there seem to be strategic and
| personal disagreements between Musk and the board that might make
| friendly negotiations difficult. "I am not playing the back-and-
| forth game," Musk said in his initial proposal; "I have moved
| straight to the end." That's an annoying way to start
| negotiations.
|
| > His other option is to pressure the board into dropping the
| pill, and the classic way to do that is with a tender offer plus
| a proxy fight
|
| >I guess Musk has a third option, which is to do nothing and
| tweet mean things about Twitter's board. Honestly a totally
| respectable option; $40 billion is a lot of money, owning Twitter
| seems exhausting, and Musk does have several other full-time
| jobs. A fourth option would be "buy a lot of stock, trigger the
| poison pill, and unleash absolute mayhem," which is not totally
| impossible given that it is Elon Musk.
| fleddr wrote:
| I see a lot of bad faith assumptions made about Musk's supposed
| plans with Twitter in the case he should control it.
|
| Although I'm not suggesting to trust a character like Musk purely
| on his words, it's at least interesting to be informed of plans
| he openly expressed.
|
| First, he clearly expressed there's no economic motive. Which
| makes sense as Twitter is a terrible investment. A pessimistic
| interpretation is that it's about prestige, a positive one is
| that he genuinely wants to improve Twitter, whatever that means.
| Personally, I think it's a little of both, they are not mutually
| exclusive.
|
| Regarding free speech, he stated that the first goal was to
| understand current "censorship" mechanisms and policy, and to
| make them more transparent. It's hard to disagree with this one
| no matter your leaning.
|
| Further, he intends to be fully compliant with free speech laws,
| in every relevant country. There isn't much choice in this
| matter, but still.
|
| As for what any new policy would look like, he stated that in the
| case of a grey zone, not censoring it is preferential. The grey
| zone is not defined, but in any case it means less censorship.
|
| As for any political direction, he stated to have none. His ideal
| would be for both extreme ends to be equally angry, so in
| balance. This suggests that it's not some play to revenge-censor
| the far left or steer things in any explicit political direction.
|
| Other than this, he has plans to improve/cleanup the broken parts
| of Twitter, like bots.
|
| Like I said, you can take all of these public statements with a
| grain of salt, and you should. I personally give them the benefit
| of the doubt, as pretty much all of the "worst case"
| interpretations make no sense. It's not an economic play. It's
| not a play to only allow speech that benefits him directly as
| what possible Twitter speech would benefit him directly, given
| the position he's already in? He's also not turning it into a 40
| billion dollar 4chan, there's just no rational basis for such
| pessimistic takes.
|
| Perhaps a simpler take is that Twitter is so broken,
| dysfunctional and toxic that he can't possible make it much
| worse. And if he still does, let's hope it fully sinks. The world
| would be improved.
| threeseed wrote:
| a) Twitter is not a terrible investment. Their fundamentals are
| strong i.e. growing revenue/profit and any competition has
| failed to materialise. And we have yet to see the financial
| impact of their premium offerings e.g. Twitter Blue.
|
| b) We can be pessimistic about Musk's intention because of his
| past behaviour. At Tesla/SpaceX he has routinely suppressed any
| free speech and unionism. With Jack Sweeney he tried to buy his
| silence and he has on a number of occasions filed defamation
| lawsuits over things people have said. He is not altruistic but
| instead uses his power to shift the world to his benefit.
| fleddr wrote:
| Even if you're right about the financials (which I doubt),
| then still it doesn't make any sense for Musk to grow his
| wealth via Twitter. Surely there's better ways to do that and
| one can wonder what the point of growing wealth is at this
| stage.
|
| The way I see it, his plays are "larger than life" plays.
| It's attaching his name and legacy to solutions to giant,
| seemingly unsolvable problems. Which so far seem to be
| problems that actually help humanity forward. Most of them
| anyway.
|
| If so, one can wonder if it matters whether it's driven by a
| sense of ego or truly and selflessly wanting to help humanity
| forward, or a bit of both?
|
| One type of criticism I fully agree with, or at least
| acknowledge. His methods. The goal may be altruistic, but his
| methods surely are not. He's ruthless in achieving these
| goals and has no mercy towards anybody standing in his way.
|
| It's hard to say whether the end justify the means, and it
| may not even be fully purposeful. He's autistic and had a
| difficult upbringing. Which doesn't have to be an excuse for
| everything, but it's something to take into account to paint
| a full picture. Which is a complex one, and not a simplistic
| Disney villain stereotype.
|
| I ultimately do agree that he shifts the world to benefit
| him, but perhaps not in the way you mean it. To benefit him
| to enable him to achieve the goals, no matter what.
| helsinkiandrew wrote:
| So its $25.5 billion of debt backed by his Tesla shares and $21
| billion from himself, presumably from selling Tesla shares?
|
| I wonder how many will accept the offer - about 30% of ownership
| have said they're not interested at that price, if he let a few
| large holders stay on it could be successful - but this would be
| a kick in the teeth for smaller investors and his retail fans.
| topspin wrote:
| > about 30% of ownership have said they're not interested at
| that price
|
| Why would Musk need more than 51% of voting shares for control
| of the board?
| rpmisms wrote:
| Quite interesting how this is basically a slightly larger
| personal loan that anyone might take out to make a purchase.
| darknavi wrote:
| > a slightly larger
|
| I know inflation is high but...
| rpmisms wrote:
| To borrow a phrase, it's several orders of magnitude greater
| than an average car note, but it's still just a secured
| personal loan, more or less.
| throwaway2037 wrote:
| I noticed on the form: Citizenship or Place of
| Organization: USA
|
| I know that he was born in South Africa to a South African father
| and a Canadian mother. I assume this means he is entitled to
| citizenship (and passports) in both places.
|
| Does anyone know if he still has both of these citizenships? If
| yes, I am surprised that he is not required to declare them on
| this form. Maybe SEC does not care about other passports, if
| already a US citizen.
|
| One idea: Maybe he renounced the others so that he can run a
| rocket company in the US. As I understand, Space X is crazy
| strict about security requirements, and many of those are
| dictated by the US Federal gov't.
|
| For example, in New York City, I knew many Jewish people that
| were native born US citizens, but also had an Israeli passport.
| It made it easier to visit Israel (much lower security
| requirements), and it was an important cultural link for them.
| mpalczewski wrote:
| When you become a US citizen they ask you to renounce other
| citizenships. At least it was the case the for me.
| elldoubleyew wrote:
| >they ask you to
|
| My understanding is that they can't really enforce this. You
| can still hold multiple citizenships even if its against the
| rules.
| reaperducer wrote:
| I suspect it depends on what your original citizenship was.
| There are a number of countries with which you can have dual
| U.S. citizenship.
| nickmain wrote:
| The Naturalization Oath is "Renounce and abjure absolutely
| and entirely all allegiance and fidelity to any foreign
| prince, potentate, state, or sovereignty of whom or which the
| applicant was before a subject or citizen".
|
| Makes no mention of giving up citizenship or passport-
| holding, just allegiance.
| mardifoufs wrote:
| I had to pledge allegiance to the queen when I got my
| canadian citizenship (or maybe my parents did? I was 9 so
| that would make more sense). So in a way, I'd have to
| renounce my canadian citizenship to become American, even
| if in reality you are right that it doesn't happen.
| goatcode wrote:
| Citizenship is allegiance. Even if the moral doesn't align
| with the reality anymore, it still is considered to.
| mgh2 wrote:
| Both countries allow it https://www.cic.gc.ca/english/helpcen
| tre/answer.asp?qnum=356...
|
| https://www.immigrationhelp.org/learning-center/is-u-s-
| dual-...
| goatcode wrote:
| I don't think this applies to naturalization. If you're
| born with the qualifications for citizenship in each, then
| you are a citizen of both. Apart from being born that way,
| you may not be able to hold either one or the other, on
| naturalization.
| tasty_freeze wrote:
| I've never had a twitter account and didn't plan on getting one.
|
| But if Musk is successful taking over twitter, my intent is to
| get a twitter account and start posting the most grotesque and
| offensive things to see if Musk really is a free speech
| absolutist. My suspicion is that he is mostly interested in his
| free speech, not mine.
| zionic wrote:
| Similar boat minus the last part. Never had a Twitter, but I'll
| join as paying member if Elon buys it.
| shockeychap wrote:
| I think that the characterization of "free speech absolutist"
| is misleading and facile, and this is reinforced by the idea of
| testing it with "the most grotesque and offensive things". Very
| few people are absolutists who would favor a platform that
| allows everything - kiddy porn and snuff films included.
|
| I think what Musk wants to see is the Overton Window opened up
| more than it is now, and that's not a bad thing.
| guerrilla wrote:
| Well Musk may be misleading and facile, but that's how he
| describes himself in his own words.
| root_axis wrote:
| Kiddy porn and snuff films are illegal. Musk is a self-
| described "free speech absolutist" in his own words so it's
| fair to hold him to that description, and while I do agree
| it's misleading, Musk is often misleading when it comes to
| his businesses, so I think the criticism is well earned.
| [deleted]
| Anon1096 wrote:
| I don't think Musk has ever claimed to be a free speech
| "absolutist", he just wants free-er speech for things like
| political views.
| jmull wrote:
| There's this:
|
| https://twitter.com/search?lang=en&q=absolutist%20(from%3Ael.
| ..
| andechs wrote:
| he just wants free-er speech for his OWN political views
| zaptrem wrote:
| https://twitter.com/elonmusk/status/1499976967105433600
| "Starlink has been told by some governments (not Ukraine) to
| block Russian news sources. We will not do so unless at
| gunpoint. Sorry to be a free speech absolutist."
| dnissley wrote:
| I read this as a tongue in cheek jab at people who like to
| use "free speech absolutist" as a negative descriptor.
| dangerface wrote:
| Not blocking Russia doesn't mean he is a free speech
| absolutist even if he says it.
|
| I know I can read minds.
| [deleted]
| goatcode wrote:
| >the most grotesque and offensive things
|
| >mine
|
| You enjoy grotesque and offensive things?
| psyc wrote:
| I am too sensitive for grotesque images, but I do greatly
| enjoy maximally offensive verbal comedy, if it's funny to me.
| chasing wrote:
| No need to bother, there are plenty of people who will be doing
| this for you. Your contributions will be mere drops in the
| grotesque and offensive ocean.
| [deleted]
| belter wrote:
| Here is something grotesque you can post:
|
| "Elon Musk says Tesla hopes to produce a robotaxi with no
| steering wheel or pedals in 2024"
|
| https://www.businessinsider.com/elon-musk-tesla-build-robota...
| macspoofing wrote:
| Musk makes a lot of (insane) promises - like going to Mars in
| the next 5 years. Sure.
| badwolf wrote:
| or selling "Full self driving" packages in Teslas
| [deleted]
| ohmanjjj wrote:
| We are too.
| kjksf wrote:
| I think the flaw in this plans is that you assume that Musk
| will personally approve every tweet.
|
| There will be moderation.
|
| Musk talked about the need to improve Twitter's handling of
| spam, bots and scammers.
|
| So clearly if he owns Twitter he will direct the team to
| eliminate spam, bots and scammers as much as possible.
|
| If you get classified as those, you'll be booted off the
| island.
|
| And given that your stated purpose is malicious, I say that you
| should be.
| macspoofing wrote:
| He is concerned with the Overton window being too tight.
| openforce wrote:
| Lol, I don't think that is necessary. He has already bought his
| free speech with the ~9% stake.
| kyle_martin1 wrote:
| NDizzle wrote:
| So you haven't cared about free speech at all until you want to
| lash out to spam others? Cool story, bro... I bet you and your
| legion of followers will love all your content. Then you'll
| bitch when people disallow you from commenting on their posts..
| But I can't push my speech on others!!! This isn't my
| definition of free!!!
| tasty_freeze wrote:
| Please tell me how you determined that I don't care about
| free speech at all from what I've said. All I said is I have
| never had a twitter account.
|
| I find the medium to not lead to productive dialog. The only
| interesting posts I've read are ones where someone
| essentially ignores the format and writes a long form comment
| over ten serial tweets. Limiting people to 140 characters (or
| 2x that now) leads to people spitting out punchy comments
| that lack any nuance. Rather than a dialog you get either
| echo chamber if the participants are in agreement, or if the
| participants are in opposition, a series of tweets attempting
| to land a body blow on the other.
| jpdb wrote:
| I think that is a worthwhile test and agree banning things like
| spam or extremely grotesque content means you aren't a "free
| speech absolutist." However, banning some speech (such as those
| mentioned above) wouldn't necessarily put him in the camp of
| only being interested in his own free speech.
| chasd00 wrote:
| from what i understand, if your post is within the bounds of
| the law then you should be fine.
| flipbrad wrote:
| Which country's law?
| jimkleiber wrote:
| This gets at a core issue for me: how do our national
| governments govern online spaces that transcend national
| boundaries?
|
| From what I understand, a large reason the US switched from
| the Articles of Confederation to the US Constitution was to
| help resolve inter-state conflict. I wonder if we can
| resolve inter-national conflict with our current
| confederation of nations.
| falcolas wrote:
| The articles of confederation was the Confederacy's
| foundation document that codified how the Confederacy
| would be run.
|
| AKA "The South" in the US civil war.
|
| Edit: Yup, as pointed out by replies, I got my documents
| backwards. Sorry!
| jimkleiber wrote:
| No, it wasn't.
|
| > The Articles of Confederation and Perpetual Union was
| an agreement among the 13 original states of the United
| States of America that served as its first frame of
| government. It was approved after much debate (between
| July 1776 and November 1777) by the Second Continental
| Congress on November 15, 1777, and sent to the states for
| ratification. The Articles of Confederation came into
| force on March 1, 1781, after ratification by all the
| states.
|
| https://en.m.wikipedia.org/wiki/Articles_of_Confederation
|
| Edit: I think you're thinking of the Constitution of the
| Confederate States: https://en.m.wikipedia.org/wiki/Const
| itution_of_the_Confeder...
| dahfizz wrote:
| Maybe you are thinking of the constitution of the
| Confederate states? The articles of confederation predate
| the civil war by almost 100 years.
| falcolas wrote:
| Yup, got it in one. My bad.
| robonerd wrote:
| I understand how you could have this confusion, but if
| you're going to offer a correction you should double-
| check yourself first. You can look it up on wikipedia to
| check yourself and to copy the URL to post in your
| comment at the same time, two birds with one stone, and
| you avoid the embarrassment of being wrong.
| jimkleiber wrote:
| I appreciate how you answered this and wish I had replied
| with as much grace as you did. Thank you for showing a
| different way to respond.
| Someone wrote:
| The limits of the right of free speech vary significantly by
| country
| (https://en.wikipedia.org/wiki/Freedom_of_speech_by_country,
| https://www.amnesty.org/en/latest/news/2017/03/uae-
| prominent...), so I don't think there is a "the law" on
| Twitter (whatever its terms of use say about jurisdiction)
| nraynaud wrote:
| he has fired a lot of his own employees for what they said or
| posted online, no need to test him more.
|
| Some people think it's fair game to retaliate gainst your own
| employees because there is no free speech at a company, I would
| counter that it's a very narrow margin for someone who declared
| themselve "free speech absolutist" and didn't implement it in
| their own kingdom.
| shabier wrote:
| > he has fired a lot of his own employees for what they said
| or posted online, no need to test him more.
|
| Twitter is not Tesla or SpaceX neither are they considered
| the same (at all). To expect him to treat everything the same
| across the board is a disingenuou unrealistic expectation.
| nraynaud wrote:
| he used the term "absolutist", moreover those firings would
| probably be illegal in most civilized countries.
| 0x500x79 wrote:
| What about the reports that he canceled customer's orders
| after a blog post that they have made?
| WORMS_EAT_WORMS wrote:
| That's pretty hilarious, but I think saying offensive things
| (and offending people at their expense) to own Elon really is
| some derangement. I am assuming this is a joke.
|
| I don't get why people are so worked up about this. If you see
| Twitter, as Elon and millions of other people do, as the
| "public digital town hall", it is not unreasonable to verify
| people's identities and let them comment whatever they want so
| long it is legal.
|
| It does not mean that you or anyone have to subscribe or listen
| to their crap.
|
| If you don't see it that way, do people really not understand
| how others see that as gatekeeping, controlling, or dangerous?
| What is the purpose of Twitter than to you - basically
| television? To tune in and tune out?
|
| Then, open source the algorithms. Do the same people really not
| want to know why Twitter chose to show you X information? Wild.
| bduerst wrote:
| It's a test of the word and motivation of not just a
| billionaire, but one of the world's wealthiest individuals -
| one who has publicly insulted and offended many people
| already.
|
| I think it's more deranged to see such a test as abnormal.
|
| (Also _grotesque_ does not necessarily mean _offensive_ , and
| you can limit the scope of the content's exposure)
| WORMS_EAT_WORMS wrote:
| Your comment:
|
| > (Also grotesque does not necessarily mean offensive, and
| you can limit the scope of the content's exposure)
|
| OP comment:
|
| > start posting the most grotesque and offensive things
| bduerst wrote:
| Right, it's _not limited_ to being offensive, and even if
| it were, you can limit exposure.
|
| Also, testing if a billionaire (who has offended many
| people on Twitter) is lying is not deranged behavior,
| which is the point you keep avoiding.
| WORMS_EAT_WORMS wrote:
| > start posting the most grotesque AND offensive things
| tasty_freeze wrote:
| Yes, even offensive things. If you are a free speech
| absolutist, there are no boundaries.
|
| So far you are railing on imagining the worst possible
| implementation of my idea. I won't speculate why you are
| that way.
|
| I also think (a) nobody would notice my twitter account,
| (b) they'd probably block me, which would make my point,
| and (c) the people who did read my stream while it was
| active would clearly understand the context of my
| statements.
|
| Think of it like The Satanic Temple. It exists not to
| glorify Satan but to test whether laws really are
| favoring some religions over others, in contradiction to
| the constitution.
| theonething wrote:
| Dude, the GP said they'd post "the most grotesque and
| offensive things." Please note the "AND offensive". And
| yet, you keep trying to deny that the GP's intent is to
| post offensive things?
|
| > Right, it's not limited to being offensive, and even if
| it were, you can limit exposure.
|
| What do you mean by limit exposure? How would the GP
| limit exposure of their grotesque and offensive tweets?
| And even if they did, wouldn't that defeat the purpose of
| their test? They are trying to increase exposure and see
| if _Musk_ will limit exposure.
|
| The GP is stating they will purposely offend people to
| test their suspicions of someone. They are willing to
| hurt (with words) innocent people to do this. You're
| calling this normal behavior. So if Musk takes over, it's
| okay to start calling black people the n word on Twitter
| to test Musk? I think that qualifies as "most offensive."
| And to call this testing behavior abnormal is deranged
| itself according to your words?
|
| And some of your justifications are it's okay to do
| because Musk is the world's wealthiest individual and
| he's already offended others?
|
| > It's a test of the word and motivation of not just a
| billionaire, but one of the world's wealthiest
| individuals - one who has publicly insulted and offended
| many people already.
| stjohnswarts wrote:
| It's not derangement, it's a logical method of protesting if
| you think that it's valid to ban tweets on subjects like
| qanon, flat out (dangerous) lies, and stirring up violence on
| Congress on private platforms
| shabier wrote:
| Calls of violence, deformation and whatnot are already
| illegal and partially enforced towards one side of the
| ideological spectrum.
|
| Although groups like qanon tend to sway naive users to
| extremism, it would be unfair to silence different thoughts
| just because it "may" lead to that.
|
| Fight bad ideas with better ones.
| WORMS_EAT_WORMS wrote:
| Eh -- it's totally derangement.
|
| Protesting a cause at an innocent persons expense is
| immature.
|
| It also can escalate into real violence.
| tasty_freeze wrote:
| Thank you for reading my mind and calling me totally
| deranged. Very rational and not deranged of you.
|
| Here are some sample tweets I might want to post.
|
| "I'm not saying Elon has killed anyone, but he owns a lot
| of property where bodies could be buried. Why aren't the
| authorities looking into this?"
|
| "Fact: Tesla cars are killing more people than any other
| cause." Yes, it it is patently false, and that is the
| point.
|
| "People are saying that Elon is forcing his numerous
| lovers to get abortions. Does anyone know if this is
| true?" Hey, I'm just asking questions.
|
| I believe twitter accounts allow posting a very short
| description. I'd probably put something like "Testing the
| limits of twitter's free speech."
| WORMS_EAT_WORMS wrote:
| Look how fast you escalated this:
|
| > People are saying that Elon is forcing his numerous
| lovers to get abortions.
|
| Yes, this is harmful to Elon's "lovers" and at their
| expense (not yours, not his).
|
| Yes, this is deranged.
|
| Yes, people can support your right to say this while
| thinking you are really immature, thoughtless, and not
| even remotely creative.
| tasty_freeze wrote:
| I disagree on multiple grounds. Forcing someone to have
| an abortion is a terrible thing to do and should never be
| allowed. Having an abortion is not shameful, and so my
| slander was aimed at Must, not his putative lovers.
| Second, I didn't say all of them had an abortion, so any
| individual lover isn't being accused of anything.
|
| I understand you disagree with me. Call me deranged is
| over the top. Calling me immature and thoughtless and not
| even remotely creative is also a broadside that you can't
| possibly know. How about we talk about ideas rather than
| you psychoanalyzing me?
|
| You have taken great offense that I hypothetically might
| say something untrue on twitter. Have you spent this much
| energy combating the actual harmful BS that is actually
| on twitter? Have you written more about my comment or
| about Elon Musk calling that scuba diver who helped
| rescue those kids a pedophile?
| IAmNotAFix wrote:
| You need to have a significant following for this to have any
| relevance. If you have a significant following, you have a
| strong incentive not to post the most grotesque things.
| bilbo0s wrote:
| You post things outrageous enough, believe me, a significant
| following will raise up around it.
|
| I think we're all about to witness the tragedy of the commons
| in real time if Musk buys twitter. Because there are
| literally thousands of people in college towns alone all
| across the US who will descend on Twitter and do this.
| Probably millions outside of college towns who will do the
| same. it's too bad.
|
| My bet is we'll end up filing this under "This is why we
| can't have nice things".
| suction wrote:
| The true test will be if he has Trump's and other fascist's
| accounts reinstated.
| k1ko wrote:
| Curious. How exactly do you reconcile the definition of
| fascism with your use of it?
| theonething wrote:
| They don't and can't. The word is bandied about by the left
| to the point of meaninglessness now.
| FerociousTimes wrote:
| The Shitbidder in Chief strikes again!
|
| When will people get tired of his stale shitposts and
| shenanigans?!
|
| Get a hobby, Elon and seriously consider cutting on Twitter
| usage, it's frying your brain.
| boomboomsubban wrote:
| Does Twitter even made money? The Wikipedia article claims they
| went from losing several hundred million in 2017 to making a
| billion in 2018, but I'm not seeing what change led to that huge
| turnaround.
| Flankk wrote:
| They have about $5 billion in annual revenue. Most years they
| lose money, hence the poor stock performance. Welcome to
| silicon valley.
| krageon wrote:
| > They have about $5 billion in annual revenue
|
| > Most years they lose money
|
| Absolutely grotesque.
| mypalmike wrote:
| It's also factually incorrect. The filings are public
| record.
| boomboomsubban wrote:
| 2021's revenue was ~$5 billion, and if I'm reading things
| correctly they've posted a profit twice since 2010.
| mypalmike wrote:
| They've posted (admittedly large) losses only 2 quarters
| since Q4 2017.
|
| https://www.alphaquery.com/stock/TWTR/earnings-history
| bombcar wrote:
| I haven't dug into the filings, but I wonder how much of
| that is "actual losses" and how much is "accounting losses
| to avoid tax".
| goatcode wrote:
| Welcome to InQTel
| baby-yoda wrote:
| at least historically they had a DI/DS scheme (like many mega
| corps) so theres probably 10s of millions that are "expensed"
| to a foreign subsidiary to avoid tax.
| Schopenhauer01 wrote:
| Selling user data to governments?
| boomboomsubban wrote:
| Starting in 2018?
| root_axis wrote:
| I don't believe Musk's free speech claims for a second, he has a
| long history of regailing the public with grandiose claims and
| then failing to deliver. I'd bet 100 to 1 that twitter will
| continue to ban accounts for legal posts.
| kyle_martin1 wrote:
| wolfofcrypto wrote:
| [deleted]
| mountainriver wrote:
| Good, I hope he buys it and shakes things up. Twitter needs a
| revamp
| mirceal wrote:
| what does "shake things up" mean?
|
| whenever something like this happens you have to ask yourself
| why now and what's in it for Musk (let's be real: nobody spends
| this much without an agenda). My fear is that Musk's endgame is
| to reinstate a specific account that was banned after some
| specific events around a specific election. If this is what's
| happening he can frack off.
| xdavidliu wrote:
| > My fear is that Musk's endgame is to reinstate a specific
| account that was banned after some specific events around a
| specific election.
|
| Why would he pay 50 billion for that? What does he gain from
| it? Goodwill? Leverage on Trump in case the latter becomes
| President again?
| mirceal wrote:
| one hand washes the other.
|
| the gov already pumped billions of dollars in tesla and
| space x through different programs. if that pumping
| increases that would be great, right?
| api wrote:
| I'd be fine with bringing back most of these banned accounts
| _if the algorithm also died_.
|
| Without an engagement-maximizing algorithm that promotes the
| most divisive content, those accounts would just be preaching
| to their own choirs. Meanwhile other people could pop in and
| see just how unhinged and ridiculous they are.
|
| Maximizing engagement means maximizing dishonest trolling,
| hate, fear, controversy for the sake of controversy, and
| catchy tabloid bullshit. The most engaging content is
| basically an adversarial attack on higher human cognition. It
| typically works by bypassing the rational mind and shooting
| for the amygdala.
|
| Make it a simple timeline again. Nix recommendations in favor
| of search. Make it just a forum, not an inherently biased
| Skinner box that sucks out peoples' brains.
|
| I'd support that regardless of who he lets back on the
| platform, because algorithmic social media is the real
| problem. Algorithmic social media is what got Donald Trump
| into the presidency, among many other things.
| mirceal wrote:
| isn't it convenient to blame everything on the algorithm?
|
| why spend time actually educating people and giving them
| the tool of critical thinking when you can create a
| cesspool that enables and amplifies xenophobia, racism,
| sexism, you name it.
|
| why call out certain behaviors that are horrendous when you
| can normalize them and pretend this is part of the normal
| public forum?
| api wrote:
| Person A walks past you and smiles. Person B walks past
| and punches you in the face. Which maximizes engagement?
|
| Person A tells you about a new discovery at NASA. Person
| B tells you the Earth is flat and bombards you with
| "irrefutable" proof. Which maximizes engagement?
|
| I really do think engagement maximizing algorithms
| explain much (but not all) of our collective descent into
| insanity since about 2010-2012 when they became popular.
| mirceal wrote:
| the algo amplifies nasty things. that's for sure. i guess
| my point is that those nasty things exist independently
| and have backing (and we should not normalize them).
| api wrote:
| It's the algorithm that has helped normalize them by
| promoting them to a wider audience because they maximize
| engagement.
| memish wrote:
| He should reinstate all accounts that were banned for
| political or ideological reasons. Or just straight up do a
| jubilee of all accounts unless they posted illegal content.
| rootusrootus wrote:
| Wouldn't that be a violation of his fiduciary duty, at
| least in the same way that other people in this
| conversation have defined fiduciary duty when criticizing
| the board for adopting the poison pill?
|
| Bringing back the accounts that spew stuff which pushes
| advertisers away will not make Twitter more financially
| successful than they are today.
| xur17 wrote:
| If he takes the company private, does he have a fiduciary
| duty to it?
| rootusrootus wrote:
| That's true, if his intent is to take it private, he
| could run it into the ground on purpose.
|
| Hell, maybe that's his intent. What if it turns out that
| rather than being a free speech absolutist, he thinks
| social media is destroying the world and the best way to
| solve that is to crush it out of existence, starting with
| Twitter.
|
| That wouldn't work, of course, but it would be
| entertaining.
| MrMan wrote:
| Do his lenders enjoy him runni g the collateral into the
| ground?
| mirceal wrote:
| why? what's in it for him and what does it mean for all the
| other people in the US and in the world?
|
| ask yourself: why were those accounts banned?
| PKop wrote:
| Ideological warfare. He supports their views. What's in
| it for the people banning these accounts?
| mirceal wrote:
| is it ideological warfare though?
|
| what's the ideology that's being "suppressed"?
| MrMan wrote:
| Genocide, Eugenics, liberty, xenophobia, racism, civil
| war
| mirceal wrote:
| i like how you casually slipped liberty in there.
|
| +5 for mental gymnastics
| rootusrootus wrote:
| > What's in it for the people banning these accounts?
|
| Money. If your advertisers flee, meeting payroll gets
| exponentially more difficult.
| zionic wrote:
| > why were those accounts banned?
|
| Twitter is/was a ban happy shithole.
|
| It is absolutely trivial to get banned on Twitter. My
| favorite example is someone I know getting banned for
| posting pitbull fatality statistics. They were banned for
| "racism". Against dogs.
|
| Twitter needs a top to bottom purge.
| mrtranscendence wrote:
| I call bullshit. Nobody was banned from Twitter for being
| racist against dogs. Full stop. Did not happen.
| zionic wrote:
| Not going to dox myself via sharing their @. It's banned
| now so you can't see it anyways. They were attacked by
| some pitbull advocacy club and likely mass-reported.
|
| The replies were full of people saying things like "this
| is exactly like how white people post statistics to say
| black people commit more crime! Report this person for
| racism!"
|
| It was charts of dog fatalities per year broken down by
| breed.
| mrtranscendence wrote:
| I still don't believe that's the whole story. Maybe it
| was automatic due to the large number of reportings. But
| I'm certain nobody at twitter said "yep, let's ban him
| for racism against pit bulls".
| mirceal wrote:
| i mean... i can see some automatic system banning some
| users. does that mean twitter does this on purpose?
| probably not.
| theobeers wrote:
| Afaik, he views Twitter as the closest thing we have to a
| genuine public square on the web, and he thinks it's poorly
| managed and ideologically captured. Musk also uses Twitter a
| lot, so it's believable that he wants it to be something
| better than what it currently is.
| jimkleiber wrote:
| > Afaik, he views Twitter as the closest thing we have to a
| genuine public square on the web, and he thinks it's poorly
| managed and ideologically captured.
|
| For me, this is the thing that bothers me the most: if he
| thinks it is the closest we have to a public square, why
| does he think that the richest private individual in the
| world should decide how it is run?
|
| It seems he's saying "the oligarchy is not running this
| well so we should make it a dictatorship, not a democracy,"
| which is in his right to say or believe, I just wonder how
| much we have lost faith in democracy if we agree.
| skellington wrote:
| Who is running it now? A Saudi prince and a bunch of
| other tech oligarchs? Why would Elon be worse than that?
| How is twitter a democracy now? Did you cry this much
| when Bezos (the then richest person) bought the
| Washington Post?
|
| Isn't the fact that twitter is NOT part of our democracy
| the crying call of the left? "It's not censorship because
| it's a private company and they can do what they want (as
| long as they only censor anything I don't agree with)!"
|
| Oh NO, Elon might make twitter a free speech platform
| where differing views can be expressed!
| ModernMech wrote:
| > Isn't the fact that twitter is NOT part of our
| democracy the crying call of the left? "It's not
| censorship because it's a private company and they can do
| what they want (as long as they only censor anything I
| don't agree with)!"
|
| Lol, if you think the left is genuinely defending the
| rights of private corporations, I don't think you know
| much about the left...
|
| Probably _the_ defining ideological organizing principle
| of the left is social equality, which is the exact
| opposite organizing principle of corporations, that being
| profit over all. Corporations are organized as
| dictatorships; leftists prefer them to be organized as
| democracies of, by, and for workers. Corporations censor
| the free speech of their workers, restricting what they
| say and how they can organize themselves; leftists want
| to take away the power corporations have to do this.
|
| Insofar you are hearing anyone you perceive to be on the
| left supporting the rights of corporations like twitter
| to do what they want, perhaps consider they are throwing
| the argument in the face of corporate friendly Democrats
| and Republicans who have created this situation
| themselves by granting corporations such power over our
| lives, and are now only complaining when it hurts them
| politically.
|
| I'm waiting for the day when that's tackled honestly by
| those groups, because right now it seems to me that
| politicians want to force specific companies like Twitter
| to stop hurting them politically while still maintaining
| corporate power and the inflow of corporate cash into
| their reelection campaigns. Thy want to call Twitter a
| "town square" and a "public good", and carve out
| exceptions that would specifically limit its power while
| still maintaining the power of the corporations they
| prefer to wield it. Meanwhile they will argue
| vociferously that healthcare, education, housing, even
| roads and broadband aren't public goods and must be kept
| privatized or turned into private ventures.
|
| Under our current system (not created by leftists),
| corporations are people too and have more rights and
| power than natural humans. Leftists will stop pointing
| out that corporations have this power as soon everyone
| else stops arguing that corporations _should_ have this
| power.
| jimkleiber wrote:
| I was talking about the structure of its governance,
| which I think is currently more like an oligarchy and if
| Musk buys it, might be more like a monarchy or
| dictatorship, not like a democracy.
|
| I don't claim that the current oligarchy is doing it
| well, I don't claim that a Musk monarchy would not do it
| better, and I don't claim that even a democratic
| structure would do it well.
|
| I was merely trying to point out the different governance
| structures and question our collective faith in
| democratic structures.
| theobeers wrote:
| I have some good memories of using Twitter in the pre-IPO
| days. Of course we can't say that the former private
| ownership was _necessary_ to create an open platform, but
| I don't think it was a hindrance in that regard, either.
| (Would it be different for a megabillionaire to buy the
| company today? Definitely. Still, there shouldn't be an
| unchecked assumption that it's indispensable for Twitter
| to be publicly traded.)
| jimkleiber wrote:
| I'm not saying the current publicly traded,
| previous/future private ownership, publicly regulated
| utility, non-profit, or any other form of ownership and
| governance would necessarily yield a better result than
| others. There can be benevolent dictatorships and
| oligarchies and malevolent democracies and republics. I'm
| more interested in why we (US specifically) celebrate
| democracy in public governance but seem to prefer
| oligarchy or autocracy in corporate governance.
| mirceal wrote:
| better how?
|
| what experience does musk have to make twitter better and
| why is this expensive unique so that twitter itself cannot
| make the changes?
|
| twitter back in the day was awesome until they turned
| hostile to the 3rd party developers.
| MrMan wrote:
| Twitter devs - dumb and lazy
|
| Elon musk - smart and crazy
|
| This is all you or Morgan Stanley need to know, besides
| Elon claiming he doesn't care if the venture makes money.
| mirceal wrote:
| lol. some of the smartest people i've worked with had
| twitter on their resume.
| saboot wrote:
| It's not just trump, it's likely we'll see other "unfairly
| censored" people like David Duke, Milo, and Alex Jones.
|
| This will elevate the level of discussion to be more like the
| highly praised philosophy forum known as 4chan.
|
| I'm sure all the users will appreciate it and not leave
| immediately.
| fallingknife wrote:
| I don't buy this line. Twitter used to be "the free speech
| wing of the free speech party." So your theory is that this
| happened:
|
| 1. Twitter is totally open free speech 2. This scares
| people away and user counts drop 3. Twitter censors and
| users come back
|
| But this didn't happen. Twitter and other, at the time,
| free speech platforms like Reddit were experiencing rapid
| user growth throughout their free speech phases. The "this
| will scare away users" justification for censorship is used
| entirely as an ex post facto justification.
| fzeroracer wrote:
| No, this is the route that literally every popular social
| media platform goes through if they want to make money.
| Having an 'absolutist' stance on free speech is only
| tenable at smaller scales. As your platform scales up and
| more people join, so does the amount of people posting
| things that are borderline illegal, chase off
| advertisers/other users and so forth.
|
| There's a reason why none of the other purported full
| free speech platforms ever taking off and it's because
| they end up so odious that advertisers never go near them
| and the userbase stalls out. Personally I think most of
| the people that believe full freedom of speech is
| possible have never been a moderator of even a small
| social media platform. If you have two users and one of
| them is harassing, stalking etc another user you
| eventually have to make a decision which of the two you
| want to keep around, and it inevitably involves you
| censoring one of them.
| fallingknife wrote:
| This is not the argument I was responding to. That was
| the argument that the platform will lose users, which
| objectively didn't happen. You are talking about losing
| advertisers, which is a reasonable theory, but also
| incorrect. Twitter and Reddit to this day are full of
| content, e.g. porn, that is absolutely toxic to
| advertisers, but it doesn't drive advertisers away from
| the platform as a whole because they have segregated
| their platforms and allow advertisers to pick and choose
| where they advertise. An example of this is Google search
| and Youtube demonetization of controversial videos.
| Advertisers are certainly an explanation of those
| policies, but it doesn't explain outright banning content
| from the platform.
| mirceal wrote:
| why don't these "unfairly" censored people build their own
| platform? oh! it's hard. much harder than spouting their bs
| and complaining about "free speech"
| mikkergp wrote:
| I wonder if the world can support a conservative Twitter.
| I think the problem is that if you're going to spout
| offensive nonsense it's not as much fun if there is no
| one around to be offended by it. And while those who are
| offended will fight it when it's a percentage of their
| platform, there will be a wave as people abandon what
| they see as a toxic platform. I mean sure there are
| platforms like 4chan and The Donald but 4chan's traffic
| is a fraction of what reddit's is.
|
| Given Elon's predilection for trolling it's odd he
| doesn't realize those people who are banned don't want to
| build anything, they just want to watch the world burn.
| logicalmonster wrote:
| > why don't these "unfairly" censored people build their
| own platform?
|
| Don't you recognize that this is exactly what happens?
|
| They do end up going to their own corners of the web, and
| idealogical-activists refuse to leave them alone and try
| and shut them down wherever they go. Look at how many
| times Gab, Parler, and other more free speech sites have
| been shut down.
| api wrote:
| Some of them tried and either failed miserably or built
| cesspools only other hate addicts want to visit.
| mirceal wrote:
| exactly! the gist of it is that they need people from the
| "other camp" and they need to get into shouting matches
| to feel like they matter and their crackpot ideas are
| valuable.
| saboot wrote:
| They've already made a half dozen platforms, the market
| has clearly said that the majority of users are happy
| with Twitter as it is without them.
|
| But it's not good enough, we must be forced to listen to
| hear how the COVID vaccine is a mind control weapon and
| why we must fight (((globalists))).
| eks391 wrote:
| The unfairly banned people have made several platforms,
| they just never blow up and you don't hear about them.
| It's like an employee gets fired from target, a well
| known and established company, so they make their own
| pseudo target and you're shocked that you've never heard
| of their small one Edit: corrected autocorrect miswording
| mirceal wrote:
| why don't the platforms blow up? you'd think if these
| people are banned based on ideological issues only they
| would accumulate and thrive on these new platforms
| shabier wrote:
| It almost sounds like you're implying that most of the
| conversation is happening on Twitter, that it is the town
| hall.
|
| Good. Time to break it up and enforce fair rules.
| mirceal wrote:
| nope. not implying that.
|
| the reason twitter works and is successful is that you
| have people from all backgrounds and walks of life.
| people that get banned don't follow the rules that
| Twitter has (if the rules are fair, etc, is another
| discussion, but everyone has to follow the rules)
| mardifoufs wrote:
| Sure. But if Elon Musk buys twitter, a private
| corporation, then he can decide who he platforms. Yet you
| see tons of people complaining exactly about that
| possibility here. So your comment is pretty ironic in the
| context of an entire thread filled with complaints about
| Musk getting his own platform.
| sergiotapia wrote:
| If his agenda is polar opposite of the current agenda, I
| can't wait to see it. I would love to see him turn Twitter
| into a free-for-all where all LEGAL under US law material is
| allowed. Where YOU as an individual can mute/block things you
| do not want to see. It's incredible this idea today is
| considered "dangerous".
| saboot wrote:
| Yes, I can't wait to see the place I get real time news
| updates and tech discussions become a platform for
| Holocaust denial.
| mirceal wrote:
| yes, but fReE SpEeCh! /s
| memish wrote:
| It's EASY to counter Holocaust deniers because there is
| so much evidence that it happened. It's like debating
| flat earthers. No problem. Why be threatened by things
| that are easily debunked in day light?
|
| It's not hard to defeat bad ideas with good ideas. Or you
| can just ignore it by turning off the channel. That's
| always an option.
| saboot wrote:
| It puts the burden on me as a user to combat all the
| nonsense.
|
| I'll pass. And I'm sure many others will too.
| [deleted]
| mikkergp wrote:
| The problem is that those ideas spread because it's not
| in most peoples best interest to challenge them
| intellectually. It's in their self interest to promote
| that material because it feels good emotionally.
| rootusrootus wrote:
| > It's not hard to defeat bad ideas with good ideas.
|
| That's a load of crap. You cannot debate with conspiracy
| theorists. Debates only work when both sides are acting
| in good faith.
| mirceal wrote:
| huh. this naive approach is cute. but here is the thing:
| the amount of effort required to refute bullshit is at
| least an order of magnitude higher than the effort
| required to produce it.
|
| we don't have unlimited time an unlimited attention
| spans. we also deal with uneducated, easily manipulated
| people that will just discard anything that does not
| match their world view and just amplify the bs.
| memish wrote:
| Correct. No one can deal with all that shit. But it's
| distributed. You can ignore most of it, or all of it if
| you want. There are plenty of us autists to overwhelm it.
|
| Sending Flat Earthers off to their own dark corner is how
| they become entrenched. Leave them in the public square,
| in broad daylight, so they are exposed to evidence to the
| contrary. That's how you defeat bad ideas over time.
| mirceal wrote:
| this approach of letting people air bs and having them be
| shamed by the level-headed individuals may work if the
| people airing the bs are just misinformed but are open to
| a discussion and changing their mind.
|
| a lot of people, on the internet, are not open to this
| and will chose the bs over any fact, argument, reason.
| mrtranscendence wrote:
| Empirically, that doesn't work. Bringing misinformation
| into the public square simply allows it to spread. It's
| almost immune to "evidence to the contrary", at least for
| those who are apt to believe misinformation and
| conspiracy theories.
| sergiotapia wrote:
| That's some sick shit but I can't see why Twitter cannot
| allow you to block that garbage from YOUR perspective. I
| want personal controls for my content.
| memish wrote:
| It's dangerous if you can't defend your ideas based on
| their own merit. So it has to be done through authoritarian
| censorship and force.
| mirceal wrote:
| have you ever defended your ideas? against someone that
| does not do this in good faith? and makes shit up on the
| fly? and lies when caught? and uses mental gymnastics
| when shown their are plain wrong?
|
| how many times would you try to debate that person before
| deciding it's a waste if time?
| skellington wrote:
| You don't have to debate or acknowledge every idea.
| That's different then censoring it. I don't debate flat-
| earthers, but I also don't censor them.
|
| Free speech is measured by the tolerance for speech that
| you hate.
| [deleted]
| rootusrootus wrote:
| There are already Twitter alternatives that operate as a
| free-for-all. So we don't even need to speculate on how
| that plays out. It is interesting to ponder how Elon thinks
| that would make him any richer. Or maybe he values the
| free-for-all concept so highly that he's willing to burn
| billions of his own money on it when Twitter loses most of
| its advertisers.
