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Comment by nickysielicki | Hacker News Reader

I don’t understand how any board can implement a “poison pill”, not just Twitter but Netflix and others, and not be found working against the interest of shareholders. Can anyone help me understand?

You’re categorically changing the profile of the stock. This has a chilling effect on large investors, including but not limited just to Musk, right?

Vanguard, for example, has just had its range of further investment limited arbitrarily. Isn’t that bad for all stockholders, to know that large stakeholders will not drive the price up if they somehow gain substantial belief in the company?

The risk portfolio of Vanguard just went up considerably because in the case that they fully lose faith in the board, they no longer have the option of installing a friendly board, they must simply liquidate their holdings. This, in turn, makes them more skeptical of further smaller (non-takeover) investment because it’s more to liquidate and more risk.

Who does this benefit besides the board? I guess I understand that the board is not beholden to the interests of all shareholders equally, and I’m not suggesting that this doesn’t benefit some shareholders, but where does the line start?

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If I was a member of Twitter's board, Musk's history of erratic public behavior, SEC settlement, and openly hostile attitude towards the company's employees would be more than sufficient to justify my belief that his controlling ownership would not be in the interest of the current average shareholder.

That opinion would also be consistent with how "fiduciary duty" is interpreted by US regulators: companies are not required to perform any particular action that might reasonably be in the interests of shareholders; they must merely show that the company's actions were intended to be in the best interests of the shareholders.

However, I think it's a harder case to argue when twitter stock closed at $.18 above the price they went public at in 2013. Sounds like whatever it is they have been doing hasn't been in the interest of the average shareholder either.

The stock is toast regardless after this.

The fate of the company after it has been taken private doesn't matter as far as "fiduciary duty" is concerned.

> fate of the company after it has been taken private doesn't matter as far as "fiduciary duty" is concerned

If it goes private. As always, Matt Levine says it better than I can:

"...the financing seems to be made up of cobwebs and phlogiston. But also Musk has joked about taking companies private before, and he generally changes his mind a lot. (He agreed to join Twitter’s board last week! And then changed his mind four days later!) If you are a well-advised professional public company board, it is just catastrophic to imagine that you might say 'okay Elon $54.20 it is' and then he’d say 'ha no I was kidding, psych!' That would be crippling for a public company. Also that is basically what he did to Twitter’s board last weekend!"

https://www.bloomberg.com/opinion/articles/2022-04-15/sure-e...

Levine is being disingenuous, as usual. Obviously he would have banks and investors fighting to finance the deal. Wouldn't a breakup penalty address the breakup problem?

Not to mention he is being disingenuous by implying there was no material change between getting offered a seat at the board, and hearing what accepting that seat would entail.

Levine is a former Goldmanite, Twitter advisor. GS versus MS, the latter here unusually on the hostile side.

It sounds like Musk received the offer, accepted it and changed his mind afterwards. That is, after accepting the terms, not after receiving them. If that’s the sequence of events, I don’t think Levine is being disingenuous.

> Wouldn't a breakup penalty address the breakup problem?

No. If you’re at a table negotiating a break-up penalty, you’ve already crossed the Rubicon. You have indicated that the price was at the very least worth considering.

If that buyer then walks before agreeing to the break-up penalty, the damage has been done. Board seats have been lost for less.

(To be clear, Musk is a shitshow, but a cash-out is a cash-out. How to balance those things is above my pay-grade.)

I agree thoroughly that's why tge pairing with Twitter would be marvelous.

One can equally argue that opens sourcing Twitter algorithm and building trust would bring incalculable number of new users, have a profound impact on their ad business and not to mention, cut down their competitor's moat. People will flock to Twitter like bees. Ad revenue + subscription would skyrocket.

So, it can go either way and can be argued either way.

That’s correct. Which is why “fiduciary duty” arguments aren’t very good.

> opens sourcing Twitter algorithm

People need to stop saying this. It's nonsense. Or maybe keep saying it so we know your clueless about how anything works that your commenting on

> It's nonsense

Why? (Honest question.)

Also genuine, why would a person believe that would happen? The foremost thing that comes to mind is they'd be giving something of great value and receiving nothing in return.

which part do you want open sourced? timelines are generated after going through machine learning and then multiple services. even then, some of the infrastructure limits what you see in the end.

https://blog.twitter.com/engineering/en_us/topics/infrastruc...

> Unfortunately, Haplo has its limits. Since we try to pull every single Tweet ID in a conversation every time a conversation is loaded in real-time, this is potentially an unbounded amount of data. We’ve found that if our platform tries to load more than a certain number of entries from our cache at once, our cache request latency will spike, and we begin to time-out on a significant fraction of read requests. Because of this, there is a limit of thousands of Tweets per conversation tree in this cache.

even just showing an ad is a ton work has a bunch of services involved

https://blog.twitter.com/engineering/en_us/topics/infrastruc...

Other stuff that I think explains the complexity

https://blog.twitter.com/engineering/en_us/topics/insights/2...

there's no single algorithm, its a bunch of parts coming together from hundreds of engineers and multiple services.

You think there is no such thing as OSS models?

Please explain. I can easily envision much more transparency on how the feed works.

Transparency i can agree with, i think twitter does a horrible job at that. especially explaining the rumored shadow bans and stuff. But i think thats different then open source code

I think you’re vastly overestimating the number of people who pay attention to such things.

The problem is, this plan applies much broader than Musk, and penalizes even the “good” activist/takeover artists.

After they've been bought out, the performance of of the company is of no concern to the former shareholders.

It doesn't have to be complicated. The shareholders should have a right to decide through a proxy vote on whether to accept the offer

To me, this seems obvious. No reason something this fateful shouldn’t be put to shareholder vote. No good reason, at least.

Yeah, I think Elon is going to demand this (and as a 9% shareholder himself, is likely to get it)

He could have made a cash tender if he was serious. But he isn't, and does not have the cash.

> If I was a member of Twitter's board, Musk's history of erratic public behavior, SEC settlement, and openly hostile attitude towards the company's employees would be more than sufficient to justify my belief that his controlling ownership would not be in the interest of the current average shareholder.

That... makes absolutely no sense. The interest of the current average shareholder ends when they sell their stock. There is no point in time at which both (1) the current average shareholder owns more than zero shares, and (2) Musk has a controlling interest. So it's impossible for those two things to conflict.

If you were a member of Twitters board, would it be in the interest of the current average shareholder to sell their shares at well above the market price?

It depends on how you define fiduciary responsibility. If it’s a point in time, transactional view, yes. If it’s a long term view of maximizing share holder value over time, not necessarily.

> If you were a member of Twitters board, would it be in the interest of the current average shareholder to sell their shares at well above the market price?

That definitionally depends on whether you, as that hypothetical board member, believe that Twitter has the potential to reach a share price higher than $54.20 if it stays public.

Also, remember there is nothing that binds the board of a company to solely consider potential shareholder value in the actions they take. There's a widespread belief that "fiduciary duty" overrides all other concerns, but from a regulatory/legal standpoint, that's simply not so. The board obviously needs to take it into account, but if they believe a merger or takeover is not in the best interest of the company, they don't have to take it.

Right, but they hurt other shareholders by preventing them from taking it.

Don't like the bid, fine, say no -- but don't prevent your peers from selling out.

A buyout is all or nothing. Many current shareholders (a majority?) think the offer is low. The board is representing their interests.

But all that is irrelevant because he wants to take the company private- no shareholders. The impact to shareholders is the massive bailout he would give them on their shares.

If they cared about shareholders best interests they would bring it to vote.

As a Netflix shareholder at the time they adopted their poison pill, I feel like the subsequent ~40x increase in share price has been very much in my interest. :-)

Of course hindsight is 20/20, but even at the time, it seemed like the company was prioritizing long-term growth, whereas if they were taken over by Carl Icahn, they'd certainly not be.

Netflix had a product to sell, not just a crowd.

Twitter definitely isn’t Netflix. It’s been a dog since IPO, languished under a part time disinterested CEO, and only peaked because of the pandemic meme stock era.

As an individual and index shareholder I’d love for Musk to take it away at a premium, I have zero faith management will do anything positive.

