Elonnnnnnnnnnnnn!

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S1: On Thursday. I got up early. I made muffins for my son, had a couple of cups of coffee. I was having a quiet domestic morning. And then at 7:23 a.m.. Elon Musk tweeted, It was one line, no punctuation. Even it said. I made an offer and there was a link to the securities filing where Musk proposed buying Twitter and taking it private. So I scrapped the work day I had planned and got Felix Salmon on the line. Felix is the host of Slate Money and he’s the chief financial correspondent at Axios. Hello, Felix Salmon.

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S2: Good morning, Lizzie O’Leary.

S1: Welcome to all Elon all the time.

S2: We thought we could get away from him, but we were wrong.

S1: Our show last Friday was all about Elon Musk buying a roughly 9% stake in Twitter and maybe joining the company’s board after that show aired. Twitter CEO Parag Agrawal announced in a note to his employees that no, Musk would not be joining the board after all. The note ended by saying there will be distractions ahead, but our goals and priorities remain unchanged.

S2: This is the worst case distraction for Parag Agro while and anyone trying to concentrate on doing their jobs at Twitter because this is the mother of all distractions.

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S1: You know, I admit at the time I was skeptical of the scenario of Elon Musk attempting to buy the whole company. You were not. You said something very prescient last week, which was everyone knows that if Iran wants 9.2% of Twitter, what he really wants is 100% of Twitter. Congrats on being right.

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S2: I honestly, I was I wasn’t convinced he was going to make a bid for the whole thing. I know that it sounds president, but there’s a difference between wanting 100% of Twitter and actually trying to put funding together to spend $43 billion on Twitter, which, even if you’re Elon Musk, is a non-trivial amount of money.

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S1: Several hours after he announced that he was trying to take over Twitter, Musk told an interviewer during a TED Talk where else that he was unsure about whether he could pull this off, but that he wanted to try because he sees Twitter as a kind of public square.

S3: It’s important to the function of democracy. It’s important to the functioning of the United States as a free country and on many other countries, and to help actually to help freedom in the world.

S1: Today on the show, what does Elon Musk really want with Twitter? Is this a genuine bid to mold the social network in his image or does he want to have a little fun, make some money and walk away? I’m Lizzie O’Leary and you’re listening to what next? TBD a show about technology, power, how the future will be determined. Stick with us. I wanted Felix to set the table for us a little bit, especially for people who have not been following Elon Musk’s every tweet. How did we get from last week to here?

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S2: Okay. That’s relatively understood. Not simple, but it’s understood. First, Elon buys a large chunk of Twitter stock, makes an FCC filing, saying he has no strategic goals whatsoever. He’s just a passive investor. Then very shortly thereafter, he changes his mind saying, well, there is the strategic goal. And actually I’d like to join the board. Jack Dorsey, the co-founder, says, I’ve been trying to get him on the board for ages. Parag Grow while the CEO says it’s going to be great having Elan on the board. But then as part of the process of getting him on the board, literally the day he was meant to join the board, he sends them a letter saying And never mind, I don’t want to join the board. After all, I think he persuaded himself that being on the board would not be enough and what he really needed to do was own the company. So he said Nope, because according to the board agreement, he couldn’t make a bid if he was on the board. So he decided not to join the board. And this is the other shoe dropping.

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S1: Why does Elon Musk want to buy Twitter?

S2: Oh, I. Not to say billionaire whimsy.

S1: I think you can say that. Yeah.

S2: When you were in that the world doesn’t work the same way that it does with everyone else. He has 200 and some billion dollars. Why not? It’s a toy. He gets to play with it.

S1: I want to read from his securities filings because I found this little part interesting. He says, I invested in Twitter as I believe in its potential to be the platform for free speech around the globe. And I believe free speech is a societal imperative for a functioning democracy. However, since making my investment, I now realize the company will neither thrive nor serve this societal imperative in its current form. Twitter needs to be transformed as a private company. Help me unpack this a little bit. Do you do you believe this statement about free speech as he sees free speech?