|
| Of course, he may just do the opposite, and start banning
| people on the left. That would align more closely with how
| he runs the companies he is currently in control of.
| mirceal wrote:
| Musk is part businessman, part clown. Twitter probably
| hits a sweet spot for both.
| fzeroracer wrote:
| Twitter isn't just a US platform. It's a global one. As
| part of a global platform that means it has to adhere to
| laws in countries other than the US. Thing's like EU's
| anti-terrorism laws or data privacy laws. You could argue
| that they should strictly adhere only to US laws, but
| you're effectively arguing for Twitter to outright remove a
| large portion of its international audience and censor them
| as well.
| JaimeThompson wrote:
| Elon canceled someones order because of what they said which I
| consider strong evidence he doesn't fully support others having
| free speech like he claims
| esotericsean wrote:
| So many others here are saying negative things. I hate that
| people are even allowed to be billionaires or that they don't
| pay their fair share in taxes. But I do believe that Elon has a
| master plan and him buying Twitter is a key element in that
| plan. Starlink + Dogecoin + Twitter. It all makes sense and I'm
| in full support.
| overthemoon wrote:
| What makes sense? What do you think the plan is?
| lesgobrandon wrote:
| arangof wrote:
| overthemoon wrote:
| I have no illusions about how well-managed Twitter has been up to
| this point, but it is bitterly ironic that the narrow,
| libertarian-adjacent argument that goes something like "they're a
| private enterprise, they can ban whoever they want, free speech
| has nothing to do with it" is being tested. What happens when a
| giant, unaccountable communication monolith is run by a guy you
| don't like?
|
| I can't stand the man, and I dislike the idea of him owning
| Twitter. Who knows what's going to happen, whether he'll succeed
| or not, Maybe he'll put his money where his mouth is re
| censorship, I don't know, but that there will be an ideological
| changing of the guard is inevitable, imo. What then? Do we really
| want these platforms to have so much unaccountable control over
| the discourse?
| dangerface wrote:
| Freespeech is an inherently libertarian believe I don't think
| it's the libertarians that are trying to ban people for not
| being politically correct.
| zionic wrote:
| > Do we really want these platforms to have so much
| unaccountable control over the discourse?
|
| Funny how this is suddenly a problem when Elon tries to buy. I
| agree in principle, but the bias on display is overwhelming.
| overthemoon wrote:
| That's exactly my point. I don't think the people who wanted
| this or that account banned really thought through what they
| were saying when they were appealing to the private nature of
| Twitter's ownership.
| bandyaboot wrote:
| Why so much interest in this? Isn't it pretty clear at this point
| that the Twitter board isn't interested in selling to him at
| $54.20?
| xg15 wrote:
| From my understanding, the board has no (direct) say in this.
| He's asking the _shareholders_ - i.e. anyone who owns Twitter
| stock - to sell to him for that price until he has the required
| majority. All the board can do is put up measures to make this
| hard (like the poison pill thing).
| hristov wrote:
| Actually, if you know what you are talking about, this filing
| actually shows Elon is about 21 billion dollars short. This is
| because 21 billion dollars of the commitment is coming from him
| and not from any financial institution. He is a very rich man but
| almost his entire wealth is tied up in tesla shares which he
| cannot sell in such large amounts and ownership of spacex which
| is even harder to sell.
|
| If he tries to sell 21 billion dollars worth of tesla shares, the
| share price will collapse.
|
| So no, once again he does not have funding secured. And once
| again he is trying to bullshit his way around the issue, although
| this time the bullshitting is a little more sophisticated.
|
| It is still possible that he tries to sell a lot of tesla shares
| to get the cash to buy twitter, but it is unlikely.
| exdsq wrote:
| He can just borrow the money. He's the worlds richest man - he
| can borrow < 10% of his net worth against his Tesla stocks if
| he wanted to.
| colinmhayes wrote:
| The funding already includes a $12.5 billion loan against his
| tesla shares. He is limited by tesla by laws and banker risk
| aversion to how much loans he can take out against his
| shares. I would speculate that the $21 billion in his equity
| is there because he couldn't get more loans.
| snowwrestler wrote:
| And I believe he has already pledged other Tesla shares to
| secure previous loans.
| anon_12012020 wrote:
| Funding is secured via multiple strategies that best fits the
| case. How can you possibly think he does not have funding
| secured, when in fact he has more options than anyone private
| citizen in the world right now?
|
| Ludicrous
| JumpCrisscross wrote:
| > _How can you possibly think he does not have funding
| secured, when in fact he has more options than anyone private
| citizen in the world right now?_
|
| He's already margined a lot of his Tesla shares. The rest is
| largely illiquid. Tesla shares are expensive to margin,
| especially for $10bn; we're seeing an unusually-large
| consortium of banks assemble to provide that tranche of
| financing. That implies having to sell large, market-moving
| stakes in, all likelihood, Tesla and/or SpaceX. Something
| feasible, but unlikely pleasant for Musk or other
| shareholders in those names.
|
| Also, Musk is someone who said "funding secured" without
| funding secured in 2018.
| jefftk wrote:
| _> Musk is someone who said "funding secured" without
| funding secured in 2018._
|
| Yes, though that was a Tweet and not an SEC filing
| JumpCrisscross wrote:
| > _that was a Tweet and not an SEC filing_
|
| Most people, at this point, believe he has funding. When
| he first tweeted his bid, however, the stock _dropped_.
|
| He still has to come up with $21bn. He's tapped out on
| margin loans, so that will involve some selling of
| assets. And market conditions are volatile enough for
| those funding commitments to fall through.
| bombcar wrote:
| Some portion of that remainder can come from TWTR
| shareholders who are willing to go private.
| TuringNYC wrote:
| >If he tries to sell 21 billion dollars worth of tesla shares,
| the share price will collapse.
|
| He can execute an equity stock swap agreement with an
| investment bank and not unload any shares.
| michelb wrote:
| Isn't Musk set to receive a 23 billion dollar bonus for
| performance?
| auspex wrote:
| Or just takes a loan against his shares
| dlivingston wrote:
| > So no, once again he does not have funding secured
|
| For the reader's consideration: Musk's TED interview [0], he
| claims (quite forcefully) that he did in fact have funding
| secured, but effectively "pled not secured" as to get a more
| favorable response from the SEC.
|
| [0]: (time stamp: 0h27m00s) https://youtu.be/cdZZpaB2kDM
| colinmhayes wrote:
| He also claimed FSD will be better than humans within a year
| in that interview. I'm not buying it.
| outworlder wrote:
| Better than the best human driver, or better than your
| average driver? If it's the latter, it's probably there.
| bombcar wrote:
| To be fair to Musk, humans are pretty @#$%@#$ bad.
| dtparr wrote:
| Because he keeps going around saying that in public, there
| was a recent request for a restraining order to stop him from
| repeating it since it poisons the jury pool. It quoted the US
| District Court's ruling from 1 April of this year[0]:
|
| "the evidentiary record demonstrated that no reasonable jury
| could find Musk's tweets on August 7, 2018 accurate or not
| misleading. Likewise, given that Musk was intimately involved
| with the facts leading to that conclusion, the Court also
| held that he recklessly made the statements with knowledge as
| to their falsity"
|
| Which is to say, a federal judge has ruled that it was
| inaccurate, and he knows it was inaccurate.
|
| [0] - https://storage.courtlistener.com/recap/gov.uscourts.ca
| nd.33...
| kjksf wrote:
| Actually, the judge just denied plaintiffs motion saying
| it's too broad.
|
| First Amendment strikes again!
|
| https://www.cnet.com/news/politics/elon-musk-doesnt-have-
| to-...
| dtparr wrote:
| Right, he denied the TRO, but that doesn't change the
| prior ruling regarding the accuracy of the tweet. Also
| "accuracy of the tweet" is a horrible thing to have to be
| debating in a court of law.
| kjksf wrote:
| > Also "accuracy of the tweet" is a horrible thing to
| have to be debating in a court of law.
|
| I agree. The lawsuit is laughable and should be thrown
| out of the court.
| hristov wrote:
| Sorry to respond to my own post, but after writing it I ran
| across and article in Bloomberg that basically confirms what I
| am saying. Apparently Musk is looking for equity partners to
| provide the 21 billion equity part of twitter's bid.
|
| https://www.bloomberg.com/news/articles/2022-04-21/musk-is-s...
| hkdobrev wrote:
| The SEC filing shows there's now a commitment to provide that
| equity investment. Elon Musk has formed a Delaware
| corporation which investors could invest into to provide the
| money behind the "Equity Financing". The article does not
| confirm your point and your top comment is misleading.
| [deleted]
| winternett wrote:
| For far less than $21 billion of investment I, or many other
| people, could redevelop and scale an entirely new social
| platform that would outpace Twitter, and I could probably do it
| multiple times over until it succeeds... The goal seems rather
| "Captain Ahab-ish" in nature...
|
| I think the story is quickly turning into more of a hype effort
| than actual advancement.
|
| Twitter would still need time and labor to be re-worked, which
| in itself is a massive undertaking. It looks like Twitter has
| multiple problems in scaling beyond it's current state, and
| that's why it has only made gradual changes over time for many
| years.
| rockinghigh wrote:
| > If he tries to sell 21 billion dollars worth of tesla shares,
| the share price will collapse.
|
| Elon Musk is routinely selling billions of dollars:
| https://finance.yahoo.com/quote/TSLA/insider-transactions?p=...
|
| * $1,007,908,791 on Dec 28, 2021
|
| * $333,647,031 on Dec 22, 2021
|
| * $594,924,622 on Dec 22, 2021
|
| * $325,723,600 on Dec 21, 2021
|
| * $528,016,861 on Dec 21, 2021
|
| * $738,683,277 on Dec 13, 2021
|
| As long as the trade is small compared to the daily volume, the
| market impact is limited.
| kurupt213 wrote:
| Maybe he has 21 billion available in his margin account on
| Robinhood
| [deleted]
| nojito wrote:
| Why does he have to sell a single share?
|
| He routinely takes out loans against his shares to disturbingly
| high levels.
| hristov wrote:
| He is trying to take out a loan here as well. One of the
| letters included in the story is actually a margin loan
| commitment from morgan stanley. But that was for only 12.5
| billion. This was all he could get against his shares.
|
| It does seem low in comparison with the value of his shares,
| but banks are well aware of the self reinforcing negative
| spiral a margin call can have on a share price and will not
| give out massive margin loans.
|
| My point is that even after he got the maximum loan he could
| get, and then got the maximum margin loan against his shares,
| he is still 21 billion short.
| jhugo wrote:
| You don't know that those are the largest loans he was able
| to get. They might just be the largest loans he wanted to
| get.
| lkxijlewlf wrote:
| But why? Why would this be the number he wanted?
| jhugo wrote:
| The loans have different risk characteristics than his
| equity stake, he balances risk by deciding how much of
| his own money to put in vs. how much borrowed money to
| put in. (There is no doubt a ceiling -- how much of his
| own money _he is able to put in_ -- but there 's no
| reason to assume he wouldn't invest less than that
| ceiling.)
|
| If you have enough cash to buy a house, you might
| sensibly still take out a mortgage, and you'll need to
| decide how much cash to put down as a deposit vs. how
| much to borrow. (The bank will likely set a lower limit
| for the amount of cash, but you might choose to put down
| more.) Someone could ask you "why did you choose that
| number", and you'd give a similar answer.
| hristov wrote:
| Why would he intentionally put himself in a situation
| where there is a 21 billion shortfall?
| jhugo wrote:
| You don't know that there is a 21 billion shortfall. The
| source of funds for his intended equity stake is unknown
| to us at this point. It could be his imagination
| (especially given his history with the phrase "funding
| secured"!), or it could be something we are not aware of.
| oh_sigh wrote:
| What is disturbing about taking a loan out using an asset as
| collateral?
| flabbergasted wrote:
| Seriously, how can I buy some of his shares of spacex?
| malfist wrote:
| Easiest way? Buy Alphabet stock. They are a spacex investor.
| Otherwise you can't, it's a privately held company
| jefftk wrote:
| Looks like Alphabet owns ~7.5% of SpaceX. Alphabet is worth
| $1.67T; SpaceX is worth, say, $150B. This means ~$11B of
| Alphabet (~0.66%) is SpaceX. That is an extremely dilute
| method of gaining exposure to SpaceX!
|
| (Disclosure: I work for Google, which is part of Alphabet)
| antonvs wrote:
| Dilute is better than zero I suppose. Presumably the play
| is that SpaceX might end up controlling an extremely
| profitable Mars colony, creating the ultimate
| gigaunicorn, and making that 0.66% seem much bigger. This
| influx of cash will also allow Musk to become President
| of Earth, at which point even those with dilute indirect
| holdings in SpaceX will be sitting pretty. It's a classic
| long-term play really.
| gigaflop wrote:
| Well, he's just following the American model. Leave,
| displace and colonize, rebel, and declare sovereignty.
|
| To those who would follow _him_ on such a mission?
| Sayonara. He 's spoken about how it would be mostly work
| for those living there, and I wouldn't be surprised if he
| tried to implement a 9/9/6 schedule.
|
| I would trust Weyland Yutani with a Mars colony before I
| would trust EM.
| outworlder wrote:
| My sarcasm detector is having a lot of trouble with this
| comment.
| kjksf wrote:
| The point is that 10% swing in Google's performance (in
| either direction) has much bigger impact on stock price
| than 1000% swing in SpaceX performance.
|
| Amdahl law applied to company performance.
|
| Don't buy Google to own SpaceX.
|
| Wait until Starlink IPO and buy that (if not too
| expensive).
| jefftk wrote:
| If you're goal is to own a piece of a potential Mars
| colony, owning part of Starlink doesn't help.
| hef19898 wrote:
| Plus Starlink is just another profitability goal post of
| SpaceX that is again moved out into the future.
| titzer wrote:
| > If he tries to sell 21 billion dollars worth of tesla shares,
| the share price will collapse.
|
| Stock swap agreements are a thing. He doesn't have to outright
| sell them on the open market to get cash. Even if he did, it's
| not like the price is going to crater because he's losing
| confidence in TSLA or something.
| kgwgk wrote:
| According to wikipedia: An equity swap is a
| financial derivative contract (a swap) where a set of future
| cash flows are agreed to be exchanged between two
| counterparties at set dates in the future.
|
| That kind of arrangement doesn't get you cash today, does it?
| titzer wrote:
| That was not what I was referring to.
|
| https://www.investopedia.com/terms/s/stock-swap.asp
|
| While this case wouldn't be TSLA acquiring Twitter, stocks
| are fungible assets that can be traded as part of an
| agreement.
| kgwgk wrote:
| Oh, I misundertood.
|
| I thought that when you said that "he doesn't have to
| outright sell them on the open market to get cash" you
| were referring to an alternative way of getting cash -
| not to an alternative form of payment.
|
| I'm not even sure that it would be really feasible, in
| any case it would surely be very unusual.
|
| As that link says, the way it goes normally is: "A stock
| swap occurs when shareholders' ownership of the target
| company's shares is exchanged for shares of the acquiring
| company." But here people would not be getting shares of
| the acquiring company, they would be getting shares of an
| unrelated company. There is no reason why they would want
| to keep those shares, so they would quickly flood the
| market.
| outworlder wrote:
| Unless a contract specifies that they cannot do that for
| a certain period of time.
| layer8 wrote:
| He'd have no trouble borrowing money against his assets though.
| As far as I know, that's what most billionaires do.
| FiberBundle wrote:
| Even billionaires don't just borrow $21 billion.
| mise_en_place wrote:
| He just borrowed $25.5 billion[0]. So your assertion is
| false. The issue is coming up with $21 billion worth of
| equity which is contingent upon TSLA stock price.
|
| >[0]https://twitter.com/exec_sum/status/1517137710699458560
| ?s=21...
| robonerd wrote:
| 'Just' is doing a lot of work in this assertion.
| kingbirdy wrote:
| There are limits to how much he can borrow against his
| assets, both due to banking risk models and Tesla bylaws.
| He's too close to those limits already to borrow another
| $20B.
| rcMgD2BwE72F wrote:
| >He's too close to those limits already to borrow another
| $20B.
|
| What are the limits and where is he now? Please tell us.
| darawk wrote:
| He can easily get a loan against the value of his shares for
| this, combined with his own personal wealth (he recently sold a
| huge amount of stock, he has lots of cash on hand). It's not
| bullshit at all.
| mangoTangoBango wrote:
| Why can't he take out a loan against those shares?
| kgwgk wrote:
| He's also doing that:
|
| https://www.bloomberg.com/opinion/articles/2022-04-21/elon-g.
| .. Elon Musk needs about $46.5 billion to buy
| Twitter at $54.20 per share: about $39.4 billion to pay for
| the 91% of Twitter's stock that he doesn't currently own,
| about $4.3 billion of debt to refinance and various
| miscellaneous costs. To pay that, he has: A letter
| from his banks offering to lend $13 billion to Twitter, if he
| buys it, with $7 billion of that coming in the form of senior
| secured bank loans and $6 billion coming in the form of junk
| bonds. A letter from his banks offering to lend him
| $12.5 billion personally, secured by $62.5 billion worth of
| his Tesla Inc. stock. At yesterday's closing price, that
| comes to about 64 million shares, or about one-third of his
| Tesla stake. An agreement with himself to put up the
| other $21 billion, give or take.
| skeeter2020 wrote:
| Forgive my ignorance, but rich people routinely get access to
| cash secured with their assets though, so why can't he do that,
| pledging his huge equity ownership?
| zdragnar wrote:
| It is still borrowed, which means still needs paying back. If
| you don't care about the stocks (i.e. they are only an
| investment vehicle) this is fine.
|
| Musk controls Tesla by way of owning more than 50% of its
| stock. He'd be trading Tesla for Twitter, which I think
| anyone would agree is a terrible trade.
| giobox wrote:
| What? He's the single largest shareholder, but even
| recently its approx 17 percent of Tesla he owns. Musk
| hasn't owned more than 50% of the stock anytime Tesla has
| been a public company.
| anonygler wrote:
| You can absolutely take out low interest loans using your stock
| as collateral. That's how the wealthy pay for many things.
| kevin_thibedeau wrote:
| It's how they scrape by on a $1 salary so they can engineer
| themselves into a lower tax bracket.
| AndrewUnmuted wrote:
| This is pretty misleading. Don't you think the government's
| forcing "income" to be defined as w2 salary has a lot to do
| with why this happens, and is therefore an important
| qualifier? They literally invented a new industry by
| arbitrarily restricting terminology. Those loans would
| never exist if we did not pray on individual earners to
| "fund" the government's "services."
| bcrl wrote:
| Or he'll trade TSLA shares for TWTR. I can imagine that some
| investors in TWTR would be happy to take him up on such an
| offer.
| weeblewobble wrote:
| If TWTR holders want to trade for TSLA they can simply do it
| on the open market
| motoxpro wrote:
| When you see "Acquired for 50% cash and 50% stock" this is
| a company "trading" x shares for y shares. So yeah this
| happens all the time not in the open market.
| jay00 wrote:
| Not for the premium he's offering to take it private.
| HWR_14 wrote:
| This is true. But if he was talking about trading shares of
| SpaceX for TWTR I would probably rearrange my holdings.
| blake1 wrote:
| Not in this case: this is a tender offer, and what you're
| describing is a merger. Which might actually make sense, but
| it would be something that goes through the TSLA board, and
| can't be done unilaterally by Musk.
|
| Of course, he must be supremely influential with the board,
| but there is a governance structure that can't just be
| bypassed.
| NationalPark wrote:
| I wonder how Tesla shareholders feel about this situation. It
| seems like by leveraging with his Tesla shares, he's passing on
| the risk to everyone who owns Tesla stock. If they have a
| couple bad quarters or some kind of macro change happens and
| the price starts going down, Musk gets margin called and has to
| dump his stock on the market, which could start a spiral of
| panic-selling or even open Tesla itself to being corporate-
| raided.
| kjksf wrote:
| As a shareholder, Musk multiplied my money by 20x
|
| Even though I'm obviously so much smarter than him on matter
| of acquiring public companies, I'll graciously allow him to
| do whatever he pleases as long as he continues growing Tesla
| at 50% compounded rate.
|
| Which he did this quarter, and the one before that and the
| one before that.
|
| I'll be concerned when that stops happening. Until then I
| give him my blessing to do whatever he pleases with HIS
| money.
| coldcode wrote:
| And how can Tesla keep growing at a 50% rate, buy out all
| the other car companies in the world? There is a limit as
| to how many people can afford to buy $60k+ cars. The stock
| is already far beyond what the company profits will ever be
| worth. Today it seems like no one cares about profits, but
| will that always be the case?
| zarzavat wrote:
| Tesla is not about cars. It's a marketing company and its
| product is the Tesla share price. This Twitter stunt is
| just one in a long line of stunts that Musk does to get
| attention for himself. People invest in Tesla because
| they want to invest in Musk as an individual.
|
| This media hijacking is similar to the way that Trump got
| elected in 2016.
|
| I bet that if SpaceX ever went public it would cause
| Tesla to fall as everybody who wants to invest in "Musk
| is a genius" would invest in SpaceX instead of Tesla.
| [deleted]
| NationalPark wrote:
| Well yeah, of course you would be concerned if that stopped
| happening, even more so if it means the CEO is suddenly
| compelled sell a bunch of his stock at a discount to avoid
| violating his debt covenants. You don't get any upside from
| the twitter deal, so unless you think Musk will use Twitter
| to boost Tesla's price (suppressing bad news?), it seems
| like all downside for current Tesla owners.
| robonerd wrote:
| > _so unless you think Musk will use Twitter to boost
| Tesla's price (suppressing bad news?)_
|
| Or bullying American politicians. Or simply preventing
| himself from being banned.
| AndrewUnmuted wrote:
| The USA's politicians can stand to be bullied a lot more
| than they currently are. Many of them got to where they
| are now by being bullies themselves - Twitter bullies in
| particular!
|
| They say the United States Congress is really just
| Hollywood for ugly people. In a sense, social media is
| really just Hollywood for smart people. Given Elon Musk's
| circumstances, and no matter what his motivations, they
| seem to be the correct ones to maximize his possible
| outcomes.
| robonerd wrote:
| I certainly understand the schadenfreude aspect of it.
| But when I said bullying I mostly meant that as a
| euphemism for a sort of aggressive lobbying. For
| instance, manipulating politicians into supporting his
| companies by threatening to signal boost their opponents
| during the next election, or promising to suppress them.
| kjksf wrote:
| Like I said, I'm a very benevolent person.
|
| Trust me, I'll unleash my wrath on Musk the moment his
| actions cause my net worth go down due to TSLA stock
| going down.
|
| But in my infinite compassion for lesser human beings, I
| allow Musk to continue doing things that are not 100%
| related to increasing TSLA stock price.
|
| He has my blessing to purchase Twitter, if that makes him
| happy.
|
| Don't get me wrong, there are limits to everything.
| Recently he asked if he can have a 9-th child and I said
| "absolutely no".
|
| Another child would distract him from running a company
| and I, as a shareholder, absolutely cannot have it.
| macksd wrote:
| As someone who doesn't really know what they're talking about,
| I'm also wondering how he would be getting around the widely-
| reported "poison pill", even if he did have $21B more.
| jaywalk wrote:
| The poison pill is there so he can't do it without approval
| of the board. If he comes in with a serious offer that the
| board decides is worthwhile, they can remove it just as
| easily as they added it.
| jhugo wrote:
| By asking the board to remove it. If faced with a serious
| tender offer backed by financing and accepted by a majority
| of shareholders, the board would find it difficult not to
| allow it to go ahead (by removing the poison pill).
|
| That doesn't mean they couldn't refuse to remove it, but
| since they should act in the interests of the shareholders,
| they would need a good explanation (e.g. another better
| offer, or a plausible plan for extracting more value from
| Twitter than they currently do).
| xg15 wrote:
| So, total noob here in that whole area, but I have a
| question about fiduciary duty.
|
| The popular understanding seems to be that a companies'
| board is legally bound to act in the best (financial)
| interests of the shareholders - and _only_ those. This is
| why hostile takeovers are a thing at all: If the acquiring
| company gets the majority of the target 's shareholders on
| board (or becomes the majority), then the target's board of
| directors is legally bound to accept the takeover, even if
| it would be harmful to the company (nevermind the company's
| employees or customers)
|
| How far does this go? If I'm a shareholder of McDonald's,
| could I sue them because they could have increased profits
| by lacing their burgers with cocaine but chose not to? (Or
| say some synthetic drug that's technically legal because it
| hasn't been banned yet).
|
| If a company could make more profit but is kept from it by
| some regulation, could I sue them if they didn't try to
| lobby against that regulation?
| rurp wrote:
| My understanding is that courts and regulators give board
| members a lot of deference on their decisions, as long as
| they are well considered and not obviously ridiculous.
|
| It's perfectly fine for a board to say that the legal and
| reputational risks far outweigh the benefits of lacing
| burgers with cocaine.
|
| Most decisions, such as lobbying, involve complicated
| calculous and don't have a simple way to verify the ROI.
| The board can defend most positions (from no lobbying to
| lots of lobbying) by arguing that they believe it's the
| right decision based on their experience, judgement, and
| analysis of the situation; probably with some written
| analysis defending whatever their decision was at the
| time.
| macksd wrote:
| One key thing to know here, in addition to the replies
| you already received, is that the role of fiduciary duty
| is dramatically overstated by a lot of other HN comments.
| jhugo wrote:
| Could you sue them? Sure. Would you win? Probably not.
|
| The board would likely make a compelling case that the
| long-term effect of lacing burgers with cocaine is a net
| loss for shareholders given the inevitable reputational
| harm, lawsuits, payouts, etc.
| rsstack wrote:
| They don't have to make the best decision to advance the
| interests of the shareholders. It is impossible to know
| if an option that wasn't taken would have been better.
| They're require to act in a reasonable way that fits
| market norms and the data they had at the time. The
| decision of whether to accept Musk's proposal, regardless
| of how much he claims it to be the "best thing to do", is
| very subjective and complex. As long as they don't rely
| on immaterial facts (such as their dislike of Musk), it's
| impossible to prove that they made the wrong decision
| because we can't A/B test reality. They might still
| believe that Twitter can be worth $60B in a year and if
| they have enough data to support that, they can do
| whatever they think is right.
| swores wrote:
| By persuading the board, either directly or by turning
| shareholder opinion strongly enough, for them to put it to a
| shareholder vote.
| bfz wrote:
| I may be mistaken, but I believe he can achieve $21bn in short
| exposure to Tesla through swaps and never have to report the
| "sale" publicly
| kgwgk wrote:
| If he needs $21bn in cash, how does $21bn in short exposure
| to Tesla through swaps help?
| rcMgD2BwE72F wrote:
| >If he tries to sell 21 billion dollars worth of tesla shares,
| the share price will collapse.
|
| So why didn't the stock price collapsed when he sold $15B in
| December 2021?
|
| https://www.reuters.com/markets/deals/teslas-musk-says-he-so...
| godelski wrote:
| Typically these sales are scheduled and announced well ahead
| of time and then, like another user pointed out, may be solve
| over the course of months. So the market typically reacts
| near the announcement and it isn't much because it looks like
| business as usual. From the article you linked it
| specifically says that he was exercising options that would
| have expired. IIRC he also has another large stock allocation
| that expire in August of this year and so will be selling
| those.
| nemothekid wrote:
| There is no reason why he can't do the same here.
| godelski wrote:
| I agree. But what I'm saying is that it will take a few
| months to execute. I was just trying to expand on the
| above discussion and why his sales didn't make Tesla
| stock crash but selling out of the blue would.
| _fat_santa wrote:
| This raises another issue, that is can he even sell that many
| shares of Tesla and still stay in control?
|
| IIRC he made a comment about how he was "cash poor" a while
| back and it basically came down to he can't sell more of
| Tesla/SpaceX without dipping below 51% and loosing control.
| Teandw wrote:
| He's billionaire cash poor which is a lot different to our
| cash poor.
| colinmhayes wrote:
| Musk only controls 17% of tesla votes, he's already out of
| control.
| rootusrootus wrote:
| > cash poor
|
| I wonder what a paper billionaire's definition of 'cash
| poor' is compared to mine.
| RansomStark wrote:
| Grimes gave an interview on this:
|
| "[Musk] lives at times below the poverty line," Grimes
| said, per Vanity Fair. "To the point where I was like,
| can we not live in a very insecure $40,000 house? Where
| the neighbors, like, film us, and there's no security,
| and I'm eating peanut butter for eight days in a row?"
| [0]
|
| In the same article Grimes complains Musk wouldn't
| replace a broken mattress.
|
| No idea how Much this shows Musk is cash poor, and how
| much it shows crazy rich person, but it gives a glimpse
| either way
|
| [0] https://www.businessinsider.com/grimes-says-elon-
| musk-someti...
| colinmhayes wrote:
| Another take from the Journal
| https://www.wsj.com/articles/elon-musk-says-he-lives-
| in-a-50...
| kurupt213 wrote:
| 'In the same article Grimes complains Musk wouldn't
| replace a broken mattress.'
|
| That's just a humble brag.
| mywittyname wrote:
| This sounds like Musk being a "eccentric" person.
|
| I have a difficult time believing Telsa couldn't put him
| up in executive housing and cover a security detail. Or,
| he couldn't send out a tweet and get a $50 million line
| of credit, uncallable line of credit to live on.
| Especially given that he can at get 13 billion dollars to
| acquire another company.
|
| I think he likes bragging about being a homeless couch
| surfer.
| hawk_ wrote:
| because selling another $21b of tesla would indicate he has
| found other more interesting things to do.
| rcMgD2BwE72F wrote:
| He bought ~9% of Twitter already. I'm sure his co-
| shareholders prefer that he takes control over companies he
| bought in, because he can then easily develop synergies
| (cf. Boring Co and Tesla, SpaceX and Tesla, SolarCity and
| Tesla, etc).
| gopher_space wrote:
| The problem with this idea is that nobody's really on
| Twitter for the free speech. He might take the company to
| new and exciting places, but it won't be with the current
| userbase.
| kjksf wrote:
| Or, following Ockham's Razor, it would indicate he needs
| money to do something with it.
|
| Maybe buy $600 million yacht or maybe buy money losing
| company.
| hristov wrote:
| He sold that over two months and the overall market was much
| stronger then. Also those sales were pretty much required for
| taxes and thus did not send a negative signal to the market.
| If he sells large amounts of tsla shares to buy twitter, this
| will be a negative signal -- any other tesla shareholder can
| sell tesla shares to buy twitter, and why wouldn't they when
| the tesla CEO is doing it.
|
| It is still possible that he tries to raise 21 billion by
| selling stock but I doubt it. First if he actually wanted to
| do that, he would keep quiet while selling and then come out
| with the tender offer when he had the cash.
| wutbrodo wrote:
| > any other tesla shareholder can sell tesla shares to buy
| twitter, and why wouldn't they when the tesla CEO is doing
| it.
|
| Because they wouldn't be taking control over the company...
| That's the purpose of those whole situation. Musk isn't
| just making a play on the basis of thinking "one dollar of
| TWTR is worth more than one share of TSLA"
| mrep wrote:
| There stock is up because they just beat earnings [0] and
| TSLA has 24 billion dollars worth of volume per day [1].
| I'm pretty sure he could raise the 21 billion given some
| time.
|
| [0]: https://www.cnbc.com/2022/04/20/tesla-tsla-
| earnings-q1-2022....
|
| [1]: https://www.nasdaq.com/market-activity/stocks/tsla
| devoutsalsa wrote:
| He can always borrow it, too. Tesla is a volatile stock,
| but if he's not borrowing a huge percentage of his stake,
| he should be able to use it as collateral. Then he can
| sell later to pay it off when the timing is right.
| deckard1 wrote:
| _Musk goes to the bank_
|
| Musk: I can haz money?
|
| Bank: You said that Twitter isn't going to be a way to
| make money. That you "don't care about the economics at
| all". Your exact words.
|
| Musk: ...
|
| Bank: ...
|
| Musk: Give me money
| conductr wrote:
| Bank: put that sweet sweet Tesla stock in this account
| and take what you want
| darawk wrote:
| It's a secured loan. The bank doesn't care if it makes
| money or not.
| iepathos wrote:
| Bank: I see your net worth is far beyond what you're
| asking for and you won't have a problem making payments
| with your income. I didn't even know credit scores got as
| high as yours. Here you go.
| mywittyname wrote:
| Musk's net worth his highly volatile. Telsa is trading at
| pretty high 200 P/e, one bad quarter could crater the
| stock price. Space X is private, which carries its own
| issues. Add to that the risk to these assets if Musk
| dies. Or hell, even it Musk merely "spooks" investors
| with his flamboyance.
|
| This is a insanely risky vanity project.
| littlestymaar wrote:
| No matter how volatile his worth is, it's just around a
| tens of the said worth and there's no way it loses 90% of
| its value overnight, even if TSLA's valuation is arguably
| nonsensical.
| mywittyname wrote:
| It doesn't need to lose 90% of its value overnight, 30%
| is enough to trigger a call on margin loans.
|
| Within the past year, Telsa stock slide from a $1209/sh
| peak to $766/sh in the span of about five months.
| littlestymaar wrote:
| And what? Can't he just add more securities as a
| collateral if it happens?
| Sebb767 wrote:
| As the saying goes: If I owe the bank one million
| dollars, I have a problem. If I owe the bank one billion
| dollars, the bank has a problem.
| metadat wrote:
| Wrong in this case.
|
| Here the bank can reclaim what is owed via other means.
| sangnoir wrote:
| Having to find "other means" to reclaim is exactly what
| makes it the banks problem.
|
| Do you think it's easy to get someone with access to
| billions of dollars (of your money) to do something
| they'd rather not? They can tie you up in the courts for
| _years_ since they 're basically equal powers: an $800
| billion bank doesn't get better lawyers than a guy worth
| $1 billion. A bank vs someone with just a million dollars
| means the individual is at a major disadvantage as lawyer
| fees can easily exceed that amount in attritional
| lawfare.
| rasz wrote:
| The saying goes:
|
| "If you owe the bank $100, that's your problem. If you
| owe the bank $100 million, that's the bank's problem."
|
| and comes from 1976 "As I see it: the autobiography of J.
| Paul Getty". There were no billionaires back then. When
| you owe a bank 20 Billion while being worth 260 you are
| still in the first category.
| jjav wrote:
| > I didn't even know credit scores got as high as yours.
|
| A bit of an aside, but the richest person I know (as in
| buys multi-million dollar cars on a whim and has many
| many of those) says his credit score is pretty mediocre
| because he's never had a loan. I'd thought having
| gazillion dollars in the bank would give you a good
| credit score but guess not.
| MrMan wrote:
| I can only get loans from my private bank because my
| credit score is bad. I only borrow on margin foe trading
| I don't really need other debt but it's embarrassing
| smoldesu wrote:
| As another side note, the richest person I know regularly
| maxes out his credit card so he can pay it all down and
| rake in the score bump. Every couple times he does this,
| they issue him an upgraded card with less limits: the
| cycle continues.
|
| Not a bad way to buy stuff if you have the means to pay
| it off.
| devoutsalsa wrote:
| Imagine the airline miles you'd get by purchasing Twitter
| on your credit card.
| no_wizard wrote:
| I imagine once you have a verifiable net worth over a
| certain amount (at least 10 million in near cash assets +
| a hefty amount on hand) you are able to bypass certain
| things the rest of us simply can't. This is what I've
| heard second hand anyway
| gonzo wrote:
| correct. a credit score is mostly about one's
| demonstrated ability to service debt.
|
| Just because you have a lot of money doesn't mean you'll
| make payments on a loan.
| [deleted]
| jack_pp wrote:
| It's about him defaulting on the loan which is not
| possible considering his shares in Tesla etc. not about
| him borrowing for investment purposes
| colinmhayes wrote:
| There's a not totally unreasonable chance that tesla is
| 10x lower next year. That would mean his net worth is
| basically equivalent to the loan he would need. Seems
| pretty risky.
| mehrdada wrote:
| We don't know the interest rate of that margin loan but
| you can be goddamn certain whoever underwrote the loan
| calculated that risk more precisely than HN crowd such
| that the rate justifies the default risk.
| kurupt213 wrote:
| You can default on a loan regardless of your net worth;
| you can even default on a secured loan. The default is
| what triggers the civil proceedings for a judgement and
| forced liquidation of assets
| Apocryphon wrote:
| Instead of the bank, what if he went to SoftBank. Imagine
| the possibilities of an Elon Musk-Masayoshi Son
| collaboration.
| gonzo wrote:
| Could be like We Work, Greensill Capital, or Wirecard, or
| it could be like GoTo.
|
| Only one way to find out though.
| AlchemistCamp wrote:
| It could also be more like Alibaba and double or triple
| the 37B profit Softbank's Vision Fund made this year.
|
| I would not bet against Musk.
| discodave wrote:
| Pretty sure that this filing shows he is $21 billion
| short on the borrowing front.
| Anon1096 wrote:
| The other half of the money was borrowed against his
| stocks already. He probably can't get a favorable rate on
| the other half so 21 million is coming out of pocket.
| valleyjo wrote:
| He's already borrowing 12.5B via a margin loan against
| his assets. Maybe that's the most he can get away with.
| hackerfromthefu wrote:
| Interested in a source for this?
| spoonjim wrote:
| One advantage of Musk's positioning as a "nutcase" is that
| him selling Tesla stock to buy Twitter doesn't signal "I
| believe Twitter is a better investment than Tesla" as much
| as it signals "Musk is doing Musk stuff"
| xg15 wrote:
| This. He communicated his plan pretty overtly: He made no
| secret that his buy attempt is mostly for political
| reasons and that his selloff will be a means to the end
| of securing funding for the takeover. None of this has
| anything to do with actual investment decisions.
|
| So maybe he hopes to sell his shares to "activist buyers"
| who want the takeover to succeed and therefore have no
| interest in dropping the share price.
|
| Of course that is assuming any of the purported motives
| are real and not just an act.
| deckard1 wrote:
| So you're saying TSLA holders don't care that Elon Musk
| is an unhinged lunatic. Got it.
|
| Someone remind me again why this isn't a cult?
| kjksf wrote:
| As a TSLA holder I care that I've made 20x on my stock.
|
| I care it's the best performing stock in the last 5 and
| 10 years.
|
| I care that Tesla is growing revenues at 50%+ over more
| than a decade, and profits even faster. Which is a better
| financial performance than Amazon has at similar stage.
|
| What I do not care is your editorializing of Musk's
| character of calling me a cult member.
|
| I guess I should be offended but then I take a look at my
| bank account and it kind of makes me not care about what
| you think about me or Musk.
| McLaren_Ferrari wrote:
| Your TSLA gains are nothing compared to what many people
| in here made on Ethereum.
|
| Yet such people don't roam around screaming off the top
| of their lungs "Buterin is God!".
|
| Ethereum, much like TSLA, much like betting on Trump back
| in 2016 are about calling an event and predicting what's
| gonna be the outcome of a socio-political movement.
|
| Nobody is better prepared to predict such outcome than
| the guy who can keep his cool and openly admit that such
| social movement is really just BS and hot air, but that
| nonetheless it still has steam and room to grow among the
| populace for the time being.
|
| What you don't want to be is a so called "true believer"
| as that would prevent you from jettisoning yourself once
| the movement runs out of steam, if you are a "true-true
| believer" you might find yourself storming the
| capitol...or in Musk's case the SEC building as that
| would be the aim of his rage when the socio-religious
| movement that he built runs out of steam as they
| eventually all do.
| outworlder wrote:
| > Your TSLA gains are nothing compared to what many
| people in here made on Ethereum.
|
| _sigh_
| jokethrowaway wrote:
| > Yet such people don't roam around screaming off the top
| of their lungs "Buterin is God!".
|
| You haven't met crypto people yet, I take?
|
| It's normal, you give people money and they worship you.
|
| Think of the "cult" of Steve Jobs linked to Apple gains.
|
| This is nothing new. It's also not a real cult, it's more
| as admiring successful entrepreneurs.
| McLaren_Ferrari wrote:
| > It's normal, you give people money and they worship
| you.
|
| You earn yourself that money by successfully making a
| prediction. By the same token when you win a poker game
| in Vegas you don't worship Steve Wynn for providing you
| the casino and a table. You gave yourself that money.
|
| > Think of the "cult" of Steve Jobs linked to Apple
| gains.
|
| Apple stock gains came as the product was becoming
| ubiquitous among the populace, matter of fact it slightly
| trailed the virality of the product. Same goes for
| Google, Microsoft, Oracle, Facebook etc.
|
| That is the normal financial trajectory of a company,
| which differs from a socio-religious movement such as
| crypto, TSLA, a political candidate etc. Those are all
| based on promises about the future and getting people
| galvanized without ever delivering any actual product
| improving people's quality of life on a scale comparable
| to the promises made.
|
| > This is nothing new. It's also not a real cult, it's
| more as admiring successful entrepreneurs.
|
| This is exactly what gets people burned when the socio-
| religious movement implodes and they fail to jettison
| themselves. Don't admire, limit yourself to gauge the
| level of admiration that other people have for the guy
| and try predicting if it will expand or contract. That's
| an indicator of the health of the socio-religious
| movement so that you know when to jettison yourself.
| trappist wrote:
| > Also those sales were pretty much required for taxes
|
| His reason - or at least his public justification - for
| that sale was to deliberately generate a tax liability. If
| you recall people were getting pretty bent about him not
| having such a thing, as a zillionaire.
| tonfa wrote:
| Yeah that's the story telling but not the reality, most
| of the sales were to cover taxes due on option exercise
| (had to do it in 2021 to avoid a tax regime change that
| was starting in 2022).
| dgfitz wrote:
| I don't think it's possible for him to quietly sell 21B
| shares. That's all very public information isn't it?
| hristov wrote:
| It is possible. He has to file certain forms when he
| sells but the SEC often lets large buyers and sellers
| have a bit of a delay when making these forms public to
| avoid front running.
| Pyxl101 wrote:
| Can't he borrow against his Tesla stock, and other assets
| including his ownership of SpaceX, and personal property,
| for cash to buy Twitter?
|
| Depending on his banking relationships, and other assets
| that he can use as collateral for the loan, he might be
| able to borrow a fairly high percentage of the current
| value of those assets as cash (maybe 50 to 70 or 80% or
| more if the collateral assets are diversified or the bank
| simply has high confidence in his effective credit rating
| or ability to repay -- and he may be doing other business
| with that bank incentivizing them to give him a favorable
| deal).
|
| I'm not a billionaire but by establishing a strong
| relationship with a bank, have been able to establish a
| credit line with a limit that is a high percentage of my
| assets that are invested by the bank in a diversified
| portfolio, along with other assets, at a low interest rate
| (mortgage levels - a credit line at approx 2.5% interest of
| an amount almost equal to my total assets at the bank).
|
| I also recently refinanced my house with this bank starting
| last winter and was able to achieve getting a 15 year fixed
| mortgage at a 2.125% interest rate - a huge reduction from
| my previous rate of 3.5% on a 30 year. I now pay less per
| month and will own my home much sooner, consequently paying
| considerably less in interest over the remainder of the
| loan, and building much more wealth in the process.
|
| With some wealth and favorable banking relationships you
| can accomplish things that most ordinary people don't know
| about and I myself didn't know about until I started
| looking into the possibilities. I am sure a billionaire has
| access to even more options than I can conceive of.
