6 possible scenarios of what happens next

Buy more, sell-troll on?

What will be Elon Musk’s next move in his clash with Twitter is the question on the lips of the most connected people in Silicon Valley and Wall Street this weekend. “This is the type of process that is going to get incredibly disruptive and drag on,” says a former senior Twitter executive, watching happily from the sidelines. It could be one of the three above. Or a mixture. Or something else altogether.

On Friday afternoon, Twitter’s board said it had approved a poison pill strategy, a move public companies have used since the 1980s to protect themselves against invasive investors like Musk. Musk has offered $54.20 a share for Twitter, valuing it at around $43 billion, and the poison pill signals the board doesn’t think that’s a good enough offer. That’s about a 38% premium to the point Musk disclosed his stake on Twitter, but nearly a quarter less than the market value of Twitter stock last July.

Based on conversations with analysts, folks at Twitter, and those who’ve worked there in the past, here’s an educated guess at possible scenarios ahead. It’s hard to be sure with Musk – the guy who once joked about taking his own company private and made his offer work as a weed joke – at the center of it all.


Musk doubles down and buys more Twitter shares.

Speaking at a TED talk on Thursday, Musk insisted he had a “plan B”. And while he also insisted that the $54.20 per share offer would be his “last and last” opener, it’s certainly possible that Musk, the richest person in the world, could afford to keep pressing. He would need to sell Tesla stock or take out a loan to do so, and he said he brought in Morgan Stanley to advise him. His proposal received a lot of support on Twitter – for a guy who lives on Twitter and likes to grab the attention of his 81 million followers there, that’s important. And a significant chunk of Wall Street analysts who follow Twitter shares think that’s a good price.

“We realize that a take-it-or-leave-it offer is ultimately not the way shareholders or a board want to negotiate, but we urge both to accept this offer and come forward,” the analyst said. Michael Nathanson, one of the sharpest. careful observers of the field of digital media.


Musk gives up.

Ultimately, he was serious about the “last and final” nature of his intentions. It was all kind of expensive digital art/trolling. He had fun. The stock has risen and if he sells slowly and cautiously, he will likely walk away with $500 million or more in earnings. Not bad.


Musk sets up a consortium.

Musk could team up with another wealthy person or several of them. Or with an institutional buyer, such as a private equity firm. Sharing the financial burden would eliminate the amount of Tesla stock he would need to sell or the amount of a loan he would need. It would also help address a vein of criticism regarding Musk’s offer that Twitter’s first investor, Fred Wilson, voiced publicly on Thursday. “Twitter shouldn’t be owned by just one person” he tweetedarguing that a platform functioning as one of today’s most dynamic venues for dialogue should not be controlled by a single force.


Musk competes with Twitter, but Twitter still doesn’t want to sell itself.

It’s possible Musk’s offer won’t be Twitter’s last hostile proposal in the immediate future. According to the New York To post, billionaire Orlando Bravo’s PE boutique, Thoma Bravo, is actively considering making an offer. Twitter has been a target in the past, most recently of Elliott Management, the activist investment firm that took a stake in 2019. The company has a long and tortured history of planning to sell itself, the continued consequence of its cultural relevance overriding its financial performance. .


Twitter finds a white knight.

A poison pill is a popular defense against an attacking investor. Here’s another: the beleaguered company finds a preferred buyer, someone who will keep the company’s current direction and trajectory intact. It could happen if Musk stays involved and continues to pressure Twitter. That could happen if Musk leaves and another impromptu buyer arrives.

Twitter doesn’t seem to think this is all over. After initially hiring Goldman Sachs to advise it, Twitter reportedly hired a second bank, JP Morgan. You don’t get more bankers if you don’t think you’ll need more bankers.


Musk draws an trump card.

He’s had enough of messing with Twitter but is still determined to make his vision of free speech a reality. (He argued that Twitter and other social media platforms are unfairly hampering discussion, repeating a familiar criticism of conservatives.) He is taking his huge capital and creating his own social media platform, which would compete with others like Truth Social of Donald Trump.

This is the least likely scenario, as the difficulties of launching Truth Social make it clear that it is difficult to create a Twitter competitor from scratch. Again, as Morningstar analyst Ali Mogharabi points out: “If he can actually raise $43 billion in cash to buy the company, then one could also consider that, if he is rejected, he could still try to raise this capital to create a similar company. social