Strong agree, Twitter hasn't grown their user base more than 10% since 2015, they might be making more revenue per user but annual revenue is likely ready to plateau if it hasn't already. Getting a premium on your stock is a good option if you can get it and a natural outcome of investing.

Wait, if some ETF accidentally exceeds 15%, then what? First of all, that'll screw over a bunch of small investors, right?

Second, could Elon swoop in at that point?

Edit: Also, if Elon is reading this, I'll happily buy 14.9% of twitter, and vote as part of your block. Just pay me enough to cover the sale and taxes, plus 1%.

Poison pills often have exemptions for passive investors such as ETFs.

Don't think that's true. ETF fund managers, when faced with a corporate action decision, will always vote for whatever maximizes their shareholders value.

Courts have upheld poison pills that treat 13D and 13G filers differently. I'd wager most ETFs that hold 5% of major public companies are 13G filers. Vanguard files a 13G for twitter. To be fair idk what the twitter pill will do - maybe it will be more aggressive.

An ETF isn’t going to “accidentally” exceed 15% ownership of Twitter.

Seriously, do you think funds playing with the kind of money to buy 15% of twitter often make careless purchases?

>Edit: Also, if Elon is reading this, I'll happily buy 14.9% of twitter, and vote as part of your block. Just pay me enough to cover the sale and taxes, plus 1%.

Such an arrangement would make Elon the beneficial owner of your shares.

Barclay's literally forgot to register with the SEC to be allowed to issue securities, then issued $15bn of them over the course of years, and lost $600m as a result. If you think "funds with this kind of money" are any better than a pack of chimps, then you should direct that "seriously" back at yourself.

https://www.bloomberg.com/opinion/articles/2022-03-28/barcla...

Just because one tiny fund screwed up once does not mean that it is anywhere near likely that any ETF would screw up in a manner that would trigger this poison pill.

$15bn is tiny, presumably we’re talking about big ETFs like SPY here.

And anyway, you’re pretty much agreeing with me. It’s absolutely possible for a big fund to make a huge and hilariously stupid mistake, but this twitter poison pill does not meaningfully affect the chances of that happening.

In a world where you can shoot yourself in the foot in a million ways, it is utterly pointless to speculate about this one extraordinarily unlikely situation.

What? Barclays is one of the largest financial institutions in the world with $1.9tn in assets.

I think we're in agreement that this Twitter thing isn't worth the attention, but we are far from agreeing that large financial institutions are inherently competent because they're large.

I was literally wondering what would happen. ETFs are supposed to be algorithmically traded right?

There's a race condition between the poison pill being instated and the ETF updating their strategy. I wonder if a board could maliciously take advantage of that somehow.

ETFs generally aren’t managed without human involvement, and this poison pill isn’t software either. You’re taking concepts that exist in worlds like Ethereum and applying it to normal finance. That’s not how it works.

> but we are far from agreeing that large financial institutions are inherently competent because they're large.

I don’t see anyone making that argument.

Speculating on an ETF “accidentally” acquiring more than 15% of Twitter implies a whole different level of incompetence than a big ETF ever fucking up big.

> Seriously, do you think funds playing with the kind of money to buy 15% of twitter often make careless purchases?

- You

> Such an arrangement would make Elon the beneficial owner of your shares.

Thanks for explaining why that won't work.

Presumably, if Elon has a few rich friends, they could use their own money, vote as a block, and the board would still be screwed.

I wonder what other schemes would work. B corp, maybe?

> Presumably, if Elon has a few rich friends, they could use their own money, vote as a block, and the board would still be screwed.

But that’s just playing along with the spirit of the rules, not a loophole.

> An ETF isn’t going to “accidentally” exceed 15% ownership of Twitter.

No, but an ETF has a defined investment strategy, and if enough money comes into the ETF, it could potentially trigger this.

Do you think big ETFs just buy shares willy nilly without any due diligence on company charters and bylaws?

I’m curious what happens in that case, then - let’s say hypothetically that SPY has enough cash come into the fund that they’ll cross that threshold if they follow their stated investment policy (“buy the S&P”) - what’s the move, then?

Buy futures or other assets that will mimic the price.

The stated investment goal isn't "buy the S&P", it's "match the price of the S&P".

How far can you go with that strategy? The derivative assets aren’t going to fully move with the price, and can have much higher volatility than the asset you’re trying to avoid buying.

No, you aren’t going to have higher volatility like this than you would buy triggering a poison pill like discussed in the article.

They will talk to Twitter board and make an agreement with them to not trigger the poison pill, and continue buying shares.

Such an agreement would be reached incredibly quickly, there would be no need for stopgap measures.

From the article:

> Under the new structure, if any person or group acquires beneficial ownership of at least 15% of Twitter’s outstanding common stock without the board’s approval

Index funds do, that's pretty much the definition of an index fund.

ETFs are a different concept, but a good index fund will be structured as an ETF, and it looks like this thread is using "ETF" to mean "index fund"? If so, then the answer to your question is an unambiguous yes.

This is simply incorrect. Index funds still do basic due diligence, they would not trigger this poison pill.

If it’s a passively managed index fund, then yes, absolutely.

That is not what passive management means.

For example in the case of SPY, that would go against their stated investment objective.

They also clearly state

> the Trust may fail to own certain Index Securities at any particular time, the Trust generally will be substantially invested in Index Securities

Alright, then I suppose they’d buy up to 14.9% and then create additional long exposure thru swaps or synthetic longs using options.

Or they’d just hit up twitter’s board, enter an agreement with them, and continue buying shares as normal.

The poison pill just requires prior approval from the board, which they would happily grant in this kind of a case.

... wouldn't that imply the ETF was 15% of the market or market segment overall?

Yes, which is excessive, I agree, but there’s nothing mechanically preventing it.

So you do agree with me that this is not going to happen.

> Edit: Also, if Elon is reading this, I'll happily buy 14.9% of twitter, and vote as part of your block. Just pay me enough to cover the sale and taxes, plus 1%.

You might want to speak with a lawyer who is familiar with inchoate crime.

What you publicly proposed to Elon is a crime, since you intend to conceal beneficial ownership of shares.

Likely wouldn't even get around modern poison pills since they often contain "wolf pack provisions" covering multiple persons acting in unison.

Yet another example of something that many people wouldn’t think would be a crime, but would send them to prison for decades!

Fuck with rich peoples money, you're going to jail _for a long time_. Murder someone in a case of 'mistaken identity/residence', go to work tomorrow.

Where does the concealment come in?

Yeah, there's no concealment and no beneficial ownership. "I'll vote as part of your bloc" isn't beneficial ownership. (At most it's delegating the 'control' aspect of the equity, but even that is a stretch - in context, it's clearly a statement of incidental agreement with his opinion on this point, not a total delegation of control no matter what he should choose to do in future.)

No, "I'll vote as part of your bloc just pay me $50M" is obviously not an incidental agreement.

Even more importantly: pay me to cover the sale is the easiest 'piercing of the veil' in the history of time.

Oh so Mr. Musk incidentally wired you billions of dollars before the share purchase?

Agreed, but there'd be no attempt at concealment (I didn't know beneficial ownership of shares was a thing), so, while it would be dumb to hand me and the IRS a large pile of cash, it sounds like it would probably still trigger the poison pill, and not be illegal.

If doing it above board wouldn't make sense anyway, that means the idea is to do something illegal. You'd know who controls the board, how many shares the person currently buying it has secured, which way votes are going to go before they happen, etc. The rest of the shareholders, the rest of the whole market, wouldn't. You'd claim (and would probably have to in sworn testimony) that billion dollar gifts to you from Elon Musk, including your stock itself, were incidental.

So shareholders aren’t allowed to coordinate?

I'm glad I'm not theonly one who caught that, because if so, this appears to fundamentally undermine freedom of assembly /speech.

(Assembly into blocs of financing, dpeech as the action of capital allocation)

Honestly I'd lose faith in the U.S. in it's entirety if it was the case that the answer to your question was even remotely "yes".

It’s pretty fundamental to investment / mutual funds. Vanguard, Blackrock, etc. None of them are the beneficial owners of Tesla, but all of them are coordinating the activities of millions of investors they represent.

That's what I mean. If it were the case that coordination can't be done, it violates every normative expectation.

