Elon Musk: “I have 44 billion reasons to NOT testify under oath.”
So, the Elon Musk/Twitter dance took an unexpected twist yesterday when Musk said that he was going ahead and buying Twitter after all.
Just a reminder of what the “all” in “after all” includes:
Musk buying shares without the required disclosures under U.S. securities law.
Musk joining the board of Twitter.
Musk NOT joining the board of Twitter.
Musk decides to buy all of Twitter.
Musk signs an ironclad contract to buy all of Twitter.
Musk decides NOT to buy all of Twitter.
Musk shitposts (on Twitter) falsehoods about his reasons he doesn’t want to buy Twitter (too many bots).
Musk tweets a poop emoji because… 10-year-olds.
Musk gets called to the principal’s office (i.e. The Delaware Chancery Court).
Musk is supposed to be deposed by Twitter legal team, where he will have to answer questions, under oath.
Musk decides that it would be better to part with $44 billion rather than answer those questions under oath.
Musk announces that he is going to buy the company after all, agreeing to do what he agreed to do in April.
So here we are, on Wednesday morning, October 5, 2022, and the deal looks like it might get done by the weekend. So one would assume that Twitter stock is trading at $54.20/share, the (ridiculously, stupefyingly inflated) price Musk agreed to pay back in April.
(And, of course, after the news broke yesterday, CNBC managed to find a couple of Hall of Fame Monday morning quarterbacks who said that this was no big surprise. Seriously: on any given day, CNBC can find “experts” who will, with NO reservations, state that the moon is made of cheese, so buy cheese futures, and then the next day find a guy to say that we always knew the moon was actually made of Greek yogurt, so you cheese speculators are fucked, but buy call options in Dannon stock…)
Except as of this writing, Twitter stock is trading at $51.20. So why the $3.00 delta?
Two reasons:
1.) As previously stated on these pages, Musk is a grade-A douchenozzle who could still flake and try to weasel out of this deal. Then it’s back to depositions and a courtroom in Delaware. He has very little trust left among investors with regard to this deal, so the stock price reflects that skepticism.
2.) There is a Reuters story out this morning that says that the parties are still arguing over financing details. It includes Musk’s banks (Morgan Stanley, Bank of America, Barclays, among others) who were part of the original financing of the deal on the debt side realizing that “Hey, the entire interest rate environment has drastically changed for the worse since we agreed to finance this thing in April, so hold on there cowboy!” If the financing falls apart, the stock will crater as the deal falls apart.
In fact, Musk is such an asshat, I wouldn’t put it past him to use his inability to renegotiate the bank-funded debt as a pretext to say “Welp, I couldn’t get the financing together, so I can now back out of the deal for the previously agreed upon $1 billion cancellation fee. So long, suckers!”
BAM! The stock goes to $18.00.
And if I were given to conspiracy theories, I would say that Musk has a secret deal with the banks wherein they force him into an untenable financing arrangement so he can invoke the financing escape clause and then he makes the banks whole in some other way down the road (letting them underwrite a future stock and/or debt offering, taking them all to Vegas for a week of hookers and coke, those sorts of things.)
Remember - he is the richest man in the world who doesn’t think the rules and laws apply to him so, you know, what ev…
So, if you were thinking about buying Twitter stock today at a $3.00 discount to the buyout price, good luck with that. Wall Street has priced in that $3.00 difference for a reason:
It’s not a done deal until it’s a done deal. And with Elon Musk, even then it may not be a done deal.
<Insert poop emoji here>