| weeblewobble wrote:
| He could, but if TSLA goes down and he gets a margin call
| things could get ugly
| mise_en_place wrote:
| It is risky but keep in mind the proposal in non-binding
| and contingent upon several other conditions.
| mcintyre1994 wrote:
| Tesla has a rule limiting borrowing against its stock to
| 25% so that's probably his limiting factor.
| kjksf wrote:
| Tesla is not the lender, Musk's broker is.
|
| Therefore Tesla has zero input into margin rate broker
| decides to give Musk.
| colinmhayes wrote:
| No, Musk has an agreement with tesla that he can only
| borrow against a quarter of his shares. He's already
| borrowed against quite a few too. Musk could go to the
| board to get that number bumped up, but until then he
| can't just borrow the full $21 billion against his
| shares.
| londons_explore wrote:
| Does the rule apply to all shareholders? I don't really
| see how a publically traded company can put an arbitrary
| condition on what can be done like that - any borrowing
| can be a totally private deal between you and a bank (or
| another private individual) - Tesla isn't even privvy to
| such deals, so how can they enforce any rules about them?
| bombcar wrote:
| Large shareholders have different rules and restrictions.
| For example, you can go buy TWTR all you want, but Musk
| had to report when he had obtained a certain percentage.
|
| Remember that Musk is not only a shareholder of TSLA, but
| also an employee.
| hristov wrote:
| He already did. And he got 12.5 billion and that was the
| maximum the banks were willing to lend him against his
| stock. He is still 21 billion short.
| kjksf wrote:
| I'm pretty sure that's not the maximum, just the amount
| he felt he needed to secure.
| robonerd wrote:
| > _If he sells large amounts of tsla shares to buy twitter,
| this will be a negative signal_
|
| Not necessarily. It's conceivable that TSLA shareholders
| could interpret Elon Musk acquiring more political
| influence as good for TSLA. The question would be whether
| Musk can use control of twitter to actually influence
| politics in favor of his other companies. I don't know if
| that would actually work, but I think it's conceivable that
| many of those who own TSLA might believe it will work.
| FerociousTimes wrote:
| Is Musk known really for his shrewd political skills and
| sharp maneuvers?
|
| If I were a Tesla shareholder and this was his actual
| masterplan to maximize value for shareholders, I'd unload
| my stake in a heartbeat because I know his brand and
| business holdings will got tainted by his politics like
| what happened with Trump, and the plan will most likely
| backfire and decimate his business empire.
| AlchemistCamp wrote:
| > Is Musk known really for his shrewd political skills
| and sharp maneuvers?
|
| He should be. Solidly Republican-leaning Texans are
| buying and driving electric vehicles, in some cases
| believing that doing so is "owning the libs".
|
| Tesla seemed like an impossible long shot 15 years ago,
| not just for the considerable technical and business
| challenges but also because most Americans were happily
| buying gas-gusslers and even fantastic hybrids like the
| Prius were still somewhat niche. At the time, not a
| single major car company was willing to invest seriously
| in building electric vehicles.
|
| Now there's gigafactory right outside Austin. It's
| something I did not think would have been possible. Tesla
| has threaded a nearly impossible needle to get to where
| it is in 2022.
| FerociousTimes wrote:
| All these examples are business bets and not political
| ones. Don't get me wrong, they're astoundingly impressive
| but of the wrong type.
|
| I don't dispute that he's a shrewd businessman and fancy
| visionary but when it comes to the world of politics, I
| have my doubts and reservations.
|
| I'd like to see action and results first before I can
| vouch for him in that field.
| TapWaterBandit wrote:
| > I don't dispute that he's a shrewd businessman and
| fancy visionary but when it comes to the world of
| politics, I have my doubts and reservations.
|
| In this day and age you don't become a billionaire
| without being good at politics. Navigating the regulatory
| state is an enormous task even when you don't have people
| laser-focused on you like Musk would due to his wealth
| and size of his companies.
| sangnoir wrote:
| > He should be. Solidly Republican-leaning Texans are
| buying and driving electric vehicles, in some cases
| believing that doing so is "owning the libs".
|
| Could this attempt at buying Twitter be part of the same
| vice-signalling[1] schtick, then?
|
| 1. As in "See how I hate the same things you do?"
| mehrdada wrote:
| > If I were a Tesla shareholder and this was his actual
| masterplan to maximize value for shareholders
|
| Doesn't have to be either-or. Marketing strategy is an
| important part of running Tesla and given the empirical
| dislike of media establishment of him, ensuring Twitter
| won't go against him on a whim of the board seems
| strategically important.
|
| > business holdings will got tainted by his politics like
| what happened with Trump
|
| Is there data on Trump businesses doing materially worse
| overall after the taint? I assume the half of US that
| like him bolster it and the other half see the taint but
| the vector sum is material here.
| matthewdgreen wrote:
| Alternatively he stops being the whimsical "fun"
| billionaire that people find amusing, and starts being
| the tyrannical billionaire that people hate. This results
| in political backlash and a massive boycott of Tesla's
| consumer products.
|
| To be clear: Elon buying Twitter doesn't necessarily
| trigger any of this. Elon using that influence to
| actually push Twitter around in ways that are "useful" to
| Tesla shareholders potentially does. For Tesla
| shareholders I'd say the risk here is much higher than
| any possible reward.
| robonerd wrote:
| > _For Tesla shareholders I 'd say the risk here is much
| higher than any possible reward._
|
| I think that's probably right. But do those Tesla
| shareholders believe it?
| mehrdada wrote:
| > massive boycott of Tesla's consumer products.
|
| I mean we could speculate at length but the condition
| you're describing already exists. People have polar
| reactions to him. Some hate with a passion, some love
| him. As for boycott, I'm not surprised if a lot of people
| already feel like they won't buy a Tesla. Hard to imagine
| it can get worse from here.
| robonerd wrote:
| > _Hard to imagine it can get worse from here._
|
| He could get indicted for the FSD scamming and bring the
| whole thing tumbling down. If he stuck to just selling
| battery powered cars I'd be a lot more bullish on TSLA,
| but he hasn't and I think his antics represent a serious
| threat to the company in the long run.
| TapWaterBandit wrote:
| I think the opposite. Getting it right once is hard
| enough but the fact Musk has been a core figure involved
| in the development of:
|
| - Paypal - Tesla - SpaceX
|
| Tells me that his success isn't a fluke. You might get
| lucky with one of those companies, but with three? Don't
| think so.
| [deleted]
| FerociousTimes wrote:
| > ensuring Twitter won't go against him on a whim of the
| board
|
| Can you tell me please what you mean by this?
|
| AFAIK, Twitter is decentralized and fragmented for any
| actor to orchestrate an all-out political witch hunt
| where everyone on the platform goes against anyone in
| particular.
|
| As far as Trump's business holdings go, Trump
| Organization runs like a brand management firm where they
| license and operate businesses with Trump name plastered
| on them, and I believe it's safe to say that the brand
| name's risk profile increased greatly due to the
| association with Trumpism from 2015 onward.
| mehrdada wrote:
| > _Can you tell me please what you mean by this?_
|
| Twitter can find an excuse to ban his account (you can
| easily imagine this sort of risk exists after some of his
| recent meme tweets for example). I believe that is a
| single point of failure in Tesla PR strategy and a risk
| to be mitigated.
|
| > _brand name 's risk profile increased_
|
| Risk profile sure but has the net value decreased or
| increased due to his presidency? I don't have data to say
| it's one way or another but looking at the downside
| without the upside as well is futile.
| hackerfromthefu wrote:
| Well .. not really. Not at all. How could you even think
| it matters?
|
| Musk could simply setup muskannouncements.com and blog
| his own tweets. No one may search for your announcements,
| but you better believe for his site he will still get
| full coverage.
|
| ergo he's not doing it for his own announcements. it will
| be for a mix of media influence, and to address the bias
| in twitters 'fact checking'
| robonerd wrote:
| > _Is Musk known really for his shrewd political skills
| and sharp maneuvers?_
|
| The question should be whether TSLA shareholders think he
| is, and I think most of them probably do.
|
| (I don't own any TSLA, btw. But from what I've seen, many
| of his fanboys love him for being conniving while
| simultaneously claiming he's done nothing wrong. I
| believe this is an example of double-think. But the
| subject of this discussion is how these people might
| react to Elon Musk controlling Twitter, not whether their
| allegiance to Elon Musk is rational and rhetorically
| consistent.)
| FerociousTimes wrote:
| Is really the makeup of TSLA shareholders a bunch of
| WallStreetBets dummies?
|
| I really doubt that this is the case. I know that there's
| some real retail investor interest in the stock price
| movement and for a minority the fundamentals, but I'm
| sure there's some institutional investors and smart money
| who are in it for the long run and who analyze the
| company's financial statements, and evaluate and
| scrutinize the founder's every move and decision and this
| Dr. Evil's scheme of taking over Twitter and turn the
| platform as a tool of propaganda for Musk's financial
| interests and self-aggrandizement looks very concerning
| to put it mildly.
| mehrdada wrote:
| > _tool of propaganda for Musk 's financial interests and
| self-aggrandizement looks very very concerning to put it
| mildly_
|
| How is it any different than Bezos buying WaPo, in
| principle? That does not seem to have been detrimental to
| Amazon shareholders. And how does having a propaganda arm
| detrimental to Tesla financial interests? _Marketing_ is
| a euphemism for propaganda after all.
|
| (I can see legitimate Tesla shareholder concern for Musk
| attention being spread too thin, but to claim having
| Twitter makes things worse beyond his existing presence
| as a user seems ridiculous.)
| notahacker wrote:
| Bezos bought WaPo for what is (to him) a relatively small
| sum of money to be a hands off owner of something he
| thought should continue to exist and has potential for
| Amazon style economising. That's a bit different to Musk
| proposing to offload or borrow against a significant
| chunk of his TSLA shares whilst declaring winning an
| argument with the management of his favourite social
| media platform about rewriting Twitter's policies on
| controversial stuff is more important to him than making
| money. And yes, Musk's record of posting Tweets unhelpful
| to TSLA _as a user_ is another reason for them to be
| alarmed at controversy on Twitter becoming increasingly
| important to him.
|
| It's not just the inevitability of less time to focus on
| managing TSLA (though running Twitter being a full time
| job was an issue for Dorsey, and he was only running one
| other company and wasn't at war with the management) but
| also the hints that this is an obsession.
| FerociousTimes wrote:
| Correct me if I'm wrong, I have not seen WaPo pushing
| Amazon propaganda in their content.
|
| I'd like to take this occasion to remind you that my
| first comment was a rebuttal to someone's argument
| speculating about the motive or rationale behind this
| acquisition and posited that Musk's control of the
| platform would afford him political influence to further
| his own financial interests, hence my opening reply.
| robonerd wrote:
| > _posited that Musk 's control of the platform would
| afford him political influence to further his own
| financial interests,_
|
| Clarification: Positing that _many TSLA shareholders
| presently believe_ Musk 's control of twitter would
| afford him political influence to further his financial
| interests.
| FerociousTimes wrote:
| Well, I stand corrected then if that was your initial
| intent but the delusion with these folks is really strong
| to come up with such ridiculous scenarios to justify
| their unquestionable attachment to that online persona.
| robonerd wrote:
| One thing I feel relatively sure of is that present TSLA
| shareholders are the sort of people who, up until the
| present, see fit to own TSLA shares. This despite
| everything that is already publicly known or said about
| Elon Musk.
|
| If I keep myself in my personal mindset of a Musk skeptic
| and try to model the behavior of TSLA shareholders, I
| would anticipate TSLA shareholders selling immediately
| (today, and every day previously in the past several
| years), because that is what I would do if I were gifted
| TSLA. But that's obviously not what TSLA shareholders do,
| so my personal mindset evidently makes for an inadequate
| model of TSLA shareholders.
|
| If instead I try to suspend my own beliefs and imagine
| myself as somebody who thinks owning and holding TSLA is
| a good idea, then my new assumed mindset says that Elon
| Musk getting more power, by hook or by crook, is a good
| thing for me.
| 111111101101 wrote:
| > It's conceivable that TSLA shareholders could interpret
| Elon Musk acquiring more political influence as good for
| TSLA
|
| For that they would have to see through Musk's grift.
| Most retail TSLA holders are Musketeers and they truly
| believe that he is a visionary genius. To them, fluff
| like Twitter doesn't matter when they have the real life
| Tony Stark at the helm.
| robonerd wrote:
| Believing Musk is a visionary genius scarcely seems
| inconsistent with believing Musk owning Twitter will be
| advantageous for Musk companies.
| 111111101101 wrote:
| Genius doesn't need publicity. Its influence is
| inevitable.
| robonerd wrote:
| It doesn't seem very genius to fight with one hand tied
| behind your back just because you can.
| MegaButts wrote:
| I bet for every genius that becomes publicly known, there
| are at least 10 who are never heard publicly.
| NoOneNew wrote:
| You know... I have a feeling you might be the most right
| in this discussion.
| m34 wrote:
| Wondering if there are certain
| individuals/institutions/organizations that would have vested
| interests in any of this?
|
| Looking at the amount of money that is spent on nation-level
| campaigning (for a term length of ~4 years) the sum short would
| be minuscule when compared to near-global reach to be gained, so
| maybe the total of folks chipping in one way or another weights
| in much more p.a. than what currently is "on the table".
| humanistbot wrote:
| Just like his "funding secured" to take Tesla private?
| leetcodesucks wrote:
| Tesla has real physical value not like Twitter
| edgyquant wrote:
| This is a non-sequitor
| fxtentacle wrote:
| No, this time he has actual written warranties from banks.
| colechristensen wrote:
| No, this is an SEC filing not a tweet.
| [deleted]
| dev_tty01 wrote:
| Well, the jury is still out on that. Musk claims funding was
| secured and he was forced to settle with the SEC.
|
| https://www.youtube.com/watch?v=vzY_jIJaZwk
|
| Hard to really know the facts, but things may not be as they
| appear. In this case however, he has filed the SEC docs to
| verify that funding is secured.
| seoaeu wrote:
| The people Musk said he had funding secured from for taking
| Tesla private immediately denied it. To the point of saying
| they'd only had a single conversation with him, and never
| discussed price
| misiti3780 wrote:
| They are probably kicking themselves at this point though,
| given the trajectory TSLA seems to be on at this point.
| skellington wrote:
| Can you tell us more about the detailed internal
| discussions that happened between Musk and N other parties
| concerning possible funding for taking Tesla private? You
| seem to be an authority on the subject.
| seoaeu wrote:
| "It turned out that he had had a single casual
| conversation with representatives of a Saudi sovereign
| wealth fund in which they did not discuss the price of
| the deal or how much money the Saudis were willing to
| invest; ultimately Musk settled fraud charges with the
| Securities and Exchange Commission over this tweet."
|
| https://www.bloomberg.com/opinion/articles/2022-04-20/elo
| n-c...
| zionic wrote:
| He had verbal commitment from someone who claimed (and he
| believed) to have final authority to execute the deal.
| JaimeThompson wrote:
| Seems it would be better for Musk's stated goals to use this
| money to expand clean energy, SpaceX, and such things instead of
| buying a social media application.
| ultra_nick wrote:
| Maybe he's run out of ideas to build there.
| chasd00 wrote:
| Twitter is like a cancer, it really gets to some people and
| overtakes them. I wish Musk would just logout and focus on
| Starship.
| photochemsyn wrote:
| Why do you think Besos bought the Washington Post for what,
| $200 million... right after AWS got that $600 million CIA web
| services contract? Notably there are no more "Top Secret
| America" investigations looking into how the US government
| feeds money to defense contractors at the WaPo.
|
| https://en.wikipedia.org/wiki/Top_Secret_America
|
| Is Musk following in Besos steps, or will he really open source
| the ranking algoritm and increase the character count of posts
| to paragraph-scale (512-1024 characters)? Time will tell I
| suppose.
| colinmhayes wrote:
| > Why do you think Besos bought the Washington Post
|
| Because it was cheap and he wants to support journalism.
| Seems a lot more likely than your conspiracy theory.
| photochemsyn wrote:
| If you can point to a single investigative journalism story
| / series similar in scope and detail to Top Secret America
| published in the WaPo since Besos acquired it, then I will
| recant my opinion.
| shabier wrote:
| > Because it was cheap and he wants to support journalism.
|
| Sure, WaPa does fantastic journalism- it's obvious that
| they must be supported for their lengthy history of great
| pieces.
| JaimeThompson wrote:
| This is also something strange, Musk talks about opening the
| algorithm but hasn't, as far as I can tell, talked about
| opening the datasets, models, etc that the algorithm depends
| on which makes it a bit less useful then it could be. He
| knows this from his work with Tesla so the lack of clarity is
| strange to me.
| Simplicitas wrote:
| https://twitter.com/2obvious2/status/1516848142775463940?s=2...
| zionic wrote:
| Elon nailed it here
| known wrote:
| Schopenhauer01 wrote:
| Hopefully he buys it.
| woodruffw wrote:
| Entirely separate from the politics around why Musk would want to
| buy Twitter: I don't understand the world in which this would be
| a confidence-inspiring maneuver amongst Tesla's shareholders. If
| my reading is correct, a significant portion of Musk's net worth
| (in the form of Tesla equity) will now be held up in a perpetual
| money-bleeding venture.
| bombcar wrote:
| The TLSA shareholders will be more concerned with TWTR bleeding
| Musk's attention vs bleeding his shares; he's not giving up the
| shares or control of TSLA.
|
| It's also very likely that if Musk takes TWTR private he then
| privately sells portions of it to people who would like to be
| in on it with him. SpaceX is private, for example.
|
| The key is that TSLA is not buying TWTR (which stranger things
| have happened), it's Musk.
| woodruffw wrote:
| > he's not giving up the shares or control of TSLA.
|
| Again, correct me if I'm wrong, but it sounds like he's
| financing this prospective purchase of Twitter with loans
| that are backed in no small part by his stored equity in
| Tesla. He might not be "giving up" shares, but he's
| effectively introduced an interested party with the ability
| to seize those shares to recover any losses.
|
| That's the part that would concern me as a Tesla shareholder.
| mrkramer wrote:
| Drama Queen! Imagine Jobs or Page behaving like this.
| shabier wrote:
| I suggest you too read into Jobs' history before making that
| claim, lol.
| yalogin wrote:
| At the least he is not partnering with any fringe elements, but
| he is very serious about it. This also means if the board says we
| will sell it to you for $90 bucks he may back off, as coming up
| with another 40 billion might be very tough even if it's
| leveraged.
| cwp wrote:
| I'm kinda curious about what would happen if Musk triggered the
| poison pill. Yeah, his existing stock would be diluted. But...
| how much? What would it do to the share price?
|
| The poison pill is essentially a gun to the head of all the other
| shareholders: you're either with us or against us. Help us fight
| this hostile takeover or get diluted along with Musk. How will
| people react to that?
|
| Some will jump at the chance to buy discounted shares. Others
| will be unable or unwilling to buy more, and sell to avoid
| dilution. But they'll have to sell to people who _aren 't
| currently shareholders_, because shareholders have a better
| option. That'll drive the price down, and also reduce the
| discounted price for shareholders. Will investors that buy in
| after the poison pill is triggered also get the discounted price?
| Will existing shareholders wait to buy discounted shares until
| after the exodus lowers their price?
|
| There are so many feedback loops and non-obvious motivations
| here. It's possible that Musk could trigger the pill, stand back
| and watch the stock crater, then buy it cheap. And if the stock
| does crater, will he then have to compete with _other_ takeover
| bids?
| mettamage wrote:
| Wait, can't we trigger the poison pill buy buying up a lot of
| Vanguard?
| tptacek wrote:
| His stake will be cut approximately in half. We probably don't
| have to wonder what happens if the rights agreement is
| triggered; it won't be (it would be the first time in business
| history one ever had). Doing so would mostly just be a way of
| setting billions of dollars literally on fire, out of pique.
| cwp wrote:
| Yeah, it probably won't be triggered; even Musk would wince
| at that kind of loss. But that's exactly why we have to
| wonder, or I do at any rate.
|
| The poison pill seems suspiciously like a free lunch for the
| board if you only look at the 1st-order effect: Musk is
| diluted, and loses billions. That right there is enough to
| stop a rational investor. But it's partially a bluff. The
| board doesn't hold much stock (except Jack) and the
| assumption that _all_ the other shareholders will pony up
| cash to double their exposure is probably wrong. Many will,
| perhaps most will. But the share price will take a hit, and
| Musk is free to acquire as much stock as he wants. Maybe he
| can 't get every last share, but he might be able to take
| control.
|
| Again, I agree with you that it's unlikely to happen, but if
| there were ever a time to question the conventional wisdom,
| this is it.
| tptacek wrote:
| The point of a shareholder rights plan is to force
| acquisitions to go through an orderly process and end at a
| maximal valuation for the company. Without them, hostile
| acquirers can make coercive low-ball bids that punish
| shareholders who don't tag along, among other bad things.
| The board has ample reason to believe that the offered
| price isn't the best one:
|
| 1. It's the first offer.
|
| 2. Twitter has traded higher very recently --- as have
| other tech companies, creating a plausible argument that
| the current share price is a sectoral thing that will
| correct itself.
|
| 3. Little has been done to optimize the short-term share
| price.
|
| 4. It's a valuation Musk assigned while saying he was
| uninterested in making money from the deal, suggesting that
| it's the lowest plausible valuation for the company, not
| the highest.
|
| Musk has a simple next step: he can complete a tender offer
| and get commitments from a majority of the shareholders. If
| he can't even do that, the board will have been proven
| correct. If he can, still more things can happen that could
| prove the board correct (not least of which would be a
| higher offer). If nothing happens to prove the board
| correct, then ultimately Musk will acquire the company, if
| that's truly his plan.
|
| Not having a "poison pill" seems like malpractice under the
| circumstances.
| kjksf wrote:
| I love motivated reasoning like this.