Keep in mind, I lump in people's behavior with normative restrictions of the First Amendment. If the Government can't do it, and the Government is us, we shouldn't be doing it. So businesses doing it because business doesn't hold for me either. Especially if it happens as a method of indirection to work around literal interpretation.

So if there is a restriction on shareholder coordination, I don't see how our legal system in this case can be taken seriously as anything but a tool utilized by those in positions of influence capable of more tightly coupling to other people of influence.

I agree with your conclusion but not really your reasoning. There are countless things the government can’t do, which individual people can do. I can respect an establishment of religion. I can spend money without a transparent and disinterested tender process. Etc etc. You seem to be taking a very literalistic, almost theological reading of “the government is the people” - yes, the people choose and appoint a government to represent them, but hopefully you understand that the government isn’t metaphysically the same thing as the people.

Saying “the government is the people” is much like saying “the shareholders are the managers of the company”: yes, that’s true in an oblique, ideal sense, but you’re going to run into trouble if you start trying to literally substitute the one for the other in random sentences.

They all register and file disclosures though. A private fund of this size concealing its existence, its structure, and its objectives, is immoral and bad for the stock.

If you are claiming you own the shares when in fact Elon payed for them, you are concealing that Elon is the beneficial owner.

If you admit that he is the beneficial owner and you are just an intermediary, then the poison pill provision is not skirted.

And inchoate crimes don't require the person to do as you commanded them. Just the statement above would probably be enough to charge someone. And even if the crime you are encouraging someone to commit is impossible (for instance, asking Musk to buy 110% of Twitter through you), it is *still* a crime for you to have asked him.

I’m not sure how the second part of your claim holds up if you treat your first contention (with which I agree) as a precondition. In particular, I think it wouldn’t be possible to prove mens rea, which you’d have to do if no crime ended up being perpetrated and you’re charging someone only for the alleged solicitation of an inchoate crime?

IANAL, I just play one on TV, so I might have fucked it up. Wikipedia seems to have some good and amusing examples on their page:

https://en.wikipedia.org/wiki/Inchoate_offense

"Publicly proposed" contradicts "conceal beneficial ownership."

It's not a crime to publicly finance someone else's stock purchases, or even to publicly solicit others to finance your stock purchases (it's not "solicitation" in the inchoate sense, since the inducement is not towards a crime).

> What you publicly proposed to Elon is a crime, since you intend to conceal beneficial ownership of shares.

Not really.

Setting aside the other issues, first and foremost this is obviously a joke. Prosecution would have to establish mens rea for this to rise to a criminal act. Do you think anyone could prove true intent for these events to unfold, based on this comment?

> since you intend to conceal beneficial ownership of shares

Promising voting rights doesn't change beneficial ownership. Twitter would have precedent, however, to find "conscious parallelism" and thus "a de facto control bloc" between the commenter and Musk, and thus bundle them for purposes of the poison pill's activation [1].

Still, not a crime. Civil dispute under corporate law.

[1] https://www.yalelawjournal.org/comment/unpacking-wolf-packs

As of January 2021 there is a whole bunch of new reporting requirements for beneficial ownership to combat money laundering and hiding assets. Structuring a stock trade to conceal the actual owner of securities (note the parent poster didn't offer to vote HIS shares) and failing to file disclosures is absolutely criminal.

The Yale Law article you cite is just about groups of investors working together, which is within their rights.

X AE X-12 buys 15% triggering pill, X sells shares immediately to drop price, elon purchases 42.0% equity by minting new discounted budget shares?

I imagine if an ETF accidentally exceeded 15% then the board would go talk to the fund managers and maybe get them to sign some documents. This isn't a computer program that will automatically trigger armageddon. It is just some new rules that mean if you turn up at a board meeting saying 'haha, I just bought your company and you are all fired', the board gets to say 'nope, we just issued a bazillion shares and gave them to all the existing holders except you, and you now own just 14.9%, sorry not sorry for your loss'.

This happened with SKT (Tanger outlets) which is a high dividend paying stock in SDY ETF. The ETF was approaching 50% ownership stake.

The fund needs to report their holdings. Not all companies have a poison pill provision. Not all companies that do have a poison pill will activate it. In the case of an ETF there's usually a discussion between the portfolio manager and the company. They know where they stand. Plus it's not really in a passive fund mandate to go activist.

> You’re categorically changing the profile of the stock.

Mechanically, it's not much different than an issue of new shares. From Twitter's announcement:

>> each right will entitle its holder [...] to purchase, at the then-current exercise price, additional shares of common stock having a then-current market value of twice the exercise price of the right.

There's no obvious breach of fiduciary duty through this plan. Existing (non-Musk) investors get new shares, but Twitter also raises capital at the current market price.

You can read "Barbarians at the Gate" for some 1980s history of corporate raiding. Back then, it was pure greed and ego. So unlike today [smile emoji].

The "poison pill" defense is very old. I'm not going to defend or attack it; it is what it is.

I WILL observe that, once a stock is "in play" it usually gets acquired, or at least gets a bunch of new board members.

Elon's offer is at the same time an hostile offer, and conditional on obtaining financing from banks. This is never heard of in the history of hostile acquisitions, and is a BIG risk for the board to entertain any attempt by anyone to buy Twitter before they know what their loan percentages are.

It would be simple for them to say 'this is not a serious offer' no matter the premium that is a good faith way of rejecting it.

I could offer them $150 a share tomorrow, contingent on financing and would get laughed out of the room.

You're not the richest man in the world. It works different if you happen to be though.

Of course it does, but we also have no idea what happened behind the scenes and the board does. He turned down joining the board last week basically because he could act like a troll if he did (I’m being facetious). Calling musk the richest man in the world is also kind of silly because he’s not offering to stock swap for Tesla shares…he has a lot of theoretical wealth, which as with many factors would play in the boards decision about whether this is serious.

My point is that the number on the offer is not an objective and singular measure of whether this is a good deal for Twitter. Who is making the offer clearly matters as well to how serious it is.

Elon's offer is not a hostile takeover, it is just that - an offer.

Elon's offer is not a hostile offer. He has made an offer, management has not yet rejected it. It is just an offer to purchase the company, as of now.

If the offer is rejected and Elon continues to attempt to gain control of the company, that would be an attempt at a hostile takeover.

Hostile, in financial terms, is whenever the board or CEO did not initiate a conversation around an acquisition, and it is just made to the company.

No it isn't. They key is that management and board are against it and the deal is still pursued by the (potential) acquirer. It is perfectly possible to initiate a conversation regarding an acquisition and this is not a hostile takeover per-se though it could develop into one.

https://www.investopedia.com/terms/h/hostiletakeover.asp

Just to clarify, that does make Musk's offer a hostile takeover bid, as is also stated in that link.

Yes it does, and this is underlined by the fact that they adopted the poison pill proposal. Though, in the past such tactics have been used just to get a better price, in investment banking 'no' doesn't really always mean 'no', it may just mean 'really, no, not at this price'. That said this is already a pretty premium and they might end up regretting that move if they really are after the money and don't have a different motivation.

Musk made an unsolicited, and what seems to be a non-investment choice, purchase of almost 10% of the shares and wanted to join the board. As far as I can tell, the board made his board seat contingent on Musk not buying more than 14.9% and Musk said no, and a few days later offered to buy the company outright. Now Twitter is taking moves to prevent a hostile takeover. That sounds like a hostile takeover to me.

I'm not acting at all, I'm just nailing down what a hostile takeover bid is because there seems to be some lack of clarity about that.

I misread the context of your comment.

np, it happens.

they->the

No, right now it is an unsolicited offer. That doesn’t mean hostile, in financial terms.

What? This is not just wrong, it's comical to even think of what it would mean if it were true. The board would have to clairvoyantly foresee any possible acquirer who might be interested in the company, or else reach out to every company and individual in the world, stating its willingness - or otherwise - to be acquired. That would be, uh, quite something.

I dunno, this seems a lot like a rejection.

The offer is technically hostile because it was unsolicited, and the offer was made at the same time he indicated he wanted to buy-out the company (usually there's a gap).

A more typical way of doing this would be to make a proposal directly to the board first. The fact that Elon did it in public means he's trying to pressure the board (via the shareholders) into taking an action they wouldn't otherwise want to take which makes it hostile.

What exactly would be the risk for the board?

