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.
> 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.
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.
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?
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.
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.
Some quick searching says TSLA is about $1000 and Elon owns 178M Tesla shares.
Assuming Elon owns all those shares free and clear, aren't there plenty of investment banks that would eagerly loan Elon the $21B if Elon pledges ~63M of those shares as collateral? (I got the 63M number from assuming the lender requires collateral value equal to 3x the loan to protect against price drops.)
Then presumably Elon would sell 21M TSLA over the next year or three to pay off the loan and get the other 42M of collateral out of hock, but sell slowly enough not to crash the price of TSLA.
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?
> 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.
You clearly don't know what you're talking about. A holding company is responsible for the 21 billion. Elon happens to have created & owned that holding company. It's a perfect vehicle for him to allow private investors
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.
once again HN demonstrates how much it does not know anything . he does not need to own 100% , 51% is well and good. musk + jack + ark invest + JPM already have 25% they need to get the other 26% which should be very achievable with tesla stock . All SEC fillings aside this is pretty much a done deal .
This brings about an interesting question. If I've got $1000 in cash, that's valuable because I have it now and I can spend it now without many strings. When we talk about billionaires we look at the 21 billion musk has in Tesla and just extrapolate that $1000 in the pocket but to $21 billion in elons pocket. But in reality, he doesn't REALLY have 21 billion because he can't actually spend it all.
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.
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.
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?
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
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?
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.
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.
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.
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.
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.
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.
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.)
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.
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.
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.
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.
I am enjoying the cognitive dissonance of Musk skeptics who hate his huge wealth and influence, yet loudly insist it would be a practical impossibility for him to spend 10% of his net worth. Which is it? Does he wield more power than any one citizen should have, or is it all just monopoly money that is hopelessly illiquid? The answer will be whichever one makes you wrong and Elon Musk bad.
The question of whose voices should be allowed on Twitter seems to me to be missing the civilizational problem. It's akin to asking whether only people who graduated from an accredited conservatory of music should be allowed to play in the kazoo section. The answer might seem complicated until you realize that there shouldn't be a kazoo section in the first place. They sound like 8th graders, and adding some terrible musicians isn't moving the dial on that. Find a new instrument.
I know that Musk actually likes Twitter so this would never happen, but wouldn't it be amazing if he bought the company, laid off all the staff with severance packages, and shut the lights off? Then we could let the healing begin...
[+] [-] hristov|3 years ago|reply
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.
[+] [-] rcMgD2BwE72F|3 years ago|reply
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...
[+] [-] layer8|3 years ago|reply
[+] [-] dlivingston|3 years ago|reply
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
[+] [-] macksd|3 years ago|reply
[+] [-] skeeter2020|3 years ago|reply
[+] [-] exdsq|3 years ago|reply
[+] [-] hristov|3 years ago|reply
https://www.bloomberg.com/news/articles/2022-04-21/musk-is-s...
[+] [-] NationalPark|3 years ago|reply
[+] [-] bfz|3 years ago|reply
[+] [-] bcrl|3 years ago|reply
[+] [-] csense|3 years ago|reply
Assuming Elon owns all those shares free and clear, aren't there plenty of investment banks that would eagerly loan Elon the $21B if Elon pledges ~63M of those shares as collateral? (I got the 63M number from assuming the lender requires collateral value equal to 3x the loan to protect against price drops.)
Then presumably Elon would sell 21M TSLA over the next year or three to pay off the loan and get the other 42M of collateral out of hock, but sell slowly enough not to crash the price of TSLA.
[+] [-] anon_12012020|3 years ago|reply
Ludicrous
[+] [-] TuringNYC|3 years ago|reply
He can execute an equity stock swap agreement with an investment bank and not unload any shares.
[+] [-] unknown|3 years ago|reply
[deleted]
[+] [-] titzer|3 years ago|reply
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.
[+] [-] rockinghigh|3 years ago|reply
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.
[+] [-] recursivequine|3 years ago|reply
[+] [-] unknown|3 years ago|reply
[deleted]
[+] [-] michelb|3 years ago|reply
[+] [-] winternett|3 years ago|reply
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.
[+] [-] anonygler|3 years ago|reply
[+] [-] elisharobinson|3 years ago|reply
[+] [-] polishdude20|3 years ago|reply
[+] [-] nojito|3 years ago|reply
He routinely takes out loans against his shares to disturbingly high levels.
[+] [-] xbmcuser|3 years ago|reply
[+] [-] kurupt213|3 years ago|reply
[+] [-] mangoTangoBango|3 years ago|reply
[+] [-] flabbergasted|3 years ago|reply
[+] [-] auspex|3 years ago|reply
[+] [-] tomcam|3 years ago|reply
[+] [-] blippage|3 years ago|reply
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.
[+] [-] gavinray|3 years ago|reply
"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.
[+] [-] cwp|3 years ago|reply
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?
[+] [-] shmatt|3 years ago|reply
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
[+] [-] throwawayacc2|3 years ago|reply
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?
[+] [-] spikels|3 years ago|reply
Anyone have a sense of what might happen?
[+] [-] tasty_freeze|3 years ago|reply
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.
[+] [-] sudden_dystopia|3 years ago|reply
[+] [-] fleddr|3 years ago|reply
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.
[+] [-] root_axis|3 years ago|reply
[+] [-] helsinkiandrew|3 years ago|reply
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.
[+] [-] boomboomsubban|3 years ago|reply
[+] [-] mountainriver|3 years ago|reply
[+] [-] numair|3 years ago|reply
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.)
[+] [-] once_inc|3 years ago|reply
[+] [-] woodruffw|3 years ago|reply
[+] [-] throwaway2037|3 years ago|reply
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.
[+] [-] yalogin|3 years ago|reply
[+] [-] sebastos|3 years ago|reply
The question of whose voices should be allowed on Twitter seems to me to be missing the civilizational problem. It's akin to asking whether only people who graduated from an accredited conservatory of music should be allowed to play in the kazoo section. The answer might seem complicated until you realize that there shouldn't be a kazoo section in the first place. They sound like 8th graders, and adding some terrible musicians isn't moving the dial on that. Find a new instrument.
I know that Musk actually likes Twitter so this would never happen, but wouldn't it be amazing if he bought the company, laid off all the staff with severance packages, and shut the lights off? Then we could let the healing begin...