A month has passed since iron man and Tesla founder and CEO Elon Musk announced the acquisition of social media giant twitter, but whether this acquisition can really be achieved is still full of variables. Musk had previously predicted that in the best case, the acquisition could be completed within two or three months.
However, in the past month, the U.S. technology stocks "changed" and the share price of twitter fell by more than 10%, with a market value of only $31 billion, while Musk's offer at that time was equivalent to a premium of nearly 40% on the current market value. In the past month, Tesla, a big bull stock, has plummeted, with nearly a quarter of its market value evaporated.
On the other hand, the "money circle bosses" who helped musk raise money suffered heavy losses - virtual currency has fallen sharply recently. As of May 15, the price of bitcoin has fallen by more than 50% from last year's peak.
Attitude "pinch" after the agreement is reached
In the past few days, musk seems to have taken a 180 degree sharp turn in his attitude towards the acquisition of twitter. First, on Friday (the 13th), it announced that it would "suspend" the acquisition until the fake account of twitter fell to a certain proportion. The news made the twitter share price close down nearly 10% on the same day; On Saturday (14th local time), musk tweeted that Twitter's legal team accused him of violating the confidentiality agreement.
Behind this series of "ups and downs" statements, it is difficult to guess Musk's intention. In mid April, when he announced his acquisition of twitter, he offered an attractive high price of about $44 billion, but when twitter agreed to accept this price, Musk's attitude seemed to be "neither hot nor cold" and become "pinched".
"The twitter legal department just called and complained that I had violated their confidentiality agreement. Because I revealed that the sample size of robot inspection was 100!" Musk wrote in a tweet.
Twitter once said in a public document on May 2 that according to the internal review of the account sample, less than 5% of the 229 million daily live users are "fake or spam" accounts. But independent researchers say the actual figure may be three times higher.
For years, Twitter has been investing in cleaning up spam accounts. For example, in 2018, twitter acquired a San Francisco technology company called smyte, which specializes in spam prevention, safety and security. However, the measurement and detection of false and spam accounts is a "complex" problem within twitter. Many employees of the company do not have a good definition or understanding, which has also become a criticized weakness of twitter.
A study by Carnegie Mellon University analyzed the spread of false information in Xinguan in 2020 and found that 82% of the top 50 most influential Forwarders were robots.
"Twitter lawyers may accuse musk of disclosing the details of the transaction, that is, whether the transaction is completed depends on the verification of the robot account." "This may not affect the final outcome of the acquisition," you Yunting, a partner of Shanghai Dabang law firm, told China business news. "Musk, as a smart online celebrity, is absolutely impossible to end the acquisition in the form of a joke."
"Twitter can do better"
Last week, in a dialogue with the financial times, musk talked about whether the twitter acquisition would happen. "I think Twitter is the best platform for exchanging ideas at present, but it can do better in this regard. It needs to eliminate robots, fake and spam accounts, and any accounts that try to have a false impact on the website. Those individuals or entities that manipulate 100000 accounts are very bad," he said
Musk also said that Twitter needs to build more trust in the user community. The way to do this is to open source the algorithm, so as to be open and transparent.
"In this way, everyone can see the working principle of the algorithm and put forward suggestions for improvement." "I'm going to put Twitter's algorithm on GitHub, the code hosting platform, and say, 'Hey, if you want to make suggestions for changes, welcome,'" Musk said
In addition, musk also proposed that you should mark which tweets were pushed by human intervention, such as "a twitter staff member has taken the following actions on your account or a tweet...".
"Then you won't be confused why this tweet didn't get any attention and that tweet got a lot of attention." Musk said.
When asked whether there is a risk of failure in the acquisition of twitter, musk said: "objectively speaking, this is not a completed transaction. Before this transaction is completed, there are still many processes. For example, Twitter has not held a shareholder vote or even submitted a proxy for shareholder voting, and there are still some outstanding issues to be solved."
For musk, who "doesn't play cards according to common sense", the motivation behind any seemingly random decision he makes may not be simple. Although musk can terminate the acquisition by paying a certain "breakup fee", market analysts believe that it is more likely that musk hopes to seek better and more favorable trading conditions through negotiation.
Musk himself immediately stressed that he was "still committed to the acquisition" after declaring that he "temporarily shelved" the acquisition, but this did not stop the decline of Twitter's share price. Musk's share price has fallen by about 23% since last Friday's announcement.
The agreed price can be negotiated again
"Although musk has signed an agreement with Twitter, it does not mean that the purchase price set in the agreement is the final purchase price. If defects are found in the due diligence of the company, in the case of twitter, it is the proportion of false accounts, then it is still possible for the two sides to adjust the purchase price through further negotiations," Zhang Junyi, the managing partner of Aowei consulting, told China business news
Musk, who has more than 80 million followers on twitter, surfaced his ambition to control this social media at the beginning of the year.
On March 26, musk tweeted, accusing the platform of "failing to adhere to the principle of freedom of speech" and saying that he was "seriously considering" establishing a social media platform.
According to a regulatory document submitted to the US Securities and Exchange Commission (SEC), musk had acquired a cumulative 5% stake in Twitter as of March 14. This means that when he publicly mentioned his personal idea to transform the social platform, he was already the largest external shareholder of twitter.
On April 4 local time, it was reported that musk bought 9.2% of Twitter and became its largest shareholder. The next day, twitter announced that musk, 50, would be appointed as one of the 11 members of the company's board of directors until 2024.
According to the documents of the securities and Exchange Commission, musk proposed to purchase all the remaining shares of twitter in cash at the price of $54.2 per share, with a total purchase price of $44 billion, nearly 40% higher than the share price of twitter on April 1.
Musk said at the time that this was his "best and final offer". Market participants also believe that Twitter may not find a second buyer willing to pay such a high price.
"I don't think musk will give up the acquisition just because he thinks he has paid more." "He has a complete set of ideas and ambitions behind his acquisition of twitter, which is definitely not for fun," Zhang Junyi told China business news
However, Zhang Junyi believes that under the background of high inflation in the United States and the deterioration of the global economic environment, technology stocks, as growth benchmarks, are also facing the risk of foam bursting.
Twitter's board of directors has said that given the decline in stock valuations of Internet peers such as Facebook and snap this year, Twitter's share price is unlikely to return to higher trading levels soon.
From the end of last year to the closing on May 12, the S & P 500 index fell nearly 18%, hovering on the edge of the "bear market" cliff. During this period, the market value of S & P 500 enterprises evaporated more than $7 trillion, of which technology enterprises lost nearly $3 trillion. Apple , Microsoft, Amazon, Google, meta (after Facebook changed its name), Tesla and other companies' share prices fell sharply this year; Netflix, a streaming media company, has lost more than 70% and is the worst performing stock in the S & P index.
"After all, musk has to pay a lot of money for this acquisition. If Tesla's share price can't hold up, whether he can raise tens of billions of dollars to complete the transaction is also a big challenge." Zhang Junyi told first finance.
Similar situations have happened in the past. For example, Tiffany, a jewelry brand, sued LVMH, a French luxury group, in 2020 to try to exit the deal. Later, the purchase price fell from $16.2 billion to $15.8 billion, and the lawsuit ended in settlement.
"For twitter, maintaining negotiations with musk may be better than a protracted lawsuit." "In fact, from Musk's quotation, we can see that the twitter board did not try hard to improve the quotation, which may also mean that Twitter has no better choice," a person who has long paid attention to Tesla told first finance
But because musk didn't have a clear plan for Twitter's future, employees may flee. On May 12, twitter fired two executives and said it would suspend recruitment.