What if Tesla stock tanks (it could happen) forcing Elon to sell stock to repay his debt incurred to buy Twitter. He could decide to dump Twitter instead in a fire sale, massively undercutting its value and hurting it in the way Yahoo and AOL were hurt by the constant swaps.

Offers aren't hostile. Trying to take over a company after an offer has been rejected is hostile.

Not necessarily, the offer could be amended and increased that's perfectly normal and still not hostile. Hostile is when you pursue against the wishes of the current owners of the company and their management, so in other words if they have indicated that they are either not for sale or that they are not going to sell their shares to you.

You could then try for a hostile takeover by buying up as much as you can on the open market and possibly to try to get one or two smaller shareholders to sell their shares to get you more than 51% (and in some cases more than 66% aka a supermajority) to be able to call the shots.

Even then, the Twitter board has staggered terms, so it is impossible to do a wholesale replacement of the board and thereby gain control of Twitter. The board voted unanimously to invoke the poison pill provisions in the bylaws so it isn't a matter of swaying a small number of board members.

Tender offers can be hostile - a "hostile tender offer" is an offer directly to shareholders to buy shares at a certain price, without getting the blessing of the board.

What's wrong with a leveraged buyout, for example? It seems like the norm these days, not the exception.

Twitter already has a lot of debt, far too much to fund this.

Twitter has no equity. There's nothing to leverage.

Unless I'm missing something, 'leveraged buyout' doesn't specify that it's Twitter's equity which has to be leveraged. Off the top of my head, I think Elon Musk has some other bits and pieces which he could scrounge together for collateral.

No, leveraged buyout means you use the equity of the company purchased as the backing for the loan.

If you borrow from somewhere else it’s just a buyout.

Hm, that doesn’t sound right, and Wikipedia agrees with my understanding, that an LBO means the buyer borrows money for it:

>> A leveraged buyout (LBO) is one company's acquisition of another company using a significant amount of borrowed money (leverage) to meet the cost of acquisition. The assets of the company being acquired are often used as collateral for the loans, along with the assets of the acquiring company.

Note how the second sentence says that the assets of the purchased company can be part of the arrangement, but the “L” in LBO means the buyer’s borrowing, however they accomplish that.

https://en.wikipedia.org/wiki/Leveraged_buyout

Once Elon owns the company, HE is the one taking the risk on the loan -- NOT the board of directors.

Hmm, not sure I understand what you are saying here. If Elon gets a loan using his Tesla stock as a guarantee, the risk is solely his. If he puts together a consortium to do the purchase, then that group is taking the risk. It doesn't matter though, given the Twitter bylaws, if the Board doesn't want it to happen it won't happen.

In most other countries, such a poison pill would be illegal as it violates the principle of equal treatment of all shareholders. Also, in most other countries, the decision to issue new shares requires a shareholder vote and cannot be done by the board alone.

>I don’t understand how any board can implement a “poison pill”, not just Twitter but Netflix and others, and not be found working against the interest of shareholders. Can anyone help me understand?

So let's say you put in a shareholder rights plan that allows all current shareholders to buy 10 new, discounted shares whenever a new shareholder reaches 20% ownership and for every share they buy from then on. That effectively dilutes that one owner without anyone else, and if they continue to buy it makes all the other shareholders much more money.

That's not always legal, but it would help the interests of shareholders.

> That's not always legal, but it would help the interests of shareholders.

Except the guy at 19.9% trying to move up. Considering he has already invested quite a lot of money on the company, shouldn't the board also work for him ?

Why should he be treated differently and his share give him different "rights" than others people share ?

You are digging in the wrong sandbox if your goal is to find ethical behavior.

If ethics cannot be found, arguably you have a toxic artifact in civilization, and tgereby a good shaking up is warranted.

More likely he'll withdraw offer and sell his stake, causing share price to drop and all shareholders losing real and potential gain.

The poison pill was mostly developed at a time when the alternative was him selling all the company assets and leveraging the company to load it with as much debt as possible then give out as large a dividend as he could before selling off the stock leaving the company insolvent and everyone out of work.

So imagine a company taking $100 million in debt, giving all that out as a dividend then the stock price tanking through quick sales. Poison pill keeps the company going and avoids that fate.

And this course of events is certain why? Because you've stated so?

Yeah, I didn't say anything about it being certain. I was outlining why it was developed.

...Companies do not warrant immortality. I fail to see how a corporate vehicle being able to persist against those that have bought in sufficient stake to move policy makes any sense whatsoever.

You're claiming that Musk's purchase of twitter is objectively good for shareholders

Given that it’s at a share price premium for 90%+ of the lifetime of the stock since IPO, yes. Most shares were bought below the price Musk is asking.

it's radical to equate dollar values with objective goodness

Exactly. Profit does not always equal good.

One of my favorite books: "Small giants, companies that choose to be great instead of big"

Fiduciary duty, such as it is, only extends to dollar value; and there is no other criteria to sue the board over.

Note that I'm all for companies having much more legal responsibility to other stakeholders, not just shareholders, but that is somewhat irrelevant for a discussion of whether the board could be successfully sued over adopting this decision.

True, but the GP's phrasing of "equate dollar values" implies a sort of cut and dried interpretation. A mechanical calculation of a short-term price snapshot is not the only thing that matters. If the board has good reason to believe that Musk will be bad for the stock price in the long-term then there wouldn't be any breach of fiduciary duty.

That's not exactly true, as Musk's offer is to buy the company outright, making it private (and thus buying out all shareholders), as I understand - so there is no concept of how Musk's ownership would affect the stock price. Still, the board can easily argue "we believe shareholders will be able to achieve higher profits in the future by maintaining their ownership than by selling all stock at Musk's offered price today".

He claims that he wants to “retain as many shareholders as is allowed by the law” [0] which is just as fictional as it was when he pretended to try to take Telsa private.

[0] https://www.bloomberg.com/opinion/articles/2022-04-15/sure-e...

It's not that radical to equate dollar values with "good for stockholders". At least in my impression that is what most stock holders care about.

There's an entire sector of funds that include criteria around environmental, social, and governance impacts in addition to returns on investment.

https://www.investor.gov/introduction-investing/general-reso...

The board has declared the price offered to be too low. You say it's high enough, but I doubt you own as much stock as the people on the board.

To be clear, they haven’t actually rejected the offer yet, they’ve simply limited the ability of Musk to acquire a majority stake in the case that they reject.

If you think the stock could grow further without Musk then the board would be protecting your interests.

If North Korea offered $60 billion to buy Twitter would Twitter be forced to sell? Not comparing Musk to NK, but money isn't the only consideration when an offer to sell comes in.

No, but only because you chose North Korea.

Indeed, what happens when Elon starts his own platform instead and uses some of the ~$40 billion he'd otherwise buy Twitter with instead on paying top users of Twitter to exclusively use his platform instead?

I'd ditch twtr in a heartbeat, at this point it's a cesspool in every sense.

There are already alternatives to Twitter. Why haven't you ditched it already?

I'm aware, and do you realize nobody of note is using the alternatives? Why would you recommend someone invest time building a presence in yet another loser platform with bleak future prospects? Doesn't seem helpful or all that bright.

For a real alternative to succeed, solid backers focused on dethroning tw are needed to inspire confidence and stability, then we all need to jump at about the same time to get the momentum going and bounce out of the twatterverse.

As it stands now, there is no real competition.

> I'm aware, and do you realize nobody of note is using the alternatives?

That's exactly the point - there is no reason to believe this would change if Musk created his own social network.

I'd be willing to give it a shot if it's backed by $$$ and a progressive technologist.

Your two comments show you’re the perfect audience and user for an Elon social platform. Every failed or failing Twitter esque platform has some number of perfect audience fits. The problem is that those aren’t enough users. There is no reason to believe an Elon venture would fare markedly better.

The amount of users who once used twitter minus still use twitter is greater than current twitter users. You could build off of everyone rejecting twitter.

That only makes sense if everyone who stopped using Twitter is some kind of united cohort. Many people were simply not interested in the format, didn't find content that cared about, didn't have friends using it, drifted off to other social networks etc. Good luck gathering all of these people together on a new platform.

Most people who have “rejected” Twitter did not do so because of Twitter issues but wanting micro blogging sort of social platform.

