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kmlx

1. selling that much stock will dent investor confidence in twitter.

2. Musk exiting twitter will again dent investor confidence.

tldr there will be a huge sell-off if Musk's offer is rejected and he follows-up with dumping the stock.

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> 1. selling that much stock will dent investor confidence in twitter.

I don't understand this bit. It's just Elon selling his own shares that he just bought, why would that affect investor confidence? Nothing's changed about the company itself, so the price would just go back to where it was.

> It's just Elon selling his own shares that he just bought, why would that affect investor confidence?

It could be read by a layman as "He spent a bunch of money, got a look at the internals and realized it was a bad move". In fairness it could also be interpreted as "He just fickle".

Because he bought it with the assumption that his offer would be accepted and he could improve the company. Rejecting his offer opens the door to a world in which Twitter is worth less than what he paid for it: from both Musk's perspective, as well as that of others.

But if someone rejects your offer, that usually implies it's worth more, not less.

It depends on why the offer is rejected. You can say "we think its worth more than that" but if your stock is trading $30 down afterward your investors might have an interesting case about your fiduciary responsibility to them.

Yeah, he's given a decent carrot to the current shareholders to sell, and an even bigger stick to beat them to do it as they will lose a lot if they don't sell.

The only way they can reject this offer is if they have proof that a bigger offer is incoming.

If they reject and the stock goes down to $20, there will be lawsuits.

Lawsuits from who? The shareholders are the ones who are voting here.

Lawsuits by the shareholders suing the board for not accepting the offer. Happens all the time.

It's not for the board to decide if they accept the offer. It's the shareholder's decision.

Ultimately that's the case. But the board may decide to reject the offer without doing a shareholder vote. (That's probably what they will do). That's when the shareholders sue.

Not if it's a cash offer.

Why would the stock go lower than it was before Musk started buying?

1. The chance that Musk would buy Twitter, non-zero before his purchase announcement and somewhat circulating as a market rumor and thus perhaps part of speculation upholding the stock, would go to zero.

2. Musk's departure could be read by some as a vote of no-confidence in management by a capable businessman, and that after some conversations with management about strategy.

The market is not rational, so anything could happen, which is why you should always assume the worst if you are a cautious individual.

Because we're in a deep recession. Twitter and other sp500s are going to slide down regardless of what Musk does. He is offering a choice: "I jump the ship and it sinks a bit faster, or I give you a generous evacuation plan and deal with the leaks myself."

More information. It takes the usually remote possibility of a generous takeover offer off the table. Musk turned down a position on the board, signaling he thinks the company would be better off private. It arguably shows questionable judgement of the board.

Aside from the other reasons mentioned, don't forget hundreds of algos programmed to automatically sell once the price reaches certain low levels - which is bound to happen once large blocks of stock get offloaded.

People will bail who bought on the good news PLUS people will bail who hear the bad news but didn't buy with good news.

Because there is going to be panic selling since everyone knows it will go down if they say no.

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