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Comment by rgbrenner | Hacker News Reader

It’s definitely just a stunt… he doesn’t have the money, and said he expects larger shareholders to sign on to the deal… so he can take the company private and do great profit-maximizing ideas like turning their office into a homeless shelter. He’s presented no ideas that would increase twitters profits or market share. What shareholder would sign up for this?

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Why would Twitter profits matter to shareholders after they divest?

The employee’s RSUs?

Good point! I wonder what happens to unvested RSUs in an acquisition like this.

Went through a similar situation where a company was taken back private. The RSUs converted to cash value day of deal close and had a staggered payout with roughly the same vesting schedule.

The parent believes, based on Elon's own claims, that part of his plan of raising the money is to get some existing shareholders on board, essentially having them finance the deal, obviously by promising them a stake in the future private company.

They are also assuming an existing shareholder would only do this if they believe the future private Twitter would be a more profitable endeavor for them, which Musk's comments really shouldn't inspire confidence in.

Ah, thanks for clarifying. I misread the parent's comment. Looks like they were referring specifically to the shareholders that choose to stay on as investors.

That does make it seem less serious IMO, given he made the same claim about somehow keeping shareholders when he pretended he was going to take Tesla private

They wouldn't be divested. He's said he intends to allow the maximum number of shareholders legally allowed to continue as shareholders, that is, the biggest investors get to not divest if they want.

GP is implying that since Musk is relying on this in order to finance it since he doesn't have 43B in cash.

>He's said he intends to allow the maximum number of shareholders legally allowed to continue as shareholders, that is, the biggest investors get to not divest if they want

If this is a plausible scenario, and I don't know that it isn't, do you think it's what he means or is trying to express?

Because it seems to me that the way he says he'll keep the shareholders, it's intended to communicate to his countless groupies that they will somehow still be able to own Tesla in their Robinhood accounts. Which would be nonsense, right?

The real question is why would shareholders that care about profits own Twitter stock? In its entire history there have been 2 years it didn’t lose money and actually recorded a profit.

The hard part about these companies is user engagement.

Currently, Twitter userbase is ripe for monetization.

It's all about potential future profits. Not everyone agrees on what those profits could be, and hence why there is a market for shares, and is the reason why share prices are not stable.

Essentially, the holders believe that past performance is not reflective of possible future performance. The shorts and sellers and non buyers believe that us the case or that there are more efficient allocations of their money.

Wrong. He could probably borrow $43bn against Tesla shares in a few weeks at the most. He doesn't have to sell any Tesla shares.

Tesla has a rule that you can only borrow 25% of the value against the shares. From Money Stuff:

> Or Musk could borrow more against his Tesla stake. Tesla’s own policies prohibit Musk from borrowing more than 25% of the value of his shares, which is barely enough to buy Twitter, even ignoring the fact that he has already used at least some of that capacity. Of course he’s in charge of Tesla and its board is famously deferential to him, so I guess he could change those policies, but that still requires finding a bank to lend him $40 billion against his Tesla stake to finance this lark. Tesla’s stock has quadrupled since mid-2020; if it fell back to mid-2020 levels — say because its charismatic attention-seeking CEO found a new toy — then the loan would be underwater, and selling out of a gigantic Tesla margin loan does not seem like a lot of fun for a bank.

I didn’t know that, thanks!

Well he do own approx 50% of another company worth around 100 billion.

I'm sure he could manage to finance this just fine.

He also does not need to fund all of it; just enough that a bank would be willing to consider the Twitter shares he is purchasing as collateral for the rest of the loan.

You're not allowing for risk and exposure.

This is a lot of money, even for Musk.

I don't see this deal happening. He can't afford it (without exposing himself to unnecessary risk). If it does go through in the ways described here, he's an idiot ... and I don't believe that, despite my personal opinions about him.

Of course it's a lot of money and a lot of risk, but like him or hate him one thing Musk has consistently showed is that he's willing to take huge risks.

This deal likely won't haooen, but due to the poison pill, not due to the risk.

But in any case, my point was merely exactly what I wrote: he does not need to raise anywhere near the full amount, because he can utilize the shares he buy as part of the collateral.

shareholders that have seen how "proximity to musk"=money right now.

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