Most rejected the overall concept. The amt of users that stil want something similar but not Twitter AND who will be appeased by whatever alt Twitter is made is an even smaller number.

What would happen is that it would almost certainly fail to make any impact.

> what happens when Elon starts his own platform

He wouldn't bother because it'd be a failure. Twitter's tech stack isn't worth 40 billion, Musk could clone twitter for less than $500m, but just having a platform doesn't accomplish much, the overwhelming majority of twitter users have no reason to leave twitter.

I bet there would be a whole lot of people that would join elon-twitter.

They said the same thing about truth social.

Parler didn't fail because it was unable to attract a userbase.

That is why it failed - technical mistakes aside.

Parler failed because it was never actually able to do and be what the incoming user base thought they were promised —- a free, uncensored bastion. Since that would never work at a bigger size with mainstream attention, there’s no real diff. Parler being a grift makes it all muddied any how.

Do you remember Google Plus? Google had excellent financing and an existing team of excellent software developers and couldn't pull of a credible alternative to facebook.

The world is littered with the expensive corpses of failed software.

Much of Facebook could be cloned by many startups see VK.

Google's product lacked purpose. It died because of a lack of vision and leadership and product mistakes (real names).

It died prematurely. Google treated the product like a pilot a network threw on the first week of September. It had solid numbers and given time it could have found itself if it found a backer in leadership.

North Korea is under heavy sanctions and is thus a poor choice.

But if France put a bid on twitter, they would be forced to entertain the offer.

If the China Investment Corporation offered $60 billion to take Twitter private would Twitter be forced to entertain the offer?

China is not under sanctions, but the odds are excellent that the US government would flip out and prohibit Twitter from selling.

North Korea is under economic sanctions by USA. Your hypothetical is stupid for a whole bunch of reasons.

They certainly had no problem with selling to Saudi Arabia.

Not everyone buys a stock for a quick short-term turnaround. If I expect Twitter to 20x in the next 5 years why would I want to sell my share to Elon?

And existing investors all have the option to cash out today for just 17% less than Musk's final offer.

If you expect Twitter to 20x in the next 5 years, then

a: You're dreaming.

b: You're absolutely expecting a quick short-term gain.

> b: You're absolutely expecting a quick short-term gain

To put this in perspective, 20x in 5 years is an 82% CAGR. And five years is far short of the length of an economic cycle. Traditionally, "long term investing" meant across at least one whole business cycle.

Twitter has operated for 16 years and public for about 10, explosive growth of their userbase is in their past and monetization strategies have already been implemented for years. There is no reason to believe it has the potential for such growth.

Then why were they holding the stock the day before Musk got involved?

They feel there is potential for growth, just not flights of fancy like you describe.

> If I expect Twitter to 20x in the next 5 years why would I want to sell my share to Elon?

Vote with your dollars: buy shares at a price higher than Elon's. Borrow if you must. If you are not ready to take that risk, then maybe your expectations are more wishful thinking than anything real.

Today's price and the 'expected' future price is all that matters. The 90% lifetime price history is not relevant. All transactions of this nature are based on future value. The offer is only an 18% premium at a time when many tech stocks are being hammered due to extrinsic reasons. It is not a serious offer.

I take it you're highly invested in Twitter stock given how confident you are it's going to go up by more than 20%?

It closed $.18 above initial offer price in 2013.

The share price tells you nothing by itself—you also need to know the amount of shares outstanding at both points in time to make an actual comparison.

Today's price is the expected future price. If you disagree, go buy the stock and make some money.

That is irrelevant. To show a breach of fiduciary duty with this kind of argument, you would basically have to prove that it is objectively impossible for Twitter stock to be worth more than what Musk offered over some horizon. I very much doubt there has ever been a successful case taking this approach.

Getting paid a 25% premium for my stock sounds pretty good to me.

What if the stock goes higher in the future?

What if the stock crashes in the future? Having a guarantee profit sounds like a pretty good deal for some.

Guaranteed profit at the point in time is great for speculators. If you're doing long term investment, realizing profit at random point in time, isn't really that attractive.

What ? Even if you're a long time investor, having an instant 25% guaranteed profit is good as you can sell part of the stock and diversify.

If you follow that logic, each time stock goes after good earnings, everyone should just sell off everything.

They should, provided transaction fees and gains taxes don’t exceed their estimation of the difference in value times the number of stocks adjusted for the time value of money.

People with more complicated positions should consider covariance and factor in uncertainty. But if you’re a shareholder in a single stock and estimate that it’s overvalued by a significant margin, the rational choice is to sell your position, invest in a low risk, highly liquid asset, and rebuy.

Maybe - it depends on the growth prospects of the company - if they were high anyway - then it is better from a capital gains tax perspective to just continue holding the stock until you need the money.

I sold a lot of bitcoin for $20 in 2008, quadrupled my initial investment and felt pretty smart about it.

Good logic. Never sell anything ever because the price might go up.

Not for Twitter's board. They want more, and good for them. In the history of hostile acquisitions, the first offer is never the final one.

It is irrelevant.

I'm sorry that sort of argument makes no sense. Anything could happen in the future, but the price today is what the market judges it to be worth.

The historical price is irrelevant as well. Looking at the historical price is the same sort of thinking that leads to "throwing good money after bad".

And why wouldn't be? He is offering a premium from the current valuation. You either accept it or reject it if you think the premium is low, or am I wrong?

The board’s mandate is to maximize shareholder value. They have an offer that will objectively maximize that value. To scorn it in favor of intangibles is to act against the interest of shareholders.

According to your logic, any offer to go private above market value must be accepted. That's not the case. Stockholders might be interested in owning Twitter stock for a long time. Elon's offer might not make financial sense for them.

The boards mandate is one of fiduciary duty. Bluntly, that is not a mandate to maximize shareholder value, especially in the short term.

They do not have an offer that will maximize shareholder value - they have an offer that will increase it.

Words have meaning and concepts have definitions. They are not arbitrary of flexible for the sake of making the argument you want.

The BOD's responsibility is to the company, a public company's responsibility is to the shareholders - this difference matters.

Cornell's legal information institute provides a nice and cited set of definitions (albeit in legalese) - https://www.law.cornell.edu/wex/fiduciary_duty

No, a board is mandated to act in the best interests of the shareholders. That might be different than just maximizing the share price. They may believe this is a bad idea for the company as a whole, and that long term, it's objectively better for the company to not be owned by Musk.

isn't musks offer to buy out all the shareholders. i.e. lets take a crazy example.

you have a company that is worth $1mil and we only imagine that it can be worth $100mil (based on the size of the market we are addressing). someone comes and offers $200mil but we know he will shut the company down (i.e. liquidate all its assets, or even simply the desire to destroy the company).

While this might be sad for the company, why is it not in the interests of the shareholders to take the offer?

so if Musk is willing to offer more than shareholders expect to see in the forseable future, why does it matter what will happen to the company after that? their interest in the company ends when their shares are purchased.

> willing to offer more than shareholders expect to see in the forseable future

That is your assertion/opinion (yes, shared by many, sure). But it's not the only opinion in this case, and so I don't think the analogy holds.

Sure, I could see in the abstract times where an offer it just unavoidably good, and so it would not be in the best interest of shareholders to take it. But in this specific instance, there is a lot to be said on both sides of the offer (taking vs. rejecting it).

I would also argue that, depending on the purpose and goals of the company, knowing that a person intends to shut it down would be a reason to value existing (in order to continue carrying out their purpose) over money.

Sure - if an offer is greater than the conceivable return then of course you take it, but Musk's offer is less than the stock traded at 6 months ago and 30% below the stock's all-time-high from 14 months ago.

It's also not just about $$. In your scenario, it's just negotiating. It's possible the Twitter board and shareholders are just unwilling to ever sell, regardless of the money involved. (I don't know if that'd ever be the case, just that is is possible, and possible within fiduciary responsibilities.)

Musk is trying to buy everyone out because he wants to influence the direction of Twitter. Why not ascribe a similar set of motivations to the other current shareholders? If that is a motivation for them, then shareholder profit is not the only relevant sense of shareholder value.

This isn't an argument for the poison pill clause, but is an answer to the following quoted question. It is funny to see this motivation of most existing shareholders ignored in order to bring into being analogous motivations of another. Especially when Musk's offer for Twitter has been in order to change it promote certain values, but conspicuously, better profits has not been one of those touted values.