|
| Musk's offer is well above current stock price, within
| the range of similar take over bids. Certainly nothing
| that qualifies it as "coercive low-ball bid".
|
| > first offer
|
| Yeah, because no one else is interested in acquiring
| money-losing business. Board's remedy should be to secure
| better offer, not a poison pill
|
| > stock price was higher
|
| This is an argument in favor of accepting bid. Investors
| are telling us that Twitter is a sinking ship. Musk comes
| in willing to pay well above the current price.
|
| The alternative might just as well be to watch the ship
| sink lower and lower.
|
| "Poison pill" that dilutes shareholders will not bring
| stock price higher.
|
| > Little has been done to optimize the short-term share
| price
|
| Love the suddenly passive voice, trying to not name
| Twitter board and management responsible for Twitter's
| bad performance.
|
| At the same implying that they can wave a magic wand and
| push stock price higher. Makes me wonder: why didn't
| they?
|
| Again, the remedy for the board and management would be
| to present a credible plan to improve Twitter business
| and therefore stock price.
|
| Instead they created a poison pill which, if triggered,
| will tank the stock price and dilute many existing
| shareholders (not everyone will decide to give Twitter
| money for the cheaper stock).
|
| Almost certainly it'll tank the stock price. But more
| importantly, reduce market cap.
|
| > not the best possible valuation by Musk
|
| Or it is actually the final offer and Musk is not
| bluffing.
|
| Again, it doesn't matter. Musk doesn't have to come up
| with better offer.
|
| That's not how any of that works. It doesn't work that
| way if you're negotiating a salary, a price of a house or
| a price of a business.
|
| If board can secure a better offer from someone else then
| Musk will have to up his offer or not buy Twitter.
|
| If not, then this is the best offer Twitter will ever get
| and it's significantly higher than the current value of
| the business.
|
| Again, poison pill is not a remedy here.
| tptacek wrote:
| I don't know who you're arguing with. I'm describing the
| rationale for poison pill arrangements (I'm more or less
| just parroting Matt Levine).
|
| If the board is wrong, and Twitter is worth less than
| Musk's offer, Musk will eventually get the company ---
| either because the board will relent after Musk's tender
| is successful, or because, next year, Musk will succeed
| in replacing the board.
|
| The rest of your points basically just add words to
| things I said. It's not the case that I know for a fact
| Twitter is worth more than Musk's offer. It might be
| worth less. There is now a process for the market to
| judge who's right. Nor was Musk's original offer
| "coercive"; it couldn't have been, because it wasn't even
| an offer. The coercive offer is an eventuality the pill
| protects against, not something the pill reacts to. One
| outline of a coercive offer is "I will pay $54/share
| until I get enough shares to control the outcome, at
| which point I will use my control of the company to have
| it accept $10/share for everyone else". That's the kind
| of thing a shareholder rights plan prevents.
|
| So, as I said before: if you're right, Musk will end up
| owning Twitter. If he can't even manage the tender, the
| board will instead have been proven right.
|
| Of course, if he ends up with the company, the parade of
| horribles associated in message board consciousness with
| poison pills will have been debunked (the pill will not
| have prevented him from acquiring the company). And if he
| gets the company, but pays more per share for it, the
| board will, again, have been proven right.
| wly_cdgr wrote:
| I think it's a good idea and I hope he suceeds
| blippage wrote:
| Personally, I think Musk is having a bit of a laugh. This will
| never happen. *
|
| Twitter operating income for 12 m/e 31 Dec 2021 was negative. For
| the q/e 31 Dec 2021 it was $0.167B. Why he thinks Twitter is
| worth $45b is beyond me. What would Warren Buffett do? Well, he
| wouldn't buy Twitter, that's for sure.
|
| * Time will tell, of course. I've been wrong before. But the
| whole thing seems like madness to me.
| 01100011 wrote:
| I agree but this assumes Musk is acting rationally. He has been
| a bit odd lately. Maybe he got too high with his girlfriend and
| got weird. I don't know. Then again he is also human and prone
| to acting irrationally out of spite or vengeance.
| programmarchy wrote:
| The virgin rationalist versus the Chad Ubermensch.
| spiderice wrote:
| > this assumes Musk is acting rationally
|
| No.. it assumes Musk is only trying to maximize his net worth
| with this move, which is a ridiculous assumption.
| worldsayshi wrote:
| At the point where he's at, what exactly is rational? It's
| all up to what he wants to achieve. Money is not the end goal
| for anyone. It's what you want to do with the money. What
| does he want to do? Only he knows but my guess is influencing
| the world towards what he believes is better. Twitter seems
| like a interesting tool for that.
| toomuchtodo wrote:
| "What is the point of fuck you money if you don't get to say
| fuck you?" is the turn of phrase I believe. (Or in the case of
| Musk, meme lord when you're not on the factory/star base floor)
|
| Wealth has diminishing returns; he's just trying to get more
| value for his exceptional personal wealth (and remember, he
| plans on dying on Mars, he's playing a different game than
| typical billionaires). Status is his drug of choice, Twitter
| his platform. If you crave validation (Biden admin not
| mentioning him until recently, people buying ads in time square
| "say their [Tesla] name"), buy it if it isn't given freely.
|
| (observations as someone with years of therapy and a scholar of
| the human psyche)
| username_my1 wrote:
| It's not really about that alone.
|
| Musk have a case against him by the SEC (tweeting about
| taking tesla private), it seems like they can win it, and he
| might be forced to stop using twitter.
|
| Now I can imagine it hard for the SEC to enforce such a role
| if it's his private company.
|
| So in a sense he's using that money to secure his best tool
| to marketing / growth which is definitely worth 50Bn$ for
| tesla alone (then add all his other ventures now and in the
| future)
| dwighttk wrote:
| Is the SEC upset about Elon's _tweeting_ or making public
| statements that happen to occur on Twitter?
| elliekelly wrote:
| It was definitely his false and misleading statements
| that were the problem.
| VectorLock wrote:
| >he might be forced to stop using twitter
|
| Just like last time.
| a2800276 wrote:
| The SEC doesn't need to persuade Twitter to enforce
| anything and it would make a difference if Twitter is
| public or private. The SEC can sanction Musk as an
| individual and officer of Tesla. As such insider trading
| rules (and whatever?) apply to him, no matter what medium
| he uses to break them.
|
| (And please explain how publishing stoner and dogecoin
| memes is worth $50billion to Tesla... ;)
| onelovetwo wrote:
| He addresses the SEC thing here:
| https://youtu.be/cdZZpaB2kDM?t=1635
| SkyMarshal wrote:
| SEC already punished him by making him step down as chair
| of Tesla for 3 years, plus a fine. And I doubt that
| curtailing anyone's first amendment rights is a punishment
| the SEC is legally allowed to enact.
|
| [1]:https://www.sec.gov/news/press-release/2018-226
| elliekelly wrote:
| The SEC "curtails first amendment rights" all the time.
| It's arguably one of their most effective means of
| enforcement: an order or agreement to stop lying.
| SkyMarshal wrote:
| I am not a lawyer, but restricting Musk from being able
| to speak publicly seems an overly-broad way of
| restricting him from lying about market-related things,
| given that the latter is a small subset of his overall
| speech.
| elliekelly wrote:
| I don't think it's likely the SEC would prohibit him from
| using twitter altogether but I don't think it's entirely
| beyond their ability, either. Especially in the context
| of a settlement agreement.
| bostonsre wrote:
| > Status is his drug of choice
|
| Couldn't he have more noble causes in mind like trying to do
| the right thing for humanity (e.g. Tesla, SpaceX)? Social
| media is a cesspool right now, they seem to have a negative
| impact on democracy and humanity in general, and public
| social media companies have no incentive to clean themselves
| up because that will hurt shareholder value in the short
| term. Buying the company and taking it private will give him
| the ability to make those hard choices and try to make a
| social media company that is positive for humanity.
| Gollapalli wrote:
| >status vs noble cause
|
| Why not both?
| wwweston wrote:
| > Buying the company and taking it private will give him
| the ability to make those hard choices and try to make a
| social media company that is positive for humanity.
|
| If that's the goal, why not simply found _another_ social
| media company built around those values?
|
| Surely he has the means to attract tech talent to do it,
| the means/message to attract users to a new platform, and
| presumably if he knows what's bad about Twitter and how to
| subtract it and make it good, he could do this greenfield.
|
| This would result in increased platform diversity, too. And
| I'll bet you it's cheaper.
|
| Imagine if Musk had tried to buy a big three automaker in
| order to make electric cars happen.
| lavoiems wrote:
| > If that's the goal, why not simply found another social
| media company built around those values?
|
| Twitter is one of the few social networks that actually
| has a network. A lot of social media failed because the
| cold start problem is a very hard problem to solve at
| this point in the game. Elon probably knows it and I
| would bet that this is why he is looking to buy an
| established social network rather than creating a new
| one.
| wwweston wrote:
| It's a hard problem if you don't have the clout to get
| attention and/or if there's no particular demand for
| whatever distinction your platform offers.
|
| Musk has market-moving clout and a cult of personality,
| so the remaining question would be if he has a compelling
| insight into distinguished features.
|
| If he doesn't, he won't make Twitter better. If he does,
| he could make a greenfield platform a success.
| redisman wrote:
| Google failed at it multiple times. Trumps network seems
| to have failed
| rayiner wrote:
| Luckily this is also the right thing for humanity.
| tablespoon wrote:
| > Social media is a cesspool right now, they seem to have a
| negative impact on democracy and humanity in general, and
| public social media companies have no incentive to clean
| themselves up because that will hurt shareholder value in
| the short term. Buying the company and taking it private
| will give him the ability to make those hard choices and
| try to make a social media company that is positive for
| humanity.
|
| AFAIK, his publicly-stated plan is to not "clean [Twitter]
| up," but rather turn it into more of an un-moderated
| cesspool.
| JPKab wrote:
| The perspective of "un-moderated" equaling "cesspool" is
| entirely based on whether or not you hold any opinions
| which are unpopular with the powerful.
|
| I had an account I created in 2009. I had a modestly
| decent number of followers due to some past blogging on
| data science and DIY electronics. My account was
| suspended because I talked about the lab leak hypothesis
| before it was decided that it was ok to do so by The Good
| People(tm).
|
| Maybe you hold some opinions that will also one day be
| unpopular with The Good People(tm). If you do, you'll
| soon find out that censorship is a very clumsy tool.
| niknoble wrote:
| I'm with you, but should a person who holds no forbidden
| opinions today really feel worried that one of their
| opinions will be forbidden in the future?
|
| You've got to think, if someone has the exact set of
| approved opinions today, that's almost certainly not a
| coincidence, but a sign that they form their opinions
| based on what is approved. And in that case they're at no
| risk of ever having a meaningfully unpopular opinion.
| JPKab wrote:
| Unfortunately, you make an excellent point. And yes, I do
| think that the majority of people, when given the choice
| between what they know to be right and what they know to
| be popular, will choose the latter. Additionally, they
| will aggressively attack those who hold the unpopular
| opinion to buy themselves protection from the witch-
| hunters going after those with unpopular opinions.
| robonerd wrote:
| Maybe he thinks an unmoderated cesspool is better than a
| moderated cesspool. Either way, you're swimming in shit.
| Twitter not being a cesspool is an appealing fantasy, but
| only that.
| tablespoon wrote:
| > Maybe he thinks an unmoderated cesspool is better than
| a moderated cesspool. Either way, you're swimming in
| shit.
|
| I'm sure he thinks that. Apparently he's a "free speech
| absolutist."
|
| > Twitter not being a cesspool is an appealing fantasy,
| but only that.
|
| It's not a binary condition. Twitter can be a cesspool
| with relatively more or relatively less shit. I'm sure
| his preference will result in relatively more shit.
|
| Personally, I've appreciated a having society that lacks
| the shit Donald Trump created on Twitter.
| outside1234 wrote:
| He could but he doesn't, because he is a narcissist
| sgjohnson wrote:
| It's really none of your business what someone does with
| their own money.
|
| He could also do much worse.
| moistly wrote:
| Oh, come now. It's not our business if he uses his money
| to outright purchase a politician? It's not our business
| if he uses his money in pursuit of _The Most Dangerous
| Game_? It's not our business if he uses his money to run
| disinformation campaigns via social media? _Of course_ it
| is _very clearly_ our business what he does with his
| money.
|
| If anything, we should not only be scrutinizing the hell
| out of Musk's stated intentions, but also scrutinizing
| those people in the Twitter organization who have the
| power to manipulate the public message, and ensuring that
| there are checks in place to keep falsehoods and anti-
| democracy messaging out of social media.
|
| I mean, really, "mind your business!"? So let's pretend
| it's some other mega-billionaire, shall we? We sure has
| hell don't want the likes of Putin purchasing twitter, do
| we? Give your head a shake.
|
| Edit: ah, shit, I see later in the thread you double
| down. What a waste of my time. Don't bother responding,
| IDGAF.
| nawgz wrote:
| > It's really none of your business what someone does
| with their own money.
|
| Then don't you think people shouldn't have so much money
| that they can literally control society? What a facile
| stance.
| sgjohnson wrote:
| Musk doesn't have enough money to literally control the
| society.
| robonerd wrote:
| If controlling twitter means literally controlling
| society, then I hope he crashes and burns that whole
| affair. That much power should never be concentrated into
| a single corporation.
| nawgz wrote:
| I'm more talking about lobbying and the pernicious
| effects of a legal system modifiable by the elites. You
| can surely see that the rich and elite in society have
| written tax laws, property (IP, copyright) laws,
| employment laws, and complicated everything enough that
| the legal system is pretty directly pay to win.
|
| I think the online giant platforms are another
| problematic avenue of control, I don't object to that
| characterization, but I'm really saying that saying
| "other's money is none of your business" can't be a good-
| faith statement in a world where money can control
| livelihoods and laws with such ease.
| sgjohnson wrote:
| > but I'm really saying that saying "other's money is
| none of your business" can't be a good-faith statement in
| a world where money can control livelihoods and laws with
| such ease.
|
| It absolutely can. I have no problem with the fact that
| money can buy politicians.
|
| I have a problem with the fact that politicians can be
| bought in the first place.
|
| Which are 2 completely different issues. If you had loads
| of money, you'd play the game too.
| lovich wrote:
| Then we're "playing the game" by caring how he spends his
| money and trying to use social pressure to force changes
| in law. You can't simultaneously say Musk should be able
| to do what he wants because he can, and then tell others
| that they need to behave differently.
|
| Well, you can, but it'd be massively hypocritical and an
| opinion that's easily dismissed
| erulabs wrote:
| Musk doesn't control society, neither does twitter. If
| electrifying the cars of the western world affords
| someone the insane wealth required to... buy an internet
| forum... that seems like a _fairly_ reasonable level of
| control over capital allocation to me.
| nawgz wrote:
| I never stated anything about "complete control of
| society", I am merely making the point that money is
| essentially an abstraction of power and that modern
| society does nothing to prevent that, maybe it even is
| built to amplify that. Accordingly, to say "it's none of
| your business what others do with their money" is to say
| "it's none of your business how others use their power",
| and if you can't see how it's pretty directly everyone's
| business what everyone else does in our shared world, I
| think you and I understand ethics a little differently.
|
| Edit: parent comment cleanly and completely changed due
| to my response, what a world. Cowards.
| ufmace wrote:
| > Couldn't he have more noble causes in mind like trying to
| do the right thing for humanity (e.g. Tesla, SpaceX)?
|
| Like what?
| tayo42 wrote:
| Plastics in the ocean, mass die offs, hunger around the
| world, health care around the world
| ufmace wrote:
| Jeez, he's already launched Tesla and SpaceX, why's he
| gotta solve every problem under the sun before he does
| something not quite so clear cut.
|
| And haven't we already established that no amount of
| money thrown around is going to actually fix "hunger
| around the world" or "health care around the world". How
| many billions have already been dumped down that hole to
| little effect?
| tayo42 wrote:
| He didn't launch tesla, he bought his title. Neither
| company is really making the world better.
|
| And idk why your so cynical about results. Just one
| example is Bill gates helping with polio vaccines.
|
| Anyway I thought you were asking for better ways to
| actually help the world then buying Twitter. Plenty of
| research needs funding.
| lkxijlewlf wrote:
| > Couldn't he have more noble causes in mind like trying to
| do the right thing for humanity (e.g. Tesla, SpaceX)? ...
|
| > ...Social media is a cesspool right now,...
|
| He would have greater impact if he used his account to not
| add to the cesspool, then. Much more than if he bought the
| company and kept tweeting like he does.
| phantomathkg wrote:
| > Couldn't he have more noble causes in mind like trying to
| do the right thing for humanity (e.g. Tesla, SpaceX)?
|
| Why should he?
| misiti3780 wrote:
| joe rogan said that i believe
| rpastuszak wrote:
| > and remember, he plans on dying on Mars, he's playing a
| different game than typical billionaires
|
| I think you're giving him too much credit here. It's male
| appendage measuring at this point, like with most three comma
| club members.
| soheil wrote:
| > three comma club members
|
| So you're gonna bundle people with $999B and $1B together,
| just like that?
| LightG wrote:
| Because it's not his 'fuck you' money but the supposed hopes
| and dreams of all those who believe he is some wonderful
| 'capital allocator'.
|
| Bullshi!t proven.
|
| Is buying twitter an example of that? He may make a buck but
| I'll 100% disagree.
|
| And what? You think he earned 260 squillian dollars?
|
| No, his shares were brought to that level through the demand
| of those who purchased shares in companies he owns.
|
| It's not 'his' 'fuck you' money at all.
|
| At this stage, he's using societies capital for entertainment
| value ... the support for him is cult like.
|
| The whole spectacle is obscene and pathetic.
| moistly wrote:
| > the support for him is cult like
|
| Don't think for a moment that he does not pay a team of
| promotionists. _Every_ public forum is monitored and
| "influenced." He is not a completely stupid person and he
| obviously understands social media. _Of course_ many of
| those in this very thread that argue against those who say
| "bad things" about Musk are being engaged by his paid
| mouthpieces. It is very much in his best interests to spend
| pocket change amounts to counter all criticism. It is
| absurd to think otherwise.
| JoshCole wrote:
| moistly, I think you are in an epistemic pit because you
| think misleading others is smart. Notice that you don't
| present evidence that everything is monitored and
| influenced, because it isn't an evidence rooted belief.
| Notice that you think that influence on social media is
| intelligent, that misinformation is clever, and that
| countering criticism rather than entertaining it is
| wisdom - you call it absurd to not counter criticism at
| the end of your post. On the basis of these things you
| think that smart people must be doing it and since you
| consider Elon smart you think he is doing it.
|
| The problem is, being smart and thinking misleading
| people via online influence is smart aren't the same
| thing. moistly, in mistaking intelligence for oppression,
| I think you are dooming yourself into accepting a
| potentially false belief. Many very intelligent people
| value integrity.
|
| You asks us not to think for even a moment. Fuck that.
| What happens when we do? The finances at Tesla are public
| knowledge because it a public company. They don't have an
| advertising department. It seems reasonable that Elon
| might not believe in paid promotions as much as some
| people. So a reasonable person might entertain the
| thought that -- and now we've transgressed your command
| to not think for even a moment.
|
| > Of course many of those in this very thread that argue
| against those who say "bad things" about Musk are being
| engaged by his paid mouthpieces.
|
| I'm not being paid by Elon Musk to post this. I publicly
| declare right now that I will retract my assertion that
| you are trapped in an epistemic pit and give you one
| hundred dollars if you can prove that at least four
| people in this thread are being paid by Elon Musk to
| counteract criticism. I will welcome this public disgrace
| if you teach me better, because I strongly believe that
| accepting criticism from you so that my beliefs are more
| accurate is not absurd, but of great benefit to me.
| memish wrote:
| I would spend 15% of my net worth on free speech. Wouldn't you?
|
| A lot of people downvoting, so I'll expand; It's fair to give
| the benefit of the doubt given that Tesla is helping combat
| climate change and SpaceX is about becoming multi-planetary.
| These are civilization level problems and solutions.
|
| The idea is to make twitter a TRUSTED public square. He
| suggests open sourcing the algorithm and making all moderation
| actions visible to the public. Makes sense as transparency is
| needed to rebuild trust in the platform.
| AshamedCaptain wrote:
| I think a couple million gives you more than plenty to create
| as many WWW platforms for promoting as much free speech as
| you want. No need to burn so much money to also buy the brand
| name of one specific ISP.
| pastor_bob wrote:
| Musk is not supportive of free speech worldwide. Only in the
| US and Canada, where he knows he can get away with it.
| tyre wrote:
| Musk cares about free speech in the same way as the US South
| cares about states' rights.
| weakfish wrote:
| Excellent analogy
| mardifoufs wrote:
| No, comparing Musk to slavery is probably not an
| excellent analogy. Jesus Christ
| bigbillheck wrote:
| Are you familiar with some of the recent allegations at
| Tesla :
| https://www.theguardian.com/technology/2022/feb/18/tesla-
| cal...
| rsync wrote:
| You've misunderstood the analogy.
|
| The analogy is about misusing a high minded principle to
| further selfish - or even morally negative - ends.
|
| It is, indeed, a good analogy.
| weakfish wrote:
| Yeah, rsync (great username) is correct in my meaning
| FerociousTimes wrote:
| Pearl-clutching!
|
| Some fine example of antebellum Southern imagery there.
|
| I love practical joke, keep 'em coming!
| Barrin92 wrote:
| >I would spend 15% of my net worth on free speech. Wouldn't
| you?
|
| I totally believe that you would do that, I don't believe
| that Musk would do that, a guy so petty he once cancelled
| someone's Tesla order after he dared to make a 'rude post' on
| the internet, with an interesting justification about the
| nature of private businesses' ability to discriminate:
|
| https://twitter.com/elonmusk/status/694802955170553861
|
| https://www.theguardian.com/technology/2016/feb/03/elon-
| musk...
