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Comment by axg11 | Hacker News Reader

The pushback is simple: Twitter stock price was higher than Musk’s offer for most of 2021. We are in a downturn affecting the entire tech industry, and it’s likely that prices will return to previous levels at some point. Elon’s offer is a lowball and Twitter can bring more value to shareholders with or without Elon.

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I don't immediately buy the logic of "Stock A hit a peak of $X last year, therefore that is the correct price/valuation, and not the lower price it is right now"

If Twitter was worth more, it'd be worth more.

With that logic, you should put a huge chunk of your savings into Twitter to benefit from the insight, as it's currently trading at 39% below its 52-week high.

The argument is not that is worth more, it is that it can be worth more in the future than Musk offer. No one can predict the future, but it is a legitimate reason to believe it can be worth more than $54 in the future and pointing that it was worth more last year is just an argument for the belief. Which makes sense to me.

As legitimate as it is to believe that the stock price will never again reach $54.

> The argument is not that is worth more, it is that it can be worth more in the future than Musk offer.

Then it should be priced for discounted future cash flow and value.

The disconnect between you two seems to be an understanding of what the price of a stock means.

The stock price today represents what investors think the future value might be. The speculation that the dip will bounce back is built into today's price.

The reduced price over the high represents the perceived risk that it won't return.

Musk values the stock higher than the mean investor.

*higher than the highest-valuing person currently in the bidding list

I think we have to tolerate a certain amount of irrationality from shareholders.

If you bought a $100k home which then dipped to $80k during Covid, would you accept an unsolicited bid of $90k?

It's reasonable for some people to take the bid, since you could arguably buy another comparable house for $80k and pocket the $10k difference, but I think a lot of other people would reasonably choose not to.

(I'm not totally sure if this logic scales to board rooms / billions of dollars, but curious to hear thoughts.)

You build a home and 10+ years in 2021 it's worth 100,000 today 60,000 and someone offers you 80,000 for it you might sell.

If you sold it 80'000 then it means it was worth 80'000, not 100'000

I don't think the logical disconnect here is about whether it scales to billions of dollars. The problem is that people live in their homes and there are many frictional costs associated with moving. You need to pick something much more fungible.

I own several stocks that have dropped in the last few months. If someone offered me a 20% premium to sell them today, I would do so in a heartbeat. I would even do so if it meant the company would go private and I couldn't buy that stock again.

Indeed, note that the only rational reason not to buy TWTR right now is the simultaneous belief that (a) it's not underpriced but also (b) Musk will never [be allowed to] make the purchase. If you disagreed with either of those statements, then it would be irrational not to buy TWTR, because either way you'd profit.

I have not bought TWTR.

Well, this is exactly what would be argued about in a shareholder lawsuit if this deal falls through and the stock is back to $30.

In that case I would be terrified as a board member, I've basically lost about $15bn of shareholder value for my shareholders.

It seems a little funny to me that people flock to the idea that Twitter's market cap in a fed-fueled stock market when literally everything was moving up is some kind of true valuation for Tiwtter. If anything Twitter is likely trading at or very close to its fair value now then it was last year when retail was throwing money into anything.

I think the argument is that if long term holders wanted to sell at this sort of valuation then they would have last year when it was way higher. If there was a bunch of retail money fuelling it then they could have took advantage and got out but they didn’t. So why would they sell now for a smaller upside?

Gamestop is still at 150 so people are still throwing money into anything

GME is a bit weird because it was essentially a crowdsourced fundraising round for Ryan Cohen SPAC, expecting an NFT play. (Which I expect will fail spectacularly)

> We are in a downturn affecting the entire tech industry, and it’s likely that prices will return to previous levels at some point.

So why not take the offer (which is 20% higher than the current market price for the stock) and put the received cashed into other tech stocks? Is Twitter uniquely/excessively down compared to other tech stocks, and due for a bigger rebound?

Because Twitter is not a hedge fund.