> While this might be sad for the company, why is it not in the interests of the shareholders to take the offer?

I will sabotage my own argument somewhat though and say that I believe the economic motive dominates over time and is almost always (in macro and micro) the primary force.

If someone offered to buy your house at a 25% premium, would you sell? A house is a place to live at, in addition to having a dollar value, and so is Twitter - a powerfool tool to control speech, in addition to its dollar value on the market.

Absolutely, buy another one at market value and give the buyers my card for the next time they want to give me $xxx000.

I'm pretty sure a majority of shares of Twitter care about making the most money ahead of everything else.

But just offering a 50% premium might not be enough. They'll need to pay taxes on the realized gains and they'll need to find other places to put their money.

That’s been it though. If the board of Twitter isn’t concerned about what is best for the share folders, a direct violation of their fiduciary responsibility, then what is their interest?

If Twitter isn’t a business to make money to them, what is it, and who is it for?

A parameter in assessing the relative value of the offer to shareholders is the time horizon.

Perhaps the board believes the value of the shares over the next year or two is substantially higher than Musk's offer, such that they should reject the buyout so that shareholders can reap that gain.

And using past as prologue… how has been the performance of Twitter been?

Yeah I made 10% getting in after the disclosure was made. I’d actually invest in a twitter owned by Elon and likely ditch all my other profiles too.

A platform that makes money and has free speech would be wonderful. Maybe he can steal Rogan from Spotify too.

What’s a concrete example of speech that you’d make which is specifically banned on Twitter?

I’d make them publish their content moderation policies, and have all decisions documented and filtered through those public rules.

The speech is made in public and should be adjudicated in public. Today’s Twitter hides its moderation policies and decisions. Even though they are a private company (albeit publicly traded and the effective public square), this is wrong.

Not OP but Elon has stated explicitly that all speech legal in the USA, so if I had the choice it would include parties left, right, and center: Occupy Wall Street, the AntiMedia project, Global Revolution Live, President Trump, Milo Yiannopoulus (sp?) Alex Jones, Robert Stacy McCain, Laura Loomer.

I'm not the OP but Twitter has at various times suppressed information about covid and covid vaccines. They are well intentioned but they occasionally overreach.

As a quick example, [1] lists some categories of tweets which they will delete. Twitter seems to have overreached with category 2:

> Claims that specific groups or people (or other demographically-identifiable identity) are more or less prone to be infected or to develop adverse symptoms on the basis of their membership in that group;

This is nonsense. Your risk increases with your age. Your risk increases with your BMI. Men are at higher risk than women. Those working in customer-facing roles are at higher risk than those who can work from home. Each of those statements are apparently banned on twitter.

[1]: https://help.twitter.com/en/rules-and-policies/medical-misin...

> What’s a concrete example of speech

The example that people use, would be any speech that legal within the US.

If it is illegal, then most anti-censorship advocates are still fine with it being banned. But generally speaking, the best case scenario for them would be all legal speech in the US.

Don’t have one. Let’s go with Trump or Alex Jones. People who say a lot of things people don’t like but aren’t illegal or their illegality hasn’t been proven in court yet.

Instead this is how I’d moderate twitter, when a court orders a tweet to be banned or a judge rules that a user should be banned that is when the moderation team would step in.

I’d also make it easier for people to filter content themselves. So if there’s POVs they don’t want to ever see they don’t have to see it.

Essentially this would reverse 99% of the mod teams decisions.

The interesting thing about Twitter is that people are banned arbitrarily and politically.

Take the case of Megan Murphy, a woman who is in a lawsuit against Twitter. Rules were added to Twitter that were used as a justification for her ban retroactively:

https://www.dhillonlaw.com/lawsuits/meghan-murphy-twitter/

COVID was the biggest one for me.

How many people were banned or blocked by Twitter for COVID misinformation, when it turned out that those spreading “misinformation” were actually the CDC, WHO, and government institutions, and when said institutions blatantly lied to the public about masking, vaccines, lab leak theory, and lockdowns, Twitter did absolutely nothing, except punish the people who criticized said institutions.

Recently there have been many accounts getting banned for being critical of US foreign policy in Ukraine conflict, disagreeing with western media propaganda around specific events. Also many got banned for posting "conspiracy theories" around COVID that eventually became conventional wisdom like its origin in the Wuhan Institute of Virology.

If one disagrees with liberal establishment rhetoric on gender issues, you also get banned very quickly. There are a bunch of these consensus political issues that are off limits for debate.

What value does a platform have when people are fed up with those who complain about "I want free speech" and leave for greener pastures?

Just look at Facebook. It's widely seen as "boomer garbage" that's only used as a least-common-denominator resort for communication by the target group these days, and conspiracy crap groups and peddlers of propaganda are a huge part of the reason.

Platforms and societies that fail to maintain some basic social order all eventually disintegrate into chaos.

Would you be ok if Trump was setting mod team policy?

Like is this a we need a speech dictator even people I disagree with is better than chaos point of view?

Or is this a my point of view should be enforced on everyone and platforms should not be allowed to publish things I disagree with point of view?

Platforms should be able to censor and ban whoever they want for whatever reason. Any other stance violates the platforms free speech.

If Trump was on the mod team of a platform, I simply wouldn't use that platform.

No one needs to use Twitter. Most people's life wouldn't change the slightest bit if Twitter disappeared tomorrow. There's no serious argument that the platform has a monopoly on anything.

I agree with you fully. There seems to a lot of resentment about the idea of twitter not censoring so much.

>They'll need to pay taxes on the realized gains

The bulk of the holders of stock in most public companies are institutional investors that don't need to pay taxes on the realized gains.

Why don't they pay taxes on realized gains?

Because they're largely managing tax-advantaged accounts.

Because they are taxed on annual profit, not capital gains. If they sell a stock and buy a different one, there is no profit.

The private analogy is a professional gambler. You don't pay taxes for winnings on each bet. You pay taxes on what you have cashed out at the end of the year.

Tax on individual sales is only a thing for individuals.

> institutional investors [] don't need to pay taxes on [] gains.

Elaborate

The fiduciary duty of the board is to protect the company as an ongoing concern that seeks to increase its enterprise value, and also to protect the interests of shareholders, including minority shareholders.

This is to prevent say a majority shareholder and/or group of employees from raiding the business of its value.

So a case for a poison pill might be well made to prevent a person from taking a controlling stake to then expose the company’s IP (code base) because they have some agenda, or prevent them running the company into the ground by causing a flight of talent, or by breaking some success formula.

I think the answer is that "the interests of shareholders" can be interpreted in a much broader fashion than some people, including board members, like to pretend.

Isn’t it still possible for Musk to make a tender offer which then would have to go to a shareholder vote, or for the board to accept (or put to shareholder vote) the offer he did make? The point of the poison pill is that it prevents a certain type of hostile takeover and you may have reasonable opinions about whether or not such clauses are good/should be allowed, but I don’t think they stop takeovers in general, right?

> The risk portfolio of Vanguard just went up considerably because in the case that they fully lose faith in the board, they no longer have the option of installing a friendly board, they must simply liquidate their holdings. This, in turn, makes them more skeptical of further smaller (non-takeover) investment because it’s more to liquidate and more risk.

It sounds like your interpretation Vanguard's risk profile / likelihood and their interpretation differ. And given that I trust Vanguard's assessment.

Frankly, if I were an institutional investor, I'd probably prefer the poison pill than have Twitter become a toy subject to Elon Musk's random political fight.

Wasn't he all in on Doge coin, except he wasn't, and all in on bitcoin but then not fully, then some other random alt coin, oh and then he's back in on Doge again and how to improve it.

It sounds like sound fiduciary duty to not let your company be subject to those whims.

> Vanguard, for example, has just had its range of further investment limited arbitrarily.

As I understand vanguards structure, they have no beneficial ownership of any company and therefore never trigger the poison pill.

> Who does this benefit besides the board?

This benefits anyone who is concerned that a rich person will buy 50%+1 of a company and use their equity to make decisions they are opposed to. Now if a rich person accumulate 20%, the other shareholders can dilute that rich person. That means the rich person has to convince other shareholders that decision is correct.

