In their latest episode of the VALUE: After Hours Podcast, Brewster Taylor, and Carlisle discussed Musk Can’t Just Walk Away From Twitter. Here’s an excerpt from the episode:
Tobias: The other weird one is, is Musk over with Twitter according to him?
Bill: Now you are making me upset.
Bill: Because I have been a little bit emotionally heated about this whole situation. I think some of it is– [crosstalk]
Jake: Ooh, to share.
Bill: I know a couple people over there and the other part of it is, I’m a little bit perturbed by people making excuses for a guy who like, I think when you look at the facts that actually happened, it’s pretty obvious that him and his buddies thought that he was getting a steal. They all were like, “Oh, the Twitter board’s incompetent. You have to do this deal. How do you have the poison pill? You got to give it to Musk. These guys don’t even own shares.”
All these fucking guys out in Silicon Valley talking their shit, then they get the deal done, and then the market tanks, and then they realize that maybe they don’t understand valuation in today’s world, and then the bot thing comes out, and they’re like, “Oh, but the bots.” You’re going to tell me that Elon Musk, the world’s biggest power user of Twitter didn’t understand that there might be a bot issue?
Tobias: Yeah, that seems thin, doesn’t it?
Bill: He tweets like a crack fiend. He looks at his replies. He’s scrolling his replies. You look at his answers. He’s answering people. You’re going to tell me, he has no clue what he’s buying. He waives due diligence.
Bill: He refers to it as the most seller friendly contract you can put together and now, he’s all of a sudden done? Fuck you.
Jake: You’re living by this unacquainted idea that the rule of law is still a thing. [chuckles]
Tobias: Is he trying to reach, right?
Jake: I think so.
Tobias: At a low price.
Bill: Yeah, I think so.
Bill: That’s the only thing that makes sense to me unless– [crosstalk]
Tobias: The bid is $54.20 right now, because he’s got $4.20 in this. So, the next bids at $46.19 something like that.
Bill: He like eight buys a company with a meme bid, because he thinks it’s funny.
Tobias: It would have been funny.
Tobias: I don’t know enough about the valuation, but I thought it was probably pretty good value where he got it. I thought you could run it a little bit more sensibly and it would do quite well. Monetized a little bit better. I thought it was an obvious [crosstalk].
Jake: What about the theory that–
Bill: I’ll tell you what, he’s still got a lot of chances too. Because there’s a specific performance part of that document and I would a 100% be asking for that to be enforced.
Jake: What about the theory that it was just he wanted to unload some Tesla shares?
Bill: Yeah, I don’t know.
Tobias: I see that too, but jeez, that’s a lot of effort to make it safe. Would you negotiate a bit harder?
Jake: Let’s get into this crazy deal.
Tobias: Would you negotiate that deal a bit harder and make it–? I think he’s got a billion-dollar breakthrough and he’s sold like billion dollars in Tesla stock.
Bill: Yeah, but the break fee, I’m pretty sure that was a billion dollars. I’m pretty sure that that was contingent upon financing, which has been fully secured. Now, what I don’t know and if a lawyer is listening, please hit me up, even though I know it won’t be legal advice. I don’t know if the funding commitments of the lenders, like, let’s say that this becomes a long litigation, which I don’t think it will, but let’s say it does. Does that get the lenders off the hook? If the lenders are off the hook, then is Elon off the hook?
I think with Twitter responding yesterday and saying like, “No, we’re still going to seek specific performance, and neither you or your lenders are off the hook.” I assume you have to serve them properly, but I would imagine that it stays the commitments, but I don’t know.
Tobias: Corey Hoffstein’s got a good line here. He said, “I like Matt Levine’s take: the more bots there are, the more undervalued Twitter is, because the earnings per user are higher than expected and there is more room for penetration!”
Jake: There you go.
Bill: Then you get into this, well, what if he just doesn’t listen to the court? What world are we living in right now? If we’re living in a world where Elon Musk can honestly just disobey a court order with funds actually secured–
Jake: You mean Twitter center and all the other stuff that’s been disobeyed?
Bill: Look, I’m just saying, if the Delaware court says, you have to have specific performance here and he just says, no, and that’s okay, the entire stock market should rerate, I don’t know, 20%, 30% downwards. [crosstalk]
Tobias: He can’t ignore it, he can’t ignore it. It’s too much money. But that doesn’t discount some negotiated outcome. That’s probably more likely outcome.
Bill: Yeah, no doubt.
Tobias: If he does want it, then it gets done under lower price.
Bill: If I were them, I would not be in a real hurry to do that. A judge would really have to push me. It reminds me of– Now, I told this story on a Space. So, if you’re tuned into this Space, forgive me. But there was this woman when we were buying this house. My wife was pregnant and this tree falls on the house. The 70 grand of damage, okay? Now,
I’m out an oak tree, which is 100 years old and an integral part of the property and $70,000 damage. This woman says to me, “You’re going to have to close on the house” and the damage is immaterial. I was like, “Fuck that. We’re going to court.” We were negotiating over the escrow stuff. And her first settlement offer to me she’s like, “We’re going to keep 80% and you get 20% of the escrow money back, because you’re clearly in bad faith.”
The people around town were like, “I wouldn’t fight her, she’s got deep pockets, she has this building in San Fran that funds her whole life,” and she’s like, “This crazy woman that runs around town bitching at everybody.” She’s the type of person that she bought a ski vacation at the kids’ school at a fundraiser and then said that the accommodations were not nice enough, so, she put the ski vacation back to the school and didn’t pay for it. That’s the kind of woman that– [crosstalk]
Jake: No way.
Bill: Yeah. I was like, “All right, fine. Let’s go to court.” I sat there in front of the judge, and I showed him the pictures of the damage, and I showed him the picture of the house, and the guy that was married to her finally had to get on a plane, and come to the court, and start to actually incur pain in his life. I said the judge, I said, “I’m here for one day to actually get to a good face settlement. After that, we’re going to court.” I said, I want these people to actually argue to a jury that $70,000 is immaterial and I’ll take it the whole way.
I don’t care.” We ended up settling that day and I got 80% back and they got 20%. So, I just think you got to bury him in discovery and make him, you got to inflict as much pain as humanly possible on him, make it such a pain in his ass, and ultimately, with the specific performance clause, he’s only killing something that he may have to own. So, we’ll see. Those are my thoughts. Anyway, I’m very annoyed at the whole thing. He really bothers me and meanwhile, he’s having twins from some executive at his company like– I don’t know, I know this guy is God to some, fuck this guy.
Bill: Anyway, that’s how I really feel.
Jake: He’s doing his part to repopulate the earth.
Tobias: How many kids has he got?
Bill: Nine. If he was an NFL player, people would be making so much fun of them and they still are. But it’s just disgusting.
Tobias: Ah, he can afford it.
Bill: I guess.
Tobias: I’m tapped out at three.
Jake: Yeah. [laughs]
Bill: I don’t know. I don’t know him for real, but from the outside I don’t like what I see.
Tobias: Should do a little palate cleanser?
Bill: Yes, you are very worked up.
Tobias: Yeah. [laughs] You got some veggies for us?
You can find out more about the VALUE: After Hours Podcast here – VALUE: After Hours Podcast. You can also listen to the podcast on your favorite podcast platforms here:
For all the latest news and podcasts, join our free newsletter here.
Don’t forget to check out our FREE Large Cap 1000 – Stock Screener, here at The Acquirer’s Multiple: