A "game of thrones" has finally come to an end.
On Monday, April 25, 2019, the board of directors of social media company Twitter announced that it had reached a definitive agreement with Tesla CEO Elon Musk, whose wholly-owned entity would buy Twitter for $54.2 per share in cash for a total transaction price of about $44 billion. Upon completion of the transaction, Twitter will become a privately held company.
Affected by the news, Twitter closed up 5.66% at $51.69 per share.
Musk's business saga and Twitter's importance in overseas public opinion made the acquisition stir up thousands of waves. Behind this pre-publicized "yang conspiracy", what are we known and unknown?
Musk's layout
On April 4, a filing disclosed by the U.S. Securities and Exchange Commission (SEC) showed that Musk bought a 9.2 percent stake in Twitter, making him Twitter's largest outside shareholder, about four times the 2.25 percent stake held by Twitter founder Jack Dorsey.
The move also sent Twitter up 27 percent, its biggest intraday gain in more than four years.
But just a week before we started, March 25. Musk once posted a vote on Twitter that reads "Do you think Twitter follows the principles of free speech"? The issue attracted more than 2 million votes, with 70.4 percent believing Twitter didn't follow that principle.
Musk then released a smoke bomb and said, "Do you need a new platform?" ”
Just when everyone was speculating about whether Musk was going to start a social media company similar to Meta or Twitter, the SEC's filing disclosure let everyone know Musk's true intentions.
But this is far from the case. Half a month before the release of the vote, Musk has begun to lay out this game. According to The Verge, Bloomberg and other media confirmed that Musk has applied to the SEC on March 14 to complete the operation of increasing twitter shares, and the shares are passive investment forms.
On April 14, Musk made a high-profile announcement to acquire a 100% stake in Twitter at $54.20 per share, worth a total of $43 billion.
Since then, Twitter's board of directors has announced the launch of the "poison pill plan" to dilute Musk's shareholding, aimed at resisting Musk's acquisition. However, after Musk announced that he had "secured" $46.5 billion in funding, Twitter's attitude took a 180-degree turn.
In the end, the two sides finally negotiated, and Musk then sent a tweet, and the happiness overflowed.
What we know
Price:
Musk initially bought Twitter and said he would not change the price of $54.20 per share. He kept his promise and announced an all-cash transaction for the same amount.
While his initial filings showed the company's outstanding share valuation at $43 billion, Monday's confirmation raised that figure to $44 billion. This may be a way to calculate the number of shares, rather than any adjustment to the stock price.
Financing(1):
As Musk revealed last week, he has raised $25.5 billion in margin loans from more than a dozen banks to support the acquisition. Upon completion of the transaction, Twitter will become a privately held company.
Who will own Twitter:
It's clear that Twitter has agreed to sell itself to Musk "wholly owned."
We don't know
Financing(2):
While the announcement reiterated that Musk would "provide a commitment to provide about $21 billion in equity," it did not further specify where the funding came from. For such a large-scale deal, there could be four or five or more companies involved, and some existing shareholders may also decide to inject their stake in Twitter into the private company.
All of this means that Musk himself may not bear most of the money, which has relieved Tesla investors, who have been worried that he will sell his stake in Tesla to fund Twitter.
Who runs Twitter:
Parag Agrawal, who became Twitter's current CEO last November, took over from former CEO Jack Dorsey for only five months. The CEO position has not yet sat hot to meet Musk.
Over the past few weeks, Musk has repeatedly taken to Twitter to express his dissatisfaction with Twitter's board and the company's operations, and management changes are common when a company is acquired. But Musk is already the CEO of Tesla and SpaceX, so his ability to take on another actual leadership role may be limited.
Musk's friend and Twitter founder Jack Dorsey stepped down last November.
In March 2020, when hedge fund Elliott Management launched an offensive against Dorsey and elected a new CEO, Musk publicly expressed his support for Dorsey, writing on Twitter: I just want to say that I support Dorsey as Twitter's CEO, and others are very good. And added a heart-to-heart expression.
In addition, the two are like-minded in many ways, such as cryptocurrencies, and often interact on Twitter.
Previously, the Bloomberg article pointed out that when Dorsey left Twitter, Musk was not happy, and then he took a 9.2% stake to buy Twitter to avenge his friends, which also seemed likely.
How Twitter will work:
Musk has publicly stated that he plans to make the Twitter platform a free online paradise and complained that Twitter is too harsh in managing users' tweets. At this point, Trump, who was banned by Twitter, may resonate with him.
Just hours before the deal was announced, he said on Twitter: "I hope even the harshest critics of me can stay on Twitter." ”
But some advertisers are worried about Musk's arrival, fearing that if Twitter becomes too open, the amount of advertising will decrease.
In 2021, Twitter's revenue was $5.08 billion, up 37% year-on-year, with advertising services accounting for more than 80% of revenue.
However, some people are happy and some are worried, advertisers may not like Musk's arrival, but the currency circle investors should be cheering for Musk's acquisition of Twitter.
Musk has always been a cryptocurrency platform, and in April 2019, Musk tweeted that Dogecoin was his favorite cryptocurrency. And called himself the "former CEO" of Dogecoin. Dogecoin then skyrocketed.
In January last year, Musk changed the profile to "Bitcoin", and then bitcoin rose by $800 in the short term.
Even just a month ago, after Musk announced that he was considering creating a new type of social media, a YouTube blogger Steven Steele responded: "Whether Musk buys Twitter or creates a new platform, he will definitely make this platform support the Dogecoin tip feature." ”
Musk then replied with "100 points," suggesting that there might be such an operation.
After Musk took a stake in Twitter, Dogecoin also rose sharply and hit a new two-month high.
As of press time on April 26, Dogecoin rose more than 30%.
In just ten days, Musk "captured" Twitter, after which how will he "guard"? We have no way of knowing.
But if Musk continues to influence Twitter with his dramatic actions, Twitter will eventually become a stock with misaligned price and value, and emotions outweigh strength.