Shareholders would benefit from the poison pill because they could buy stock at a nice discount.

Or they could benefit because they believe the new owners would be bad for the business.

52 week high was 70 something. His offer is too low anyway. And he said it was his final offer. He’s just an egomaniacal billionaire who is bored.

"Who does this benefit besides the board?"

the people who run the US/world who depend on censorship to maintain their power

"they" if there is such a they, depend far more on social media hypnotizing us and controlling what we perceive and believe. its not the absence of free speech that is the problem, its that truth about our situation cannot make a dent in our psyches while we are hypnotized with a firehose of propaganda and marketing.

  I don’t understand how any board can implement a “poison pill”, not just Twitter but Netflix and others, and not be found working against the interest of shareholders. Can anyone help me understand?

You’re categorically changing the profile of the stock. This has a chilling effect on large investors, including but not limited just to Musk, right?

Correct. Hence the term poison pill. Now nobody else will be interested in buying them either and Elon selling out will tank the stock. As a reminder their stock steadily dropped all the way to $14 after the initial IPO pop and they've been losing money since before Covid.

Woke means broke I guess. I think his plan B will be to start a competitor. I'm very tempted to heavily short as soon as he walks away definitively.

As to your question of, won't the other shareholders get mad at the board and potentially sue them - I think the board is drinking their own koolaid.

He can buy one of those other competitors used by right-wing folks. Hell, if "free speech" is so important to him and to everyone else he wants to rescue he can just tweet to use those other platforms. It's certainly cheaper.

Twitter is "losing hundreds of millions of dollars every year" (I don't know if that's how we're using air quotes now, just following your lead), it is already circling the drain. No need to buy anything, it would be trivial for him to setup a clone and fund it indefinitely while it tears itself apart.

Revenue grew 37% since last year.

And they were profitable when you exclude their once off litigation expense.

Not sure about your definition of circling the drain but Twitter definitely isn't.

Spoiler alert: other platforms are not in any way more "free speech". Gab for example bans porn, which is both free speech protected by the First Amendment, and allowed on Twitter. TRUTH Social seems to forbid a lot of things, such as depictions of violence, lewd content, libelous/slanderous content and lying (true to their name, I guess?).

Twitter is where the network effect and users are, so no it makes more sense to take over Twitter and shape it to your own views if you are a billionaire who wants to make an impact on public discourse and free speech.

>Woke means broke I guess.

That sentence alone means you weren't even discussing this in good faith.

It's very well possible that the Twitter board believes that they can achieve higher value for the shareholders than what Elon offered. It's also very well possible that after talking to Elon through private conversations that you were not part of, they fundamentally disagree with his value and the direction he wants to take the company.

>I think his plan B will be to start a competitor.

Hey, maybe he would buy Parler, that would sure get him all the attention he desperately craves for. /s but maybe not.

> That sentence alone means you weren't even discussing this in good faith.

Is that what good faith means now? Being religiously part of Camp A or B?

The balance sheet speaks for itself. Incidentally Parler or his potential Twitter clone will also end up a toxic internet community. Who cares? I personally wouldn't use either one.

Certainly with Twitter already doing a great job losing money and alienating most people (almost nobody actually tweets and usage is falling) an alternative would split the user base and accelerate their demise and the inane concept of web micro-forums being worth tens of billions of dollars. Companies will simply decide advertising on Parler/Twitter is not worth the hassle.

>Is that what good faith means now? Being religiously part of Camp A or B?

No. But you immediately made this into a Camp A vs. Camp B problem when in reality there could be a million different reasons for the Twitter board to not want to get acquired means you weren't trying to discuss this specific situation, you were looking to turn this into a debate on "wokeness". That's why I said you weren't discussing in good faith.

>The balance sheet speaks for itself.

Does it? Elon has seen the same balance sheet and he thinks the true value of the company is higher than what it is now as well. So obviously he thinks Twitter has the potential to achieve much higher value through implementing XYZ. The board agrees too but just disagree on what that XYZ is.

> Elon has seen the same balance sheet and he thinks the true value of the company is higher than what it is now as well.

Up to you to take him at his word however he has stated otherwise.

"It's important to the function of democracy, it's important to the function of the united states as a free country and on many other countries and actually to help freedom in the world more broadly than the US.

You know I think this there's the risk, civilizational risk, uh is decreased if twitter, the more we can increase the trust of twitter as a public platform and so I do think this will be somewhat painful and I'm not sure that I will actually be able to to acquire it.

I mean I could technically afford it um what I'm saying is this is not a way to sort of make money you know..

It's just that I think, my strong intuitive sense is that having a public platform that is maximally trusted and broadly inclusive is extremely important to the future of civilization"

- https://www.youtube.com/watch?v=yDfqwTBHah8

Wait, you seriously think Elon is buying Twitter out of his good heart to "protect" the healthy functioning of democracy?

Jesus I know it's Friday but some of you guys start drinking early man.

His net worth is over a quarter trillion dollars. Flipping twitter for profit is very far from a sure thing and seems like a waste of his time.

Why out of everything that he could invest in would he bother with twitter specifically? Whatever his intentions are it seems plausible that this isn't about money.

I get that you don't like him but this attitude of "I am right, you are wrong, and if you disagree you are drunk" is.. not a good look.

>Whatever his intentions are it seems plausible that this isn't about money.

It's very plausible that this isn't about money, and I never said it's about money. However it's far more plausible that this is about a narcissist buying media and social influence and he wants to be able to shape public discourse that paints him in a positive light. He really cares what people thinks of him.

All of that would seem far more likely (and suits his past track record) than him doing this to "save democracy".

> I never said it's about money.

> Elon has seen the same balance sheet and he thinks the true value of the company is higher than what it is now as well.

Also I'm pretty sure a narcissist is exactly the sort of person to genuinely think he is saving democracy by buying a website.

Do you know him personally? Are you a trained psychiatrist? Narcissistic personality disorder can be a serious affliction, tell him I hope he gets the help he needs and that I wish him the best.

I personally just want to know what will happen to the stock.

You're incredibly naive.

He is already an influencer and owning a social network where he gets to set his own rules would be the best way to ensure his influence increases further.

Free speech on social media is an oxymoron. SM is designed to give you power in proportion to the number of connections you hold. Its a popularity contest of twisted, faked, carefully crafted viral thought - most real, true and meaningful things get lost in the sea of professional influencers.

You will find more real free speech with a single visit of a subreddit than you will within a week of being on social media.

elon wants to save us from woke people, and sees that this is a trillion dollar opportunity.

have you seen the matrix? they powered a cluster the size of the planet using humans for batteries! this is the same scale problem, that and pedophilia.

there are better "good faith" postings on Wall Street bets than HN, this place is an asylum

> Elon has seen the same balance sheet and he thinks the true value of the company is higher than what it is now as well. So obviously he thinks Twitter has the potential to achieve much higher value through implementing XYZ. The board agrees too but just disagree on what that XYZ is.

Yes, but one version of XYZ (the board's) has been tried while the other (Elon's) has not. Elon's plan might lead to even worse results than the board's, but he doesn't think it would, hence his optimism if they adopt his plan.

The topic of discussion is corporate governance and finance, and you immediately pivoted to some irrelevant culture war BS.

The topic of discussion is Elon Musk trying to purchase Twitter, which is very much at the intersection of finance and culture war.

"culture war" is the ultimate propaganda tool to be used on people who think they are smart

> The balance sheet speaks for itself

a) Revenue increased 37% y/y.

b) User count growing at 2% y/y.

c) Profit of $273m in 2021 when you exclude once-off litigation expense.

https://www.prnewswire.com/news-releases/twitter-announces-f...

> c) Profit of $273m in 2021 when you exclude once-off litigation expense.

The once-off litigation expense might soon be recuring in 2022, after this move. The former was a shareholder class action lawsuit, and the latter will most likely be the same.

Twitter is predicting a drop in GAAP loss in 2022 to between $225-$175m.

So even if the lawsuit is recurring (neither of us know) they are still managing to reign in their losses.

By any definition the company is heading in the right direction.

Fascism means cashism!

(Sorry, unable to resist.)

I for one prefer that my communication-medium not have "values". For obvious reasons.

