jeremyp
Philosopher
Well Twitter's ex-shareholders have collectively made a fortune by selling the company to somebody who was very likely to tank it. I'm not sure if there's room for a second fortune to be made.
Merged Musk buys Twitter!/ Elon Musk puts Twitter deal on hold....
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Well Twitter's ex-shareholders have collectively made a fortune by selling the company to somebody who was very likely to tank it. I'm not sure if there's room for a second fortune to be made.
Ziggurat
Penultimate Amazing
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There are multiple reasons that Musk shorting Twitter isn't a possibility.
First, I don't think you can short a stock that isn't publicly traded. Second, given his stake in the company, I don't see how he could make money doing that even if he could short it. You have to short more stock than you own to turn a profit, and there's no way Musk could get enough buyers for that even if it was publicly traded without tanking the price just from shorting it, so it would be self-defeating. And lastly, of course, given the necessary volumes, there's no way it would escape regulatory notice.
jeremyp
Philosopher
Twitter is now a private company. There's no market for its shares so you can't short its stock.
If Musk was the CEO of a public company, he could secretly short sell its stock, do something to reduce its share price and thereby make a profit. For example, let's say he was the CEO of a company whose stock price is over inflated because the shareholders thought he was doing a fantastic job then, if he did something to reduce the confidence of that company's shareholders, like devoting all his attention to a different company he had recently bought, it would reduce the first company's stock price and allow him to make money by short selling*.
If only such a company existed.
*needless to say, it would be highly illegal.
plague311
Great minds think...
First, it wasn't my claim. Second, you had all of the information given to you to go find it. If you want to be lazy and ignorant, go right the **** ahead. I don't care what you do but this idea that you have to be spoon fed every single bit instead of taking the information provided and look at it yourself is just lazy.
Ziggurat
Penultimate Amazing
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You may not be the first person to make the claim, but you've adopted it, and you're claiming it's true. So it's your claim.
If I have to go find it, then I wasn't given it.
Of course I want to be lazy. So do you. That's why you haven't dug up those sources and posted them here yourself. You don't have a leg up on me.
I already looked up the specific cases presented, and all of them involved violations of twitter policy. I'm not obliged to keep looking on the promise that I'll eventually find something somewhere. If you don't want to back up your claim, then you're at least as lazy as me, if not more. Which you're entitled to be, but don't pretend that you aren't.
plague311
Great minds think...
You looked them up? You looked up both instances I gave you? I'll call bull ****, but this is off topic. I provided two examples that I, myself, went out and looked up despite it not being my claim. If you can't read, or can't find a ******* @username then that's a you problem. Fix it.
kookbreaker
Evil Fokker
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How’s that head of lettuce doing?
TragicMonkey
Poisoned Waffles
Doesn't that just mean the shares aren't sold to the public through the market? Privately owned companies still have shares, which can be sold. They aren't supposed to be able to be shorted because of the different regulations around private companies...but I'm not certain I'd trust an insane billionaire to do the right thing when it comes to financial shenanigans. In fact --this will amaze some people-- I'm inclined to be extra suspicious of insane billionaires when it comes to money!
lobosrul5
Philosopher
TragicMonkey
Poisoned Waffles
Not terribly informative. This bit:
doesn't explain what those restrictions are, and how they're stopping being "freely bought and sold". Also is there a distinction between "freely" buying and selling, and some other kind of buying and selling?
I suspect that billionaires (even non-insane ones) would be sufficiently motivated and sufficiently powered to get a lot done underneath that bit of handwaving.
Ziggurat
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To short a stock, you need to find buyers. That's easy enough when the stock is publicly listed. But how the hell do you find buyers when the stock isn't? Even absent shenanigans, who's going to buy? And supposing you wanted to do it legitimately, if you're shorting a stock, you're promising to give someone a stock at some date in the future, but if it's not publicly traded and you don't already have that stock, then you can't be guaranteed to be able to get that stock at any price. And if you do already have that stock, there's no point in shorting it rather than just selling it. No one is going to buy your stock futures for a non-publicly traded company. There's no market for it.
If there's financial shenanigans going on, it's not in the form of a short. He couldn't do it, and as I explained above, even if he could it wouldn't accomplish anything.
TragicMonkey
Poisoned Waffles
Very well, then, not shorting it. But I'm sure there's some fashion in which one could make money by deliberately destroying a company one owns, I just don't know enough to figure out how it could be done. I'm not certain that's what Musk is doing, of course -- he could simply be bad at this. So it's the same question that's popped up around other figures recently: are they geniuses achieving success via some brilliant plan that just looks mad to ordinary people, or are they actually just the fools they appear to be? How does one distinguish between a brilliant actor playing a fool and an actual fool?
