First, it wouldn't matter anyway. He signed away any and all rights to due diligence in the agreement.
And secondly, it's completely impossible for any outside analysis to determine the number of active users on Twitter because most active Twitter users don't tweet or interact in anyway. They just read tweets and those users see ads, which makes them monetizable users.
Fair point. Though i would think bots still affect price, right? Ie lets say it's 100% fake right now, what would the value be? Lets say $0 for easy math. Buying it at $54.20 means he has to at least clean up the bots enough to make it worth, at least, $54 to regain his investment.
So while i think your point is interesting, if bot count affects price then i feel one could argue there's a bot threshold whereby he would be over valuing it.
In your scenario the sweet spot would be if it was just enough bots to make $54 a fair price, but also lots of bots in total so that he could "fix the problem" and increase value.
Twitter revenue for 2021 was $5b, for, say, 200m mDAU (actual number is a little over that); each mDAU is therefore worth $20. But if half of these are bots, then each non-bot is worth twice more!
If all mDAU are actually bots save one, that one user is worth five billion dollars per year.
Musk should be very happy that there are bots. Not only is his defense irrelevant, for the reasons listed above, but it's also incoherent.
He waived DD but the claim is that Twitter specifically inflated numbers to make itself appealing for an acquisition/merger, which would still be grounds for breaking the contract without Musk needing to give any money to Twitter or complete the purchase.
So... "We think it's 5% using these methods, but if those methods are wrong, then the actual number could be higher or lower." How does that lead to grounds for breaking the contract?
But yes, this is very unlikely to be proven since it'd also be fraud against every investor that has put money into TWTR within the past few years, opening the company up to a shareholder lawsuit even after it goes private.
The bottom line is the guy gets off on being an irreverent, flamboyant dipshit and this time it's biting him in the ass. And I for one am here for it. After the last few years I have run out of patience with assholes with money/power thinking they can do whatever they want in broad daylight. Christ, at least have the decency to be surreptitious about it.
And though it may well be expensive, it's not as if the $44 billion disappears: in fact it buys Twitter. And though he might regret it all in the end, he'll still have enormous wealth. (And Twitter.)
So... it does feel a bit like a pyrrhic victory to me.
Note that the loans were secured with TSLA stock as collateral, but even if those expire he'd be able to secure funding again if he was forced to proceed with the purchase by the Delaware Court of Chancery.
> Musk's equity commitment now stands at $33.5 billion
> May 26, 2022
> But in the latest filing, he’s completely removed this loan in the financing plan to acquire the social media company.
If he needs to sell thirty billion dollars worth of Tesla shares it is going to devalue the stock quite a bit. That's a full day volume of trading.
Like the parent comment said, bot count was tied with methodology.
So Musk can argue:
1) twitter is lying about the results of their methodology - highly unlikely
2) their methodlogy is flawed - which he should've brought up during discovery and asked to revaluate according to his requirements.
Either way, seems like he's screwed.
I'm not saying that the numbe is wildly wrong. I'm saying the disclaimer doesn't relieve you from the responsibilities.
That’s why many states have lemon laws for used car sales, to prevent exactly that kind of behavior in that market.
Sales of corporations often don’t have consumer protection style regulations, because consumers don’t often buy corporations.
The assumption is if you’re spending enough money to buy a corporation, you’re a big boy and can pay a lawyer to review your contracts.
So, if you’re spending $54B to buy a company, you should have your lawyers closely review the terms of the contract. Every lawyer I’ve heard that reviewed the contract Musk signed is gobsmacked by its terms and would have strongly discouraged Musk from signing the contract as written, because it’s so one sided in Twitter’s favor.
Twitter could be 75% bots and its SEC filing claim could still be entirely above board if it was able to filter them out.
Musk’s opportunity to verify that statement was during due diligence. He chose not to, and can’t legally try to perform due diligence after the fact because he has cold feet.
But clauses like this are highly binding when dealing with high stakes deals between sophisticated parties with highly sophisticated teams of attorneys on both sides of the deal.
And you certainly couldn't break a deal like this on a hunch that the number of daily active users might be wrong. That would be like holding up a national presidential election because the losing team believes there was fraud but has no evidence yet.
“Caveat emptor” has been knocking around as a phrase for two millennia now for a reason.