A couple months ago, many of the stories around the Elon Musk bid to buy Twitter centered on the 44 billion bid considered by the board as "underpaying" ($54 a share), because less than six months earlier, the price was riding high at around $72US. Two months later, the same board have unanimously agreed to the takeover, as the price has dropped from 50 at the time, to 38 today.
Still underpaying?
Now, regardless of whether they have approved it or not, Musk is not necessarily keen to buy it, citing the lack of transparency of fake accounts on the platform, that Twitter claims is below 5%. Most likely, they are doing a very large purge in the background as we speak.
But, why would he buy it now for 44 billion?
If he walks away from the current deal, there is a 1 billion "breakup fee" attached and while more complex than just paying the cash to get out, considering the offered purchase price and the current valuation, there is a lot of wiggle room in there to deal with suits from Twitter.
For example, at the point of the offer at 44B to now, Twitter has lost about 25% more of its value, which represented in the offer amount, is a 10B dollars worth. If Musk walks away and pays the 1B plus gets pinged with another billion on top to cover suits, there is still 9 billion difference. The current market cap of Twitter is 29 billion, so he could pay the fee and offer 10% above market value, and pay a total of 35 billion, saving himself 9 billion dollars on the purchase.
Would they sell to him then?
Well, the offer would be quite different, but I am pretty sure they have done the math and are also looking into the expected future performance, especially after this PR nightmare, as they really haven't handled it all well as a company.
These are the largest investors.
The Vanguard Group Inc 10.3%
Elon Musk 9.2%
Morgan Stanley 8.4%
BlackRock Inc 6.5%
State Street Corp 4.5%
Vanguard extended their stake in Twitter to become largest stakeholder again, because they don't like change at the top and like to keep management stable. Vanguard and BlackRock are the two largest investment firms in the world, with 8.4 trillion and 9.4 trillion managed between them respectively. Yes... that is trillions. Suffice to say, compared to when they bought in, they are probably doing okay at these prices - but of course, there is never too much gain to be made.
Going into a bear market though, that is a lot of exposure and seeing tech stocks crumble in value and even the new darlings like Tesla itself, as well as Amazon and Facebook have already lost +30% already this year. Are they going to hold or are they going to "cut their gains" and run? Remember, BlackRock and Vanguard are also largest holders of Amazon and Facebook stock too, but they don't make their money from selling, they take management fees on the trillions, but these are affected by the value they generate and losses don't help investor sentiment. Oh, Blackrock holds 14% of the value of Vanguard also.
While there are many billions involved in just this deal alone, I think it is clear to see that at this level, it really is all just a game of Monopoly. No one involved actually cares about why they are doing this or whether any of it is good for the world in anyway, it is all just business. At the "social level" though, we are fooled into believing that a company stands for something, but in reality, it stands for whatever the largest investors stand for, which is almost entirely, what makes the most money.
Or loses the least.
Musk can talk about free speech protection, but he needn't spend 44 billion on that - it already exists here for free on Hive. Twitter employees can complain about Musk ruining the culture at Twitter, but at the end of the day, "Twitter" is just another vehicle owned by the same group of Monopoly players looking to maximize their gains.
If Musk wanted to pay 44 billion for Hive, that would price each HIVE at 114 dollars, but of course, due to liquidity, it would likely be closer to 500 each. Would you sell knowing that the culture would be ruined?
Damn right.
Because a little fork and the entire culture moves to a new chain.
You can buy employees.
You can't buy a community.
That is protection from hostile takeover.
Taraz
[ Gen1: Hive ]
Posted Using LeoFinance Beta
For an individual to takeover Hive, they would need to buy a controlling stake of the HIVE supply.
Something that under today's token distribution would be all but impossible.
But say they were able to do an OTC deal with a few people, they would still need to buy HIVE off the market.
This would drive the price of HIVE through the roof and just increase their investment.
Say they did get enough coins to influence our DPoS governance where they could implement sock puppet witnesses, they STILL run the risk of having the community fork away.
Community is where the value is and after spending all that money, the fact there are no guarantees they own anything of value in the end, means we are all but bulletproof.
It's not just a theory either, we have proven that this is the case.
Posted Using LeoFinance Beta
Exactly - this is the strength that most people don't understand and, due to the newer changes to the chain in place, a hostile takeover (like the last) is even less possible now, as there are protections in place. There is also no reason to do it this way anyway, as this is not a business (in the same sense as Twitter) and then, changing it to be one, lessens the value it has.
And rumour has it that the Tesla executives that spoke up and challenged him around working from home got the boot. So much for free speech.
So they should. Not because it is the wrong thing to do, but they work for his company as employees. They exercised their freedom of speech - there are always consequences. Reaction is part of the freedom too.
Hello @tarazkp
Beyond calculations, I also consider that they are analyzing the expected future performance, the shareholder group for now it is convenient for them that the offer fluctuates to somehow continue generating news that will become a trend, which will give them some advantage to take the fight close to the 72 billion dollars, or well so I see it.
Best regards, be well.
I don't think they will get close to 72B - I suspect the deal will fall through or, he will get it even cheaper.
Well said. Yet, Elon Musk apparently thinks differently. The filthy rich have that attitude toward the world. I have seen it in folks I've met in life.
Ah, but Musk is buying a company - there is no community there.
That is different on Hive :)
If Elon musk should pay such amount for the hive blockchain that means he would be in charge which probably wouldn't fit the blockchain since it's not owned by one person.
Yes. He'd have to buy everything, meaning everyone would have to sell. Not likely. Though, at 500 a HIVE, there would be plenty of takers.
We don't have micro-blogging on Hive yet but I guess Project Blank might be the solution when it comes out. However, I wonder if Hive can scale up to that many users? I read a few of edicted's post and I don't know if it would work out on the current specs.
Posted Using LeoFinance Beta
There have been microblogging apps before here, they just tend not to be received well. I think the latest is d.buzz, but there have been a few others over the last 5 years (old chain included).
In regards to scaling (due to Resource Credits) it doesn't work, but with resource credit delegation coming, combined with the ability to create "hotseats" for them, it is very much possible - but it requires some additional changes (next HF) and different kinds of apps to be built.
I think people who are interested in cryptos believed that Musk would turn Twitter into kinda decentralized platform and reward tweets with Doge coin.
People might think that and I do think that he would integrate payments in crypto, but it will never be decentralized.
I read that he wants to model Twitter after WeChat which has way more functionality and more then just a talking head. Now that would be something to behold if he can get it through all the financial regulations.....
WeChat pervades pretty much everything in China from what I understand - sounds like something built for centralized control :)
And how different is that to what Mr Tesla is trying to achieve? Hahaha
It isn't, that is my point.
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STOPHe can buy Hive, turn it into another Steemit, and then we can all pump our gains into the new fork and ride it straight to the moon.... Sounds like a plan 😁