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S2: I believe that he believes it. I don’t think he’s being disingenuous here. He sees the way that Twitter has been approaching abuse on the platform and the way that it’s beefing up moderation and the way that it’s happier to suspend people and ban people as all being bad things. He knows that there were a lot of calls for him. Elon Musk to be banned a few years ago. I was one of the people who was who were making those go back when he was harassing a bunch of journalists, calling people, paedophiles, that kind of thing. So he would love to see a much more laissez faire Twitter. And he thinks I think he might even be right in thinking this, that there’s no way we’re going to get a much more laissez faire Twitter so long as it’s a public company with a broadly diverse board and so on and so forth.

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S1: Musk outlined his vision of Twitter in broad strokes in his TEDx interview on Thursday.

S3: My my strong, intuitive sense is that having a public platform that is maximally trusted and and and broadly inclusive is extremely important to the future of civilization.

S1: He got a pretty sympathetic reception from the TEDx audience and from certain sections of the internet. Do you think, looking at the the reaction from people on the right? There was a lot of praise. Meghan Kelly, Nigel Farage, Dinesh D’Souza, they’re all saying, yay, congratulations. Well, what do you think they see in in Elon Musk or what he has said about Twitter that’s making them so happy?

S2: I think reading between the lines, the big thing that they see is if this is a freedom of speech network where anyone can say anything, then the first thing he does is he allows Trump back. And they know that Trump is likely to be the Republican nominee and that he gets a huge amount of benefit from Twitter. And if Trump is allowed back on Twitter, and that’s going to help their electoral chances in 2024.

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S1: Does being a private company change that at all? Does it does it make it more likely that he could do whatever he wants in that way?

S2: It’s I think the only way that he can do whatever he wants in that way, owning 9.2% of Twitter certainly does not give him the ability to bring Trump back. Owning 100% of Twitter. Certainly does.

S1: So let’s go through the steps that it would take. Let’s rely on your longtime money expertise. He has made this offering to, you know, buy these outstanding shares. What happens?

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S2: So now it’s up to the board. The board has received an offer with extremely vague funding contingencies. You know, when you’re selling a house and you get all of these office and some of them saying, like, I’m waiving a financing contingency, and the other ones are saying, I will buy the house, but only if I can get a mortgage. Ellen is basically saying, I’m offering this, but only if I can get a mortgage. He’s not being at all clear where he expects to find this money so it could all fall apart. At that point, the board is going to want to see a credible financing package lined up. But assuming that he has a credible financing package lined up, which is a big assumption, then the board is going to say, do we think that $54.20 per share is a good price for the company.

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S1: Is it?

S2: It was a lot higher than that. So as recently as October and Elliott Associates is this activist investor who bought at about that level. And they’re going to want to make a profit. But let’s say that they say yes. If they say yes, then basically that’s the deal done. The board says yes, Elon Musk raises the cash, and then everyone who has Twitter shares wakes up the following morning with notes, with the shares, and with $54.20 per share in cash instead.

S1: And what happens to regular old users if that if that’s the case, do you think people turn away? Do they care?

S2: People care, but it’s far from clear where they’re going to turn to. I mean, they’re not going to go the truth social. One of the reasons why Twitter has lasted as long as it has is because it’s Twitter. There’s no other alternative to it.

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S1: Even though it’s a small company, it’s nowhere near, you know, the size of Facebook, anything like that.

S2: Well, it’s a huge company. It’s worth, according to Elon Musk, $43 billion. It has hundreds of millions of users around the world and it has outside and it punches above its weight in terms of public impact. The only way in which Twitter is a small company is if you’re comparing it to Facebook like in any other context. It is.

S1: I guess it’s the punching above its weight part that I’m getting at because you’re right, there is no other option.

S2: And yeah, trying to sort of orchestrate a mass exodus from Twitter would be practically impossible as a huge amount of lock in effect. But yeah, Elon owns Twitter. He can if he gets pissed off at a journalist, he can just ban that journalist and no recourse, you know, if he wanted like his own tweets to be in a bigger font, if he wanted everyone on Twitter to automatically be following Elon like he could do any of that.