Not having value is a value in itself. It takes a crazy amount of effort to be completely neutral.

>that my communication-medium

Twitter is first and foremost a publishing platform, you should not rely on it as a private communication medium. None of the chat apps I know censor stuff, so use them instead.

Use Twitter for public communication if you want, but since it's in the public domain you can't complain too much if there is content moderation.

I dunno man. My email software seems to accomplish that feat quite easily.

Sure I can complain. When it's the defacto public forum any administrative conversation-tweaking is pure poison to our society.

And also, yes, there is an implicit promise that the conversation between you and me is not getting fucked with by an invisible rat in the middle. So when I smell one of those rats, heck yes I'll complain. That's objectively ratty.

> Not having value is a value in itself. It takes a crazy amount of effort to be completely neutral.

The phone company does a pretty good job of it, and we have regulations that force them to be mostly "neutral".

Those regulations have worked out quite well. Perhaps it time to expand our existing, and working regulations to other platforms, given that they work so well on existing platforms.

One-to-all broadcasting is a fundamentally different medium than one-to-one conversations.

The various messenger apps are closer analogs to phone companies and they have no or very light content moderation.

There are some differences, yes. But regardless of those differences, society has not collapsed because of those laws. Those laws work just fine.

So they could be extended to other things, and the world would also not collapse if that happened.

> It's very well possible that the Twitter board believes that they can achieve higher value for the shareholders than what Elon offered

Who would believe that? They’ve had years to prove it and as they stock market has doubled in value their stock has been cut in half.

Share holders should sue. It’s time to trick their world and either drive the stock price to a few bucks or force then board to do their fiduciary responsibility and sell the company.

It’s a great offer.

All of this is possible, but the reality is: Twitter is a 16 year old company that has changed imperceptibly since its inception. Elon has several polls over the past month, voted on by literally over 3M people, vehemently disagreeing with some of the policies Twitter holds dear. Their revenue is flat and down. They literally had a chokehold on global politics during the Trump era, and did nothing with it toward building a better business, or even a better social network.

Their board can believe all they want. But they're failing, miserably. Elon isn't perfect, but at least he doesn't have a demonstrated history of driving his companies' value into the basement, like Twitter's leadership does. This move by their board serves no-one but them; it doesn't serve Twitter's users, it doesn't serve their customers (advertisers), it doesn't even serve the vast majority of shareholders (which will be evidenced by an unprecedented sell-off on Monday).

Goldman advised them to block the purchase, because $52/share was too high, while simultaneously holding a $30 sell benchmark on TWTR. Its not even ironic that this is where Twitter's stock is going; its what they predicted, and then caused. The idiots in the room are the Twitter board, who actually believed the advice was given in good faith.

> Elon isn't perfect, but at least he doesn't have a demonstrated history of driving his companies' value into the basement

How are SolarCity and Boring doing these days ?

> Elon has several polls over the past month, voted on by literally over 3M people,

Oh sh*t i don't follow him and didn't care about those votes ... should I write a bot to make my voice heard? Is that how it goes? (Or in other words: such a vote has no statistical significance aside from pleasing Musk's ego or whatever is driving him and his need for attention)

> Their revenue is flat and down.

This makes me wary of your post. You could have easily fact checked this and you would have seen that this is incorrect. It's up 37% compared to the year before that. [0] I checked the last 3 years and the growth has been positive during all 3 years. [1]

[0] https://www.prnewswire.com/news-releases/twitter-announces-f... [1] https://www.macrotrends.net/stocks/charts/TWTR/twitter/reven...

The entire Twitter battle is about the woke left taking over / banning all of America culture.

This implies American culture is pro-fascism, and while there are elements of that I don't believe that encapsulates American ideas - the gamut of ideologies have been part of the nation since its founding, though the ideas and what that means have shifted over time

Poison Pills are rarely exercised, this is a positional move. Unlikely Elon is the only interested party at this point. If the board can use a pill to force a slower buy-out discussion and negotiation it is very much beneficial to shareholders.

Their stock price was over $70 in the trailing 12 months.

Even with Elon's offer they are still worth 10 NFL teams combined.

I can find zero credible evidence to support your position. Please short the stock :)

I wasn't aware NFL teams was a unit of measurement. One has to wonder if you think I am wrong why you wish for me to short the stock and lose my shirt.

a) The poison pill only affects those who are looking to control the company in some way. Which isn't most large investors at all. So I doubt you will find any who will be concerned by this.

b) Twitter's stock price is now $45, peaked at $77 only last year and is profitable. Not sure where you get this ridiculous idea the company is unsellable.

c) There are plenty of free speech competitors to Twitter. None are even remotely successful. Because as Reddit also showed far more people want a moderated experience more than those that don't. And Twitter is a business first and foremost.

d) Musk is offering shareholders a premium as the stock is today. But as I mentioned even just last year it was significantly higher. And so I can't imagine shareholders would have an issue about them turning it down if they believed Twitter was still continuing to head in the right direction as it is now.

>The poison pill only affects those who are looking to control the company in some way. Which isn't most large investors at all. So I doubt you will find any who will be concerned by this.

That's not the right way to think about it. Anything that scares off ambitious, optimistic activists from buying big stakes, will then suppress the stock value in general, which hurts all shareholders, including the smaller ones.

More broadly, going public is a tradeoff. You potentially give up control to outsiders, in return for greater share value (and the cash infusion). Moves like this go the opposite direction: decrease the potential for outside control, and with it, the upward pressure on the stock's value.

> I think his plan B will be to start a competitor

I hope it isnt: I think that starting a top down, meaning "look I built this, everyone move over from twitter", competitor has a very low probability of success, regardless of who starts it. There is too much of an attack surface, there will be too much drama on real Twitter about it, early adopters will be gun nuts or some other out group and that will be how they get characterized, etc etc.

The real chance at a competitor would be something that grew organically, that people wanted to move to because it offered something valuable before it reaches scale. This is how actual businesses start. The top down approach is how massive flops happen.

Incidentally, the same holds true for the Facebook metaverse and imo suggests it will certainly fail

Remember that this IS Musk; not very predictable. But I'm going to try... Since Musk has stated that this was NOT to make money, I imagine that triggering the poison pill, and THEN dumping the shares would tank the stock. Musk did say "final offer, and if rejected, re-evaluate". The poison pill trigger? Not something talked about.

I hold some shares of TWTR, and would continue. For the lulz.

You're probably right. On the other hand he is one of their biggest users and has a lot of celebrity friends.

There's too much drama on real twitter about it anyway. They might be stupid enough to ban him too soon, and if they keep on doing that nobody will want to use it. A lot of the top users haven't tweeted in over a year.

This forum is obsessed with stock. Some things are bigger than the financial 'value' of a company.

It isn't just the shareholders they have a fiduciary duty to: they also have the duty of care, the duty of loyalty, and the duty of good faith. Selling to an adderall-addled toddler just because he happens to have accumulated more money than any person should have could be argued to violate all three.

They're doing it on purpose so people will sell off TWTR, then they will secretly buy and approve the acquisition offer. It's a blatant insider trading scheme.

> and not be found working against the interest of shareholders.

It depends on what the interests of the shareholders actually is. Monetary only, or are there other considerations they care about?

I assume the boards of such companies have had private discussions with the majority shareholders to find out exactly what their priorities are, and then acted accordingly.

>It depends on what the interests of the shareholders actually is. Monetary only, or are there other considerations they care about?

Is a board allowed to consider anything but?

Of course they are, major investors regularly push boards to do more ESG for example

Yes. The law doesn't bind directors to maximize shareholders value.

https://www.reddit.com/r/law/comments/3pv8bh/comment/cw9t52d...

I could be wrong but I don't think Twitter is a B corp.

Twitter is not a B-Corp indeed. However any company, not just B-Corps, can have a purpose other than shareholders value maximization. Check this article: https://doi.org/10.1111/joms.12660

There's an easily searchable index of B-Corps: https://www.bcorporation.net/en-us/find-a-b-corp

>any company, not just B-Corps, can have a purpose other than shareholders value maximization.

It's moving there but I don't think it's there quite yet according to case law. The board motivations at present still have to tie back to maximizing value for shareholders.

So most directors can get around the shareholder primacy rule pretty easily by tying the changes they want back to shareholder value.

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