In this case it could only be done via mind-reading or a very thorough investigation of all the man's financial dealings. I suspect there are a couple of government agencies capable of doing the latter. I'd be surprised if they weren't constantly on the watch. Musk has gotten into trouble before, and he sails rather near the wind.
That doesn’t contradict anything in my speculations.
lobosrul5
Philosopher
Time will tell, but I believe this deal will result in the largest loss of wealth to an individual in the history of mankind. The only exceptions might be a head of state ousted, like the Romanovs. Although, unlike them, worst case scenario for Musk is he becomes just really really rich and not among the richest people in the world.
ETA: I was saying in a post earlier how equity firms loot companies. Well, they really need to be able to buy it below or at least around "book value*" for that to work. Well, Musk bought Twitter for about 12 TIMES twitters book value.
*Thats the value of a companies assets, tangible or otherwise (things like patents).
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Ziggurat
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Musk is definitely not an idiot. His success with SpaceX proves that. That doesn't preclude making mistakes, even big ones, but it should give one pause before jumping to conclusions.
One obvious possibility is that this isn't about the money, that he isn't doing this to try to get richer. He'll still be unimaginably wealthy even if Twitter closes its doors tomorrow. Bezos didn't buy the Washington Post because it was a profit center. Twitter is obviously a much more expensive purchase than WP, but Musk likes to upstage Bezos.
theprestige
Penultimate Amazing
One way to do it is the bust-out. Essentially you take over a company that has good credit, and borrow as much money as you possibly can on that credit. But instead of investing the money in growing the company so that you can pay back the loan and pocket the surplus, you just pocket the entire loan and walk away when the good credit is all used up.
For this to work, though, it's best if someone else invests all the resources necessary to build up that good credit, and then you take over without paying very much at all for the privilege. One episode of the Sopranos depicted the owner of a sporting goods store, who had personal debts to the mob that he couldn't pay back. So the mob took over his store. Instead of just taking a share of the profits until the debt was paid off, they ran a bust-out. Basically sucked every dime out of the business in a matter of months. Destroyed the guy's life as well. This worked because all the investment costs were borne by the victim, it cost the mob almost nothing to take over, and all the fraud and deadbeatery was in the victim's name. A bust-out probably wouldn't work for Musk, since he's got a lot of his own money invested now, and he'd be the one holding the bag when the chickens came home to roost.
Another way to do it is a good old-fashioned liquidation. Acquire the company for cheap, sell off all the parts, pocket the cash, walk away from the gutted corpse. But Musk paid top dollar for Twitter, and Twitter doesn't have a lot of capital assets to sell off.
A third way to do it, that I'm a little hazier on, is some sort of insider scam. Say you have some kind of angle on the property company that leases out the Class A office building in San Francisco, where Twitter has it's headquarters. Take over the company, perpetrate shenanigans with the lease, pocket the profits realized thanks to being able to play both ends of the transaction somehow. Or, I dunno, have Twitter lease a fleet of Teslas on some thin pretext.
But I think that pretty much any decent scam along these lines has to start with getting the company for cheap. I think, at the price Musk paid, there's no scam on Earth that could turn a profit for him.
Ziggurat
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Unlikely. I don't think you understand the scale of some losses that have already happened. For example, Colin Zheng Huang, a Chinese billionaire, lost $40.2 billion in 2021.
lobosrul5
Philosopher
First off, wow I knew China was getting hit hard but not that bad.
After purchasing Twitter for $44 billion on Thursday—the largest leveraged buyout of a technology company in history—Musk’s net worth has fallen by $9 billion, according to calculations by the Bloomberg Billionaires Index. His net worth now stands at $203 billion, down roughly 25% since the beginning of the year.
https://time.com/6227153/elon-musk-net-worth-dropped-twitter/
So, doing a quick calculation, if he's already down 25% to 203bil, that means he was at 270 bil before... or a loss of 67 billion.
Remember, Musk had to pledge a LOT of Tesla shares to secure financing for Twitter. If Twitter goes bust he will lose... a lot. I'm not sure how much.
ETA: going straight to the source figures:
https://www.bloomberg.com/billionaires/ shows an $87 billion loss YTD for Musk. Although I'd love to be down to a net worth of "just" $183 billion myself. Zuckerburg has lost slightly more.
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I Am The Scum
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He also had to borrow a lot to close the deal. We don't know what the terms of those loans are, or how badly he'll be in the hole if Twitter sinks.
Also, all of this has not been good for Tesla's stock price.
It is just absurd, him taking on the whole "Tweaking the Libs" persona.
Who does he think buys Telsas?
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