S1: Mark Cuban posited an interesting theory, which of course he posted on Twitter that if Elon sells, then some other company like Facebook or Google would would step in and try to buy Twitter. That certainly seems like something the board might be more likely to go for. They do have a fiduciary duty here, you know, vis a vis the Iran offer. What do you think?

S2: I think there is zero chance that Google or Facebook or any large tech company would ever be able to buy Twitter.

S1: Tell me why.

S2: No, no way. Given the Biden administration’s antitrust stance and the general anti tech opinions in Washington, no one is going to even try that one. It would obviously be a monopolistic, anti-competitive move and there’s just no way.

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S1: When we come back, what could happen if the board says no way? Felix was right last week that Elon Musk wanted to buy Twitter, so I asked him to do some more predicting for me, lay out the likely scenarios as he sees them.

S2: So the first thing that happens is that the Twitter board rejects the offer. They say that it doesn’t fully value Twitter, that, you know, Alpha, Jp morgan, there is more upside from something, something, product, something. Then the bull is back in the lungs cause he can stick around with his 9.2%, he can sell his 9.2%, or he can raise his ostensibly best and final bid and try and Sweden it somehow. My guess is that probably he dumps his stock makes $800 million profit on buying low selling high and walks away.

S1: Yeah. Let’s say this whole thing falls apart and he and he does walk away. Like, what’s the upside for Elon there?

S2: Many hundreds of millions of dollars is the upside, assuming that he can sell roughly at the price that which was trading at right now, which is a generous assumption. Maybe he can’t. But realistically, he is going to be able to sell his stake at a price significantly higher than he bought it for. And so that’s a nice short term capital gain for him.

S1: Is this all some elaborate pump and dump?

S2: I mean, maybe he maybe it is, you know, he can do it with those going, why not do it with Twitter?

S1: Jp morgan seems to agree with you, by the way. They said that. The shares have significantly greater upside. If management is able to execute on its plan to innovate on product, grow the userbase 20% and build out direct response advertising. They don’t they don’t think this is going to be accepted by the board. And yet here we are talking about it. This is the thing about Elon Musk. It’s really hard to tell if he is making serious corporate offers or doing billionaire whimsy.

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S2: When your Elon I don’t think there’s a difference. You kind of don’t know whether he’s a superhero or supervillain. Right. And he kind of like switches back and forth between the two. One minute he’s Iron Man, and next minute he’s the Green Goblin. So we don’t we don’t he’s he seems to be in goblin mode right now. Like he literally put out a tweet saying he was in goblin mode. And I think we can take that at face value. What that means, we don’t really know. But he’s causing mischief and he loves doing that.

S1: Hmm. That seems not great. Like, is it healthy for one man to have so much influence over over the markets? And the way we think about, you know, these great big companies is.

S2: Deeply, deeply unhealthy. Right now, the most powerful billionaire in the world is probably Mark Zuckerberg because he controls Facebook, which is just, you know, the by far the largest social network in the world and also owns Instagram and WhatsApp. But if Elon were to buy Twitter and had control of a social network which is basically responsible for having elected Trump the last time around, and if on top of that, he also continues to control Tesla and SpaceX. Then he would be giving Valkenburg a run for his money, and he is much more prone to flexing his muscles than Zuckerberg is. He likes going out on Twitter and just saying, Hey, guess what? I have all this power. I can troll people. I can do things like make $43 billion offers for it with a just because I, you know, I’m bored this morning. And it does seem wrong that there’s no checks and balances there. There’s no accountability that he can just do whatever he likes.

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S1: Felix Salmon, thank you very much.

S2: Thanks, Lizzie.

S1: Felix Salmon hosts Slate Money and is the chief financial correspondent at Axios. That is it for the show today. TBD is produced by Ethan Brooks, edited by Tori Bosch. Joanne Levine is the executive producer for What next? And Alicia montgomery is the executive producer for Slate Podcasts. TBD is part of the larger What Next Family. It’s also part of Future Tense, a partnership of Slate, Arizona State University and New America. We will be back on Sunday with another episode. I’m Lizzie O’Leary. Thanks for listening.