| deckard1 wrote:
| Let's not forget the time Musk tried to get a guy to take
| down a Twitter account that tracks Elon's private jet. If
| Elon owned Twitter he would just close the account himself.
|
| https://www.businessinsider.com/elon-musk-
| offered-5k-remove-...
| robonerd wrote:
| If he closes that guy's account, that would be
| egregiously hypocritical. But I don't see anything wrong
| with merely offering somebody money to shut up.
| kjksf wrote:
| Musk offered him money because he was concerned about his
| safety. Which is a very legitimate concern. See John
| Lennon.
|
| It certainly wasn't an attempt to silence a critic, which
| is the thing people say he'll start doing when he gets
| control of Twitter.
| SXX wrote:
| How having some twitter account affect his safety? That
| twitter account just re-post data that is completely
| public already.
| Teandw wrote:
| Imagine someone stood outside your house and tweeted
| every time you left your house. They're not doing
| anything wrong, anyone can walk down the street and see
| if you leave your house.
|
| Would you be happy knowing that all the criminals in your
| area now have easily accessible information on when
| you're home or not?
|
| There's nothing stopping someone doing that. It's only
| someone gathering information that anyone else could and
| tweeting it. Just because you can do something, doesn't
| mean you should.
| kjksf wrote:
| Publishing his location in real time affects his safety
| in a country where any whacko with a prior criminal
| history can get a gun. There certainly are plenty of
| people with serious grudge against Musk.
|
| The data isn't "completely public". It takes non-trivial
| skill and effort to access this data.
|
| I sure don't know how to do it.
|
| It significantly rises the bar from "a whacko" to "a
| whacko with technical skills to access FAA monitoring
| system"
| SXX wrote:
| ADS-B is literally public data. There are several public
| exchanges that provide feeds without filtering and any
| person with one hour of time can access this data in
| real-time.
|
| When some billionare buy private jet he is aware about
| fact that his jet can be easily tracked. If person decide
| to be a public figure he have to deal with fact that
| he'll be tracked around.
| Daffodils wrote:
| TSLA is helping rich people think that they are helping
| combat climate change, whilst keeping their unsustainable car
| centric lifestyle.
| CryptoPunk wrote:
| Tesla has replaced two million gasoline cars with electric
| cars, and given its current growth rate, this number will
| likely be massively larger in a few years.
|
| Musk has since long ago pursued a publically disclosed plan
| for Tesla, for the company to release progressively more
| affordable electric vehicles, so the current growth rate in
| number of vehicles sold could very well be sustained for
| years to come.
|
| Beyond Tesla's own sales, its success has sparked massive
| investment by other carmakers to push their electric
| vehicle manufacturing timetables forward. There is no
| reasonable case to be made that Tesla has not had a massive
| impact on pushing the world to replace gasoline vehicles
| with electric ones. And most people consider that to be
| good for the environment, even if you now don't.
| kevingadd wrote:
| Do you have data supporting that Tesla replaced 2 million
| gasoline cars? Selling electric cars does not mean that
| the buyer has gotten rid of their gasoline-powered cars,
| and it's not uncommon for one person to own multiple
| cars.
| CryptoPunk wrote:
| I have no reason to assume Tesla encouraged more people
| to become car owners. That would be quite the expensive
| status symbol for a non-car owner to take up. And those
| who own a gasoline-powered car buying a Tesla as a second
| vehicle would still reduce usage of the first vehicle.
|
| So assuming that most of those two million sales weren't
| in lieue of the sale, or at least use, of gasoline
| powered cars, doesn't seem reasonable to me.
|
| But let's be extremely conservative in our praise of
| Tesla, and say that the company took one million gasoline
| powered cars off the road and replaced them with electric
| cars. That is quite the accomplishment if you accept the
| premise that electric vehicles are better than gasoline-
| powered ones for reducing the impact on climate.
| status200 wrote:
| If you live in an area that primarily gets electricity
| from coal plants, the break even point for a Model 3 to
| gas cars is 80,000+ miles [1]. EVs aren't some magic
| carbon-negative solution, and the politics Musk plays to
| get raw materials are a net negative for the planet as a
| whole.
|
| [1]https://www.reuters.com/business/autos-
| transportation/lifeti...
| VirusNewbie wrote:
| I really don't appreciate people on HN posting wildly
| inaccurate links, I think that's something we need to be
| discouraged from doing. Second, are you unaware of solar
| panels?
| indiv0 wrote:
| Even if that 80,000+ miles point is true it's _still
| better_ than a gasoline car over its lifetime and
| completely dishonest because who the hell is buying a
| Tesla and living in an area with 100% coal fired power?
| Germans?
|
| The "U.S. average energy mix" comparison of 14,800 is
| much more accurate.
|
| Not to mention the equation gets more and more favourable
| to EVs with each passing year.
| dane-pgp wrote:
| > If you live in an area that primarily gets electricity
| from coal plants
|
| That's a rather extreme assumption. The article you
| linked to also gives the more representative figure of
| 14,800 miles for "U.S. average energy mix (23% coal-
| fired, plus other fossil fuels and renewables)".
|
| To put things in perspective there are only 12 states
| that are majority coal powered (according to 2017
| numbers[0]): 1. West Virginia - 93.2%
| 2. Wyoming - 85.7% 3. Missouri - 79.8% 4.
| Kentucky - 78.2% 5. Indiana - 73.2% 6.
| Utah - 70.5% 7. North Dakota - 64.5% 8.
| Nebraska - 59.8% 9. Ohio - 57.2% 10.
| Wisconsin - 55.1% 11. New Mexico - 54.8%
| 12. Colorado - 54.3%
|
| Also, it's not unrealistic for a Model 3 to do 80,000+
| miles. Some have already managed 100,000 miles[1], which
| is apparently the minimum warranty period too.[2]
|
| [0] https://stacker.com/stories/3356/states-producing-
| most-elect...
|
| [1] https://electrek.co/2019/10/21/tesla-
| model-3-100000-miles/
|
| [2] https://www.findmyelectric.com/blog/how-long-does-a-
| tesla-ba...
| csa wrote:
| > If you live in an area that primarily gets electricity
| from coal plants, the break even point for a Model 3 to
| gas cars is 80,000+ miles [1]. EVs aren't some magic
| carbon-negative solution, and the politics Musk plays to
| get raw materials are a net negative for the planet as a
| whole.
|
| [1] https://www.reuters.com/business/autos-
| transportation/lifeti...
|
| Do you have a bone to pick with EVs? This seems cherry-
| picked/straw man to me.
|
| The 80k+ you refer to assumes electricity is sourced 100%
| from coal, which happens never in the US.
|
| Even West Virginia, a haven for coal, it's only 88%.
| Wyoming is also in the 80s. There are a few in the 50-70
| range, but most states are sub-35, with many being 0.
|
| [edit] For our most populous states, CA checks in at
| 0.1%, NY 0.1%, FL 7%, and TX 16%.
|
| https://www.nei.org/resources/statistics/state-
| electricity-g...
|
| This article shows how US sources of electricity have
| changed in the past 20 years or so.
|
| https://www.nytimes.com/interactive/2018/12/24/climate/ho
| w-e...
|
| Contrary to what you state, I would say that EVs are
| doing a good job at lowering overall emissions from
| passenger vehicles, and this will become more true as
| renewables increase their percentage in our electricity
| production mix.
| JoeAltmaier wrote:
| A lot of assumptions there that things will continue to
| get cheaper, cost in manufacturing will drop, battery
| range will continue to improve, charging stations
| continue to proliferate, the grid respond to the burden,
| and no missteps in captialization and expansion cause it
| all to collapse.
| CryptoPunk wrote:
| Extremely safe assumptions given the investments being
| made by Tesla, not to mention other carmakers. The
| electric grid responding to the burden is almost certain
| as well, given the history of the grid handling decades
| of rising year-over-year energy usage in most localities.
|
| As for mistakes, the company can afford many small to
| intermediate missteps and still accomplish what I
| described, because the company's momentum is already
| pushing it to accomplish these achievements.
| JoeAltmaier wrote:
| Optimistic!
|
| The grid has not responded well, that is history. Fast
| Charging stations are a huge draw, and home recharging
| raised the bar for substations everywhere. It will take
| decades to respond.
|
| Battery advances - well that's a crystal ball I don't
| care to gaze into.
|
| And company momentum is a myth. Cash flow is king - the
| day you don't make payroll, you close. It's a markov
| chain with a terminating condition. Play any markov game
| long enough and you reach that node and its all over. So
| a gamble every time.
| CryptoPunk wrote:
| I have seen no numbers to support the claim that mass
| installation and employment of charging stations will
| have an extraordinary impact on electricity usage, beyond
| the normal annual increases that the grid has been able
| to facilitate.
|
| As for batteries, you don't have to bet on battery
| advances, just the scaling up of manufacturing, which is
| already underway.
| morsch wrote:
| Apart from the last sentence, you're not really
| addressing the grandparent's point, and that last
| sentence is not a very convincing argument.
| bombcar wrote:
| Everyone agrees that "free speech" should have limits (e.g,
| not be free) but nobody agrees on where those limits are.
| [deleted]
| nradov wrote:
| The majority of US citizens agree with the very narrow
| limits on free speech defined by the Supreme Court. Only a
| fringe minority want much stricter limits, or no limits at
| all. Twitter could potentially align their content policy
| to match US law and stop censoring legal content, although
| that would make it less valuable to some advertisers.
| jeremyjh wrote:
| We already have that, it's called 4chan.
| robonerd wrote:
| Not really, most of 4chan is moderated (albeit
| inconsistently and often capriciously.) I think the
| defining characteristics of 4chan are anonymity (from
| other users anyway, with some caveats) and the
| culture/reputation of the website.
| thebigman433 wrote:
| > The majority of US citizens agree with the very narrow
| limits on free speech defined by the Supreme Court
|
| Do you mean to say that the majority of people believe
| this is how private companies should operate? If so, Id
| love to hear your reasoning for thinking that, because I
| would disagree heavily.
|
| Saying racist stuff is legal, but its still going to get
| you kicked out of almost every bar, with few to no
| complaints from other patrons.
| Peritract wrote:
| > It's fair to give the benefit of the doubt given that Tesla
| is helping combat climate change and SpaceX is about becoming
| multi-planetary
|
| I don't think it's reasonable to give the benefit of the
| doubt to [highly debatable claim] based on uncritically
| accepting other [highly debatable claims].
| CryptoPunk wrote:
| Replacing gasoline-powered cars with electric ones helping
| combat climate change is "highly debatable"?
| giantrobot wrote:
| Replacing a gas powered car with an EV in an area served
| by coal power is definitely not helping either air
| pollution or climate change. It's only moving emissions
| from the tail pipe to a smoke stack. An EV is only a net
| negative CO2 producer if you charge it from renewable
| sources. Even then it'll only be a net negative only
| after the break-even point for the CO2 produced by the
| construction of the EV and charging system.
| Peritract wrote:
| Replacing gasoline-powered cars with electric vehicles is
| _potentially_ part of combating climate change, but this
| depends a lot on the specifics of manufacturing etc. [1]
|
| Regardless, "helping combat climate change" is at best an
| _incomplete_ description of Tesla, in the same way that
| Nestle is not perfectly captured by "Good food, good
| life" ; these are potential side-effects, rather than
| inarguable core missions.
|
| We should be wary of accepting the slogans of profit-
| driven organisations as the truth. Wendy's is focused a
| lot more on selling than locating beef, for example.
|
| [1]
| https://www.forbes.com/sites/timabansal/2021/05/13/how-
| green...
| CryptoPunk wrote:
| It's a very significant part of combating climate change,
| without which there is no hope of achieving zero carbon,
| and no company has done more to make that happen than
| Tesla.
|
| One can praise Tesla while still acknowledging that it
| should not be blinded trusted to always work in the
| public interest, and also while recognizing Tesla's
| contributions alone are not enough for human civilization
| to get to zero carbon.
|
| Minimizing how significant Tesla's contribution has been
| relative to other carmakers', and in fact, the vast
| majority if not all other companies in general, is not an
| honest way of addressing these inadequancies and
| challenges you highlight, and suggests to me a motivation
| unrelated to environmentalism behind it.
| s_dev wrote:
| I'm just afraid he's gonna let Trump back on and start the gear
| up for 2024 and continue that craziness in the US of what I
| though was settled in 2020.
|
| Some things are actually more important than money -- Twitter
| can offer enormous power in setting a national narrative even
| if little economic benefit for Musk.
| [deleted]
| hunterb123 wrote:
| Angostura wrote:
| Because Jan 6 was completely normal.
| dontcare007 wrote:
| Well, when you take a look at the other riots happening
| around that time, Jan 6th was 'mostly peaceful'
| weakfish wrote:
| Whataboutism is a logical fallacy and doesn't address the
| argument at hand
| mardifoufs wrote:
| Just as an aside, whataboutism is not a logical fallacy.
| MockObject wrote:
| Adding context is not a logical fallacy.
|
| The context is that the 2020 Mostly Peaceful Protests, a
| worldwide pandemic, and extreme political polarization
| weren't normal, either.
| evandale wrote:
| Isn't this whole thread whataboutism? The claim is the
| world will go back being as crazy as it was in 2020 (but
| OP gave a 2021 example) if Trump was let back on Twitter.
|
| The counterargument was that the example given was
| actually in 2021, and the given example of crazy (Jan 6
| 2021) was less crazy than 2020 (BLM protests).
| ralusek wrote:
| In what possible universe would you think that _any_
| craziness in the US settled in 2020?
| ch4s3 wrote:
| > Twitter can offer enormous power in setting a national
| narrative
|
| I'm always skeptical about this. Twitter is dominated by
| journalists, celebrities, and tech people. Only about 23% of
| American adults have twitter accounts. Only 46% of those even
| open it daily. Of the active users 10% account for ~95% of
| tweets. Among those, ~70% identify as Democrats, and
| certainly aren't going to be swayed by Trump getting back on
| twitter.
|
| It just isn't clear to me that twitter even matters in the
| realm of US politics. Voters just aren't really there, and
| when they are they predominantly aren't engaging. When they
| do, they're mostly democrats tweeting at one-another.
| dgfitz wrote:
| I tend to agree with you, I guess I'm in the minority. I
| think a lot more political manipulation happens on
| Facebook.
| ch4s3 wrote:
| I'm not sure I buy the manipulation line either. People
| seek out information that fits their overall world view.
| It's hard to grapple with anything that challenges your
| beliefs. Insofar as people engage with bullshit on
| Facebook its probably because they already believe a
| particular thing, or it fits their existing beliefs. I
| highly doubt that facebook posts are changing a lot of
| minds. I'm also skeptical that it spurs very many people
| to actions they wouldn't otherwise take.
|
| A lot of the news articles talking about the effects of
| facebook focus on how many people "saw" a particular
| post. Given how those impressions are gathered, I'm no
| convinced that a significant percentage of those
| impressions resulted in people actually reading the post
| or even the headline, let alone that resulting in any
| real world outcomes.
|
| I think the people that build social media applications
| want everyone to think that they have the power to shape
| discourse and outcomes, and newspapers who's ad revenue
| is undermined by social media also want us to believe
| social media is dangerous. Those two things do not make
| it true.
| mcguire wrote:
| There are ~260 million adults in the US. That gives
| 60,000,000 Twitter users and 28,000,000 daily users. (I
| don't think "active users" is useful---it's about readers,
| not writers. Further, many of the important writers are not
| from the US.)
|
| In 2020, Biden received 81,000,000 versus Trump's
| 74,000,000; the difference is 7,000,000.
|
| Facebook may well be more powerful, but Twitter is still
| matters.
| ch4s3 wrote:
| > but Twitter is still matters
|
| I REALLY doubt it. Of the 28,000,000 daily users, mind
| you that means they open it once a day, 70% get news from
| the app. Of those only 37% say it increases their
| political engagement. This is roughly 7 million people
| who report any change in political engagement in the US
| as a result of looking at twitter. These people are
| overwhelmingly democrats living in big cities. I'm just
| not convinced that such a narrow, concentrated slice
| (2.7% of adults) of the the US population is really that
| big of a deal.
|
| Now you could make a case that twitter maybe matters more
| in other places outside of the US, but that's not really
| related to the trump/no trump issue that I was replying
| to originally.
| robonerd wrote:
| Less than 2% of the American public has a subscription to
| the New York Times. Would you say the nytimes doesn't
| matter in the realm of US politics?
| ch4s3 wrote:
| Well, since you asked I think they probably have less
| influence than they would like to think.
|
| Now they are syndicated in a number of other papers,
| discussed broadly on social media, cable news, local tv
| news, and across a number of new podcasts. Their reach is
| probably a good bit greater than the ~5 million
| subscribers. I would also note that 100% of subscribers
| are getting news from the NYT, because well obviously, so
| that's something. They do seem to have some sway on
| Democratic primaries sometimes, and do seem to shape
| opinions among a certain class of people. What does that
| all add up to? I don't know. Do they matter in the realm
| of US politics, probably, but I'm no sure how to quantify
| it.
| djtriptych wrote:
| He has 250 billion. He can afford a 20-40 billion dollar laugh
| once or twice.
| puffoflogic wrote:
| I agree it won't happen, but not because Musk isn't serious.
| This filing is dated April 20. It is a holy day for Musk --
| that's not a joke, only an exaggeration. I think we can take as
| a given that anything Elon Musk does on 4/20 which is serious
| on the face of it, is serious absolutely.
| gfodor wrote:
| It's funny that Musk explains specifically why he is doing this
| - just like he always does - but people are so deeply cynical
| they don't even realize they are ignoring it and coming up with
| more Machiavellian explanations.
| shafyy wrote:
| Exactly. There are a lot of things to critize about Musk -
| but it's also undeniable that he has done very impressive and
| useful things. Lately, dunking on his every move has become
| somewhat of a folk's sport (or easy clicks for
| "journalists").
| psyc wrote:
| NTs projecting their own thinking / motives onto autistic
| people is a pretty major thing.
| robonerd wrote:
| The other way around seems very common too. Autistics
| trying to understand the behavior of NTs by implicitly
| assuming the NTs think in ways similar to themselves, then
| expressing frustration when the observed behavior of the
| NTs doesn't match the inaccurately modeled expectation.
|
| In fact I'm not sure this really has much to do with NTs
| and autistics. I think this sort of dynamic occurs all the
| time even between people who are very similar (but never
| identical!) to each other.
| Hasu wrote:
| Probably because "just like he always does", he is probably
| lying.
|
| He lies quite a lot about his business intentions and
| reasoning. It's not surprising that people don't trust him
| and wonder what the real reason is, since no one believes the
| reason he's giving (other than uncritical Musk fanboys).
| awestroke wrote:
| Do you have any examples?
| Teandw wrote:
| What examples do you have then?
| gfodor wrote:
| Musk literally published the "master plan" for Tesla over
| time, and has largely executed on it, and described the
| goal of rocket reusability for the purpose of colonizing
| Mars forever ago.
|
| Are you sure that you're not confusing failed predictions
| with malevolent lying?
| aeyes wrote:
| I don't think Musk is the guy that cares about making more
| money with a business. 20 years ago anybody would have told you
| that the odds of being successful starting an electric car
| company or a rocket company are 0.
|
| With Twitter all he seems to care about is the idea, the name,
| the userbase and some of the technology. I don't think turning
| $45b into $100b is a top priority, there are easier ways doing
| that.
| MisterBastahrd wrote:
| He's absolutely a guy who cares about making money.
|
| There's no way he gets into Tesla without giant government
| cash incentives.
| rsync wrote:
| The technology ?
|
| What, pray tell, other than ad tracking is their technology?
|
| If you remove the ads and the surveillance, Twitter is 60
| lines of Perl.
| VirusNewbie wrote:
| I can't think of better way to diminish one's own technical
| skills than to make a claim that twitter is '60 lines of
| perl'. Let's see, let's even take one tiny component of
| twitter, realtime push notifications across a distributed
| system, can you do that in 60 lines of perl?
| jll29 wrote:
| It's less about the number of lines of code to
| replace/replicate it, more about the existing user base
| size & the fact that Twitter is _the_ place where
| conversations about any topic happen these days.
|
| The world being as unpredictable as it is, the conversation
| may also move to another medium tomorrow.
| JoshCole wrote:
| > If you remove the ads and the surveillance, Twitter is 60
| lines of Perl.
|
| If you remove ads and surveillance Twitter isn't 60 lines
| of Perl. Just their frontend, without even getting into
| problems of scale, is already much heavier than sixty
| lines. It also happens to have been an influential
| technology export [1].
|
| You can find more than sixty projects, not just sixty lines
| of Perl, open sourced by Twitter. While some of them are
| related to ad tracking and surveillance not all of them are
| [2]. Although I haven't checked, I would be shocked if any
| of them are below sixty lines.
|
| The idea that modern tech companies can be replaced with
| sixty lines of code is exceedingly naive. There are certain
| problems that naturally come up at scale like the regular
| failure of hardware, hot users, persistent dedicated
| attacks by intelligent malicious actors, and regulatory
| requirements around data handling which, even taken alone
| rather than together, demand more than sixty lines of code
| to adequately address.
|
| Twitter may be simple in theory, but you are quite clearly
| provoking a straw man conception of the value of Twitter's
| technology. If you weren't, you wouldn't need to lie or
| exaggerate to the point of absurdity.
|
| [1]: https://getbootstrap.com/2.0.2/ [2]:
| https://opensource.twitter.dev/projects/
|
| > What, pray tell, other than ad tracking is their
| technology?
|
| The person you are responding to is largely repeating
| first-party accounts of motivation - Elon says he believes
| that producing greater transparency in algorithmic
| moderation and active moderation at Twitter, understood as
| a technology owned by Twitter, is a core ideologically
| rooted reason for the takeover. You can get this first
| party account of motivation by listening to the TED
| interview with Elon Musk which covers the topic of why he
| feels Twitter should be taken private and why he feels it
| would benefit from having its moderation practices be
| incredibly transparent to the point of open sourcing the
| entirety of Twitter and making their moderation process
| public.
| dkislyuk wrote:
| Obligatory _Sounds Easy_: https://danluu.com/sounds-easy/
|
| Doing anything on Twitter scale has significant technical
| challenges.
| etempleton wrote:
| He made an offer in modest excess of the book value for a
| company that is probably overvalued to begin with. He knows
| this. The board knows this. Every investor with half a brain
| knows this.
|
| It makes it impossible for the board to say no without having a
| good reason. They have a fiduciary duty to examine the offer
| and determine if it is best for shareholders to cash out at
| this price. And the answer to that is it probably is because
| Twitter has never had a good path to long term profitability.
|
| So yes, he is having a laugh. I am sure if they agree he will
| find the money. He just doesn't care. He sees a poorly run
| company that is making decisions against his freedom of speech
| ethos. It is an easy target.
| jayd16 wrote:
| This freedom of speech angle is such a crock. How is the
| world richest man setting the rules of discourse on someone
| else's platform freedom?
|
| It's akin to buying your way into the opinion section of
| every newspaper if not in magnitude, certainly in direction.
|
| If he really cared about freedom, he'd just make a new
| platform with the $54B. But it's not about that. At best it's
| a laugh, at worst it's about control.
| status200 wrote:
| He believes in freedom of speech until someone tracks his
| jet, then he is more than ready to use his wealth to
| pressure them into silence.
| Teandw wrote:
| You can fight for freedom of speech while still wanting
| people to not say things/do things that you feel puts
| your personal life at risk.
|
| Freedom of speech has to come with some caveats or its
| dangerous as it can be used as a weapon.
| kjksf wrote:
| How do you equate "freedom of speech" with "publishing
| Musk's physical location in real time" ?
|
| In general we have laws against tracking individuals.
|
| What he does seems legal but it doesn't make it good or
| ethical.
|
| FAA didn't create a plane tracking system so that a kid
| can put this info on a map in real time. It's a
| legitimate security risk for those planes and people who
| use them. It's an abuse of the system.
| undersuit wrote:
| The twitter account published the location of the plane
| using publicly available information. It could have also
| published the information of one of Virgin Atlantic's
| plane.
|
| In fact it's not even Musk's plane, he just owns the
| company that owns the plane, Falcon Landing LLC. The
| twitter account didn't actually know if it was Elon Musk
| being flown or a bunch of burros being ferried back and
| forth between US states.
|
| >FAA didn't create a plane tracking system so that a kid
| can put this info on a map in real time.
|
| You're right, the FAA made the system open so that
| anybody could do this, not just this kid.
| BbzzbB wrote:
| Thinking what would Buffett do in this situation is relevant
| misunderstands (tho perhaps just tongue-in-cheek) both
| Buffett's managerial and investing approach as well as Musk's.
| boringg wrote:
| The twitter buy isn't about money its about power. Money is
| only a proxy for power. Controlling the largest distribution
| source of worldwide news is a pure power play.
| mbostleman wrote:
| >>...the largest distribution source of worldwide news>>
|
| That's not really true is it? My understanding is that it's
| actually the smallest of its immediate peers in social media.
| And perhaps the same in the field of the broader definition
| of media.
|
| As a separate issue, my personal sentiment on social media,
| like a number of others I know, is that it has all become a
| steaming pile of toxic garbage, not unlike the pile of junk
| mail I dutifully retrieve from my physical mailbox once a
| month (and even then only so that the mail person has room to
| add more). My concern on a deal like this is that if that
| sentiment takes off in the mainstream a property like Twitter
| could experience a MySpace style collapse overnight.
| aNoob7000 wrote:
| Yes, social media has become toxic but a lot of people use
| it to get their news and information.
|
| Twitter is a great way for Musk to get into social media
| without having to get users and build the infrastructure.
| He can compete at a worldwide level with Facebook on day
| one.
| bombcar wrote:
| Over the next week, mark down every time you see the
| following news:
|
| 1. News such as an HN post which is a ... twitter link
|
| 2. News in an article or on TV that reverences a ...
| twitter link
|
| 3. Social media referencing a ... twitter link
|
| There's a lot more than appears at first, even if you _aren
| 't_ consuming news on Twitter or Tik Tok a lot of it is
| being _broken_ there.
| boringg wrote:
| This is what I was referring to. Sure there are infinite
| other sites but Twitter is where it is being broken and
| where majority of all the journalists live. It is
| currently the site with status and clout for important
| news. Will that change? Always possible but it is the
| site du jour.
| rstupek wrote:
| It's also the site for the unimportant news that
| journalists decide to transform into "important" news.
| Too many "click bait" news stories end up being "xxx is
| outraged" and the story links to 3-4 random twitter
| comments
| mbostleman wrote:
| Ok gotcha. So largest by volume of breaking stories used
| as opposed to users.
| user_named wrote:
| Weibo is bigger. Wechat too.
| [deleted]
| boringg wrote:
| They are largely irrelevant to the rest of the world as a
| source of news except to see what the government line is
| and as a pulse taker of Chinese population tolerance to
| policy. They are a propoganda news source controlled by the
| Chinese Government for the Chinese population. Large
| population for sure, and highly impactful to controlling
| that population but only viable for the CCP.
| tsimionescu wrote:
| Good luck buying wechat as someone without Chinese
| citizenship.
| FerociousTimes wrote:
| Good luck buying WeChat without the proper connections to
| the ruling class in China in the first place.
| reaperducer wrote:
| How much global news comes out of either of those? That's
| the point of the parent comment.
|
| Weido and Wechat may have more users, but they aren't
| newsmakers. Just like there's more people at a Def Leppard
| concert than in the White House, but the White House makes
| news.
| danso wrote:
| Facebook is also far far bigger than Twitter. Yet Elon is
| content with ignoring it, and so was Trump (who is
| suspended into 2023 [0])
|
| [0] https://www.npr.org/2021/06/04/1003284948/trump-
| suspended-fr...
| boringg wrote:
| Facebook is a dying site and it isn't for sale.
| Irrelevant to the options.
| danso wrote:
| Weibo and Wechat are also not available for sale, so
| what's your point?
| boringg wrote:
| Also irrelevant to the conversation.
| danso wrote:
| My rebuttal was to this comment, which implied that size
| was an overriding factor of importance. _That_ comment
| was a rebuttal to you. So I 'm not sure what you even
| want to argue about.
|
| https://news.ycombinator.com/item?id=31110766
|
| Please learn how comment threads work.
| bombcar wrote:
| Facebook amplifies, it doesn't create. People link to
| twitter threads from HN all the time, rarely if ever do
| they link to FB posts.
|
| Nobody cares about Facebook, even though it's hugely used
| it's a dead letter.
| qualudeheart wrote:
| He wants Twitter as a media asset. Twitter is the new public
| square. Controlling it means power.
| chroma wrote:
| He wants to control the new public square by... not banning
| as many people?
| markus_zhang wrote:
| Twitter is a weapon. its economic condition is only secondary
| in consideration IMHO.
| aNoob7000 wrote:
| Let me add some detail to your comment.
|
| Twitter is a media weapon, and Musk knows this. This is a
| platform for Musk to push his agenda.
| ralusek wrote:
| He wants to open the platform and add transparency features
| to the actions the platform takes. He also wants to open
| source the algorithm.
|
| Why is it that people that have an agenda assume that steps
| towards neutrality are simply an opposing agenda?
| jayd16 wrote:
| Everything is an agenda even if you like the agenda.
| markus_zhang wrote:
| Yes, and it's a special weapon such that the more
| successful one operates it, the more revenue ot generates.
| A lot better than say missiles for a non violent option.
| bombcar wrote:
| If you recognize something is a weapon, you will want to
| prevent it being used against you, AND potentially want to
| use it yourself against someone else. They usually go
| together but not always. You could want people to not have
| guns without yourself wanting a gun, for example, but still
| feel "if there's a gun, I want it to be in my control."
| soheil wrote:
| Is HN a weapon too?
| bobobob420 wrote:
| Twitter is not a weapon. Most of the world does not give a
| hoot about anything that is going on twitter. You might get
| some new come up in celebrity gossip but that's really about
| it
| robonerd wrote:
| Most people in the world don't have subscriptions to the
| NYTimes, but the influence of that newspaper seems
| undeniable. Percentage of the global population paying
| attention seems like a poor measure of influence, not least
| because actual influence is not fairly distributed through
| the global populations. Influence over 100 US senators
| counts for _much_ more than influence over 100 US plumbers.
| mcguire wrote:
| The period between the Arab Spring and Jan, 2021, seems to
| argue otherwise, no?
| 2pEXgD0fZ5cF wrote:
| > Most of the world does not give a hoot
|
| Correct, but journalists, politicians and companies do,
| which is all it needs. Twitter has been way more
| influential than it deserves to be for a while now.
| DevKoala wrote:
| It does matter. A lot of people live in a bubble in which
| Twitter's loudest voices are a reflection of the "common
| sense". That is why so many governments monitor it.
| [deleted]
| soheil wrote:
| > Why he thinks Twitter is worth $45b is beyond me.
|
| It may be beyond you, are you also saying it's beyond all
| Twitter's investors too? Have you asked them?
| kjksf wrote:
| We don't have to.
|
| By generally accepted rules of engagement the totality of
| investors think that Twitter is worth 30% less than what Musk
| is offering.
|
| That's the difference between Twitter's market cap and Musk's
| very tender offer.
|
| There's no better way of asking investors how much they value
| a stock than by allowing them to bid in an open market.
| soheil wrote:
| I see I thought that was the market cap.
| bko wrote:
| There's no reason Twitter can't hypothetically make a lot of
| money.
|
| > While Twitter does not report its average revenue per user,
| one independent analyst pegged Twitter's ARPU at about $17 in
| 2020, around one third of Facebook's.
|
| Twitter is being mismanaged or at least not living up to the
| theoretical potential when compared to its peers. It might
| never get to facebook ARPU levels, but it can approach it
|
| https://digiday.com/media/the-rundown-twitter-bets-on-long-f...
| bombcar wrote:
| It's also possible that Twitter could _easily_ make money and
| the company is intentionally avoiding that, for tax purposes
| or whatever.
|
| If you are holding yourself out as a _growth_ company but
| also paying dividends, it creates a mixed message, because if
| you are growing shouldn 't the money be better spent on
| growth than just giving it back to the shareholders?
| zwily wrote:
| Twitter is not a growth company by any metric: Users,
| revenue, or stock price. If they could easily generate lots
| of revenue right now with their current management, they
| absolutely would already be doing it.
| cj wrote:
| If Twitter is losing $180 million per year, and they have
| 7500 employees, and each employee costs on average $100k
| [0] fully loaded ($750mm/yr), you could become profitable
| by reducing your payroll by 50% (laying off half their
| employees).
|
| My guess is layoffs aren't considered as an option since
| it would signal that they're throwing in the towel and
| don't believe in their own growth trajectory.
|
| [0] Average salary here is a conservative guess
| [deleted]
| mrtnmcc wrote:
| I suspect Elon wants Twitter data to train an AI/GPT-3. Also if
| you look at how he uses Twitter, he believes in the tweet
| resonance idea of being able to signal certain group or
| individuals with memes. He thinks that may be a key element in
| the future of human collective consciousness.
| paulpauper wrote:
| musk buying twitter is not like throwing money into an
| incinerator
|
| So if the stock price stays above $50 he has not lost any money
| chaostheory wrote:
| > Personally, I think Musk is having a bit of a laugh.
|
| He's definitely demonstrating how toothless the SEC is. It's
| just good at empty threats. I'm not sure what the bigger joke
| is: the SEC or the financial industry's multiple private
| watchdog corporations like FINRA which masquerade as public
| regulatory bodies.
| ekianjo wrote:
| > Twitter operating income for 12 m/e 31 Dec 2021 was negative.
|
| Twitter is a lever to all the journalistic organizations on
| Earth. Its impact is not measured by its operating income.
| mrtksn wrote:
| If he was simply a finance guy, then yes, it wouldn't make
| sense.
|
| However he is into multiple businesses that are deeply embedded
| with politics and governments. Electric cars, space program
| contracts, telecommunications - all need the right kind of
| governments to succeed. Twitter has shown to have large effect
| in politics, it makes quite a bit of sense to own and control
| that thing if you like to own and control the government.
|
| If his motives are purer, it also makes sense to try to improve
| the society with a portion of your wealth. You don't have to
| donate your money to the cancer society, you can engage in
| philanthropy through building something good instead.
| rland wrote:
| I mean, arguably, most of the valuation of his companies are
| dependent almost entirely on his presence on social media --
| Twitter being an essential piece of that.
|
| I mean Tesla P/E is like 209. 209!! GM PE is at 6.
|
| Where does this tremendous difference come from? A Tesla
| evangelist would say, well Tesla is doing self driving, Tesla
| is doing electric cars, it's the future of technology! Then
| they go buy shares. Or join Tesla as an engineer and work 90
| hour weeks.
|
| Where does this enthusiasm come from? Surely it isn't from
| the actual _technology_ in the cars, which is and _has never
| been_ distinguished to such a degree from competitors. Before
| you go and say that Telsa had electric cars first, go look at
| how many units they shipped: while they were making
| _promises_ , they were not physically manufacturing or
| delivering that many cars; by the time Tesla did ramp up
| production to the scale promised by their media image,
| consumers could buy electric cars from Ford, Toyota, GM.
|
| Simply put, most of this stellar valuation is based entirely
| off of the media sensation of Tesla, which is completely and
| inextricably bound to the media sensation of Elon Musk. This
| $50bn or whatever Elon is paying for Twitter is basically
| fabricated from whole cloth not by technology or fundamentals
| -- but from Elon's Twitter itself!
|
| This is a common pattern to Elon's business ventures, and I
| would argue, it's the primary reason for the success of Musk
| companies. The playbook is simple:
|
| 1. Be Elon Musk
|
| 2. Make an _insane_ promise, probably on Twitter
|
| 3. Convince redditors to buy shares in the venture;
|
| 4. Meanwhile, convince redditor STEM people (engineers,
| programmers, and so on) to work like dogs to make the venture
| possible;
|
| 5. Stay in the news cycle [Post on Twitter] about the
| venture.
|
| 6. Keep doing (5) until the technology is possible (this can
| actually happen sometimes, because of step 4!). If it's not
| possible, extend the hype cycle due by doing more of (5); if
| it's never possible, either bail out the venture using shares
| from a _different_ venture, or shutter it -- and make sure
| Elon newswire isn 't paying attention to the fact that it
| failed, by doing another (2)!
|
| If you can do a few of these things at once, you can get
| basically all redditors to give you their money to hire all
| redditors to attempt this _insane_ shit (Mars? Humanoid
| Robots? Brain Computer Links???). I 'm thoroughly convinced
| that nobody on planet earth except for Elon Musk can do it.
| It's actually incredible what he's able to accomplish. And
| no, I'm not talking about the technology.
| reaperducer wrote:
| _Twitter operating income for 12 m /e 31 Dec 2021 was
| negative._
|
| The operating income of a superyacht is also negative. But
| billionaires keep buying them.
|
| Some people get to a point in their lives where the numbers no
| longer matter.
|
| To its shareholders, Twitter is a business. To someone who can
| buy Twitter, it's a hobby.
| shreyshnaccount wrote:
| Whoever controls the largest online space where people talk
| practically own the next election-
| drc500free wrote:
| Twitter and WaPo are the things you spend the money you've made
| on, not the things that make you money.
| imchillyb wrote:
| Purchases like Twitter aren't about a return on investment.
|
| Purchase like Twitter are to seize the platform; period.
|
| Dissenting opinions, and bans, then become whatever the owner
| of the platform desires.
|
| How do people not see the _actual_ value of Twitter, which goes
| well beyond money.
| renewiltord wrote:
| Warren Buffett was never going to make Tesla and SpaceX what
| they are so I don't see the relevance of the comparison.
| Teandw wrote:
| All that shows is that you don't have the slightest idea on how
| companies are valued?
| fundad wrote:
| If I got to skate on securities fraud over and over I'd be
| rolling around on the floor pissing myself with laughter too.
| hunterb123 wrote:
| He's said time and time again it's not about the economics.
|
| It's hard to put a price on the propaganda machine and it's
| network effect.
|
| It's not really about making money with Twitter.
|
| - edit -
|
| @McLaren_Ferrari: I disagree it's a misguided purchase, it
| makes sense to me from his stated goals.
|
| But maybe you can sell the world's richest man your financial
| consultant nightclub analogy and save everyone.
| golemotron wrote:
| I think it's very interesting that the subtext is that no one
| believes he will run Twitter at a loss; it's not his nature.
| If making Twitter better while making money is possible,
| Elon's the one who could do it.
| jollybean wrote:
| He can make Twitter worth more, while using it as his
| personal soapbox. It's actually rational.
| McLaren_Ferrari wrote:
| Then it's once again a misguided purchase.
|
| Trump didn't own any media back in 2015-2016. He won because
| he sucked the air out of the room by making hyperbolic
| statements and riffing off the huge news cycle generated by
| his hyperbolic statements.
|
| A good and effective PR team and a charismatic deliver is all
| you need and it comes for much less than 40B.
|
| This is what kids learn in nightclubs fairly early: if you
| want to command the club you want to be a DJ. Owning the club
| will leave you with both a huge hole in your pocket and in
| the shadow of the DJ every given Friday.
|
| The answer to Musk "problems" is to become a good public
| speaker and work on his in person social game, not
| monopolizing an online platform on which he has by far the
| biggest account already. Pushing on a string that's what it
| is. That's about the only thing he can do to expand his
| virality, owning the platform is kinda redundant.
|
| Real life still happens offline (thankfully)
| zippy5 wrote:
| But what if the DJ convinces his audience to invest in a
| much larger and more expensive night club at an
| extraordinary premium. Then it might make sense to buy the
| original night club just to protect the DJ's scheme.
|
| My math is that Musk's twitter activity very reasonably
| increased Tesla's market cap by more than 5% which is what
| he is offering to pay.
| McLaren_Ferrari wrote:
| I don't think Twitter is special.
|
| Going back to Trump I think that he going quiet after
| losing was not an effect of him being banned from Twitter
| as much as it was about the post defeat depression, mixed
| with fear of retribution for Jan. 6th now that he was out
| of office and also a part of him wanting to be
| Presidential and not critique his successor.
|
| There are no rules in Twitter that prevent Musk from
| engaging in Pumps&Dumps so he'd have to do something
| Trump-esque to be banned. Spending 40B to secure the
| capability of inciting violence and unlike Trump avoid
| getting banned seems way out of whack. Besides inciting
| violence doesn't pump a stock.
| padobson wrote:
| "I think it would be fun to run a newspaper." - Citizen Kane
| jll29 wrote:
| "I think it would be fun to own a newspaper." - Jeff Bezos
|
| (Goes and buys The Washington Post)
| fundad wrote:
| No reason not to believe he'll be the new co-founder of Twitter.
| Sterling track-record.
| boringg wrote:
| To invest or not to invest? Sterling track record indeed.
| RexM wrote:
| Didn't Twitter already turn down his offer to buy them?
| shkkmo wrote:
| They adopted a poison oil that they can use to discourage a
| hostile takeover while they consider the offer. The poison pill
| doesn't necessarily mean the offer will be rejected as it can
| also put them in a better bargaining position to try and
| negotiate a higher price.
| [deleted]
| Barrera wrote:
| Wait, I thought he made his final offer. It was rejected.
| Therefore, no deal. How is this still relevant?
| civilized wrote:
| > the Common Stock, par value $0.000005 per share (the "Common
| Stock"), of Twitter, Inc.
|
| Does anyone know what the hell this means?
|
| Is this one of those annoying things in the finance world where,
| back in 1930, this would have been a meaningful number, but
| nearly a century later, everything is structured completely
| differently, there's a completely different set of numbers that
| are meaningful, but we have to keep dragging this legacy set of
| meaningless numbers around for legal reasons?
| ComradePhil wrote:
| I think Musk is seriously misled about the future of social
| media.
|
| Twitter is where people go for posting stuff when sitting on a
| toilet. Even though it may seem like it is where all the
| newsmakers are at this point in history, imho it doesn't have
| much of a future.
|
| Everyone else is better off posting Tiktok videos to communicate.
|
| Tiktok (or something similar) is the future of social media where
| you can see not only what people are literally saying but also
| how they are saying it... tone of voice, facial expressions (if
| you wish to reveal it). Video conveys a lot more information in a
| short time than a block of text ever can... because a block of
| text has to be given emotional charge, even a hint of intent by
| the reader... which makes it open to interpretation in many many
| ways, most of which can be very misleading.
|
| Younger generation is not going back to text based social media.
| peanut_worm wrote:
| Seems like such a big gamble for what basically amounts to a
| logo. He could very well just make his own website.
| mpalmer wrote:
| It would be difficult competing for Twitter's 200 million users
| if he built a competitor. Much easier to spend the money buying
| the users themselves.
| darknavi wrote:
| He's not buying the brand, he's buying the giant userbase.
| yur3i__ wrote:
| >what basically amounts to a logo, he could very well just make
| his own website
|
| Trumps fall in mainstream impact has proved this to not be the
| case. It used to be we would hear something crazy from him on a
| daily basis. If the ex president can't make his own website and
| maintain relevancy, I doubt musk can either
| netule wrote:
| He's buying the brand and the user base, not the website.
| xnx wrote:
| What happens to https://twitter.com/elonjet if Elon Musk controls
| Twitter?
| ryzvonusef wrote:
| He launches a website?
| mcintyre1994 wrote:
| A fun test of Musk's commitment to free speech I guess!
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