Twitter wouldn't exist in this scenario from the stock holder's perspective. They would get cash and then put that cash into other investments of their choosing.

The only way this makes sense is if there is a bigger offer incoming OR if the Twitter board has a plan to make twitter much more successful in the near term and succeeds at that plan.

I think the "not a hedge fund" part is referring to the fact that this would be a taxable event for the average stockholder. You can't just presto move that same amount into another tax stock.

No, they meant that Twitter is a specific business that shareholders believe in, not just a financial vehicle. Like part of the value of your house is that it is your home, not just a liquid investment.

Taxation is only a concern for folks who have big unrealized gains and lack harvestable unrealized losses.

If this leads to a shareholder lawsuit, the board may need to argue they had non public information suggesting the stock was undervalued.

At that point, they'll need a good lawyer to explain why Twitter chose to omit that information from their SEC filings.

In 2016 Microsoft acquired LinkedIn at a $26 billion valuation, which was at the time a premium of ~40% or so over the current price, but still lower than their valuation was the previous year. So it isn't unprecedented to accept an offer for an amount lower than your all time high Elon's offer is a 38% premium over the price it was prior to him disclosing his position in the company.

> We are in a downturn affecting the entire tech industry Some companies are down more than others, and some are doing fine. Twitter revenue is largely driven by ads and they are likely also going to be hit by Apple's privacy changes like all other ad based businesses. Meta (Facebook) has already said they expect ~$10 billion revenue hit from the changes. It's feasible to think that Twitter revenue for the year may actually drop and the stock price may not recover to the 2021 levels any time soon.

IIRC The Apple privacy changes hit a very specific kind of targeted advertising that Facebook was great at monetizing. I’m not familiar with Twitters ad platform but it’s unlikely to have affected them as hard as they hit FB.

Counterpoint: it's not a downturn, just a return to reality. Tech stock valuations were sky high in late 2020 / early 2021, and even considering recent drops most are still above their pre-pandemic levels.

Totally possible, but the original question was "Is there a NON-culture/political reason for all the push back" and "Twitter stock price was higher than Musk’s offer for most of 2021" is definitely a non-cultural/political reason to push back on the offer.

Again, you might be right that Twitter's price was over-inflated in 2021, but "it was worth more" is certainly a non-cultural/political reason to push back on the offer - even if they're wrong about Twitter's long-term value.

>Twitter stock price was higher than Musk’s offer for most of 2021.

That's cute but the past is gone. Twitter is clearly going downhill, both with their product and with their management (good thing they got rid of Dorsey, but perhaps that was too little too late), the stock just follows on that. If anything, people like Musk are the ones who still attract interest to the platform.

>Twitter can bring more value to shareholders with or without Elon

Twitter is on a very dangerous spot right now, their MAUs peaked long ago as young people go to other platforms, and overall, everyone is a bit of tired of the kind of discourse that predominates there, for instance, Trump was banned and I STILL find out everything about him because the people there (left and right-wing) are absolutely obsessed with him.

Honestly, Twitter is the one social media platform that I wouldn't really mind if it just disappeared. At least Facebook has some family members in there and some pictures from my earlier years. Twitter brings nothing of value to my life and I'm sure I'm not the only one who feels like that.

If Twitter allegedt failing didn't bring the stock price down before, why would it now?

Trump is mainstream. MSM covers him, as do Reddit and Facebook posters.

2021 was a growth without fundamentals for the entire market, mainly funded by currency inflation and government influence.

This bear market is returning to reality and paying the price for those profits.

> and it’s likely that prices will return to previous levels at some point

Wow, that's great news for Velodyne Lidar -- currently trading around $2 and was $28 less than 2 years ago. (Why bother with paltry 2x return on Twitter when you could get a 14x return?)

The high price was due to COVID and everyone being stuck inside. That’s over now and has been for some time.

Their stock dropped along with Facebook and other media platforms the second Apple stopped them from tracking users everywhere. That's without mentioning the crazy overvalue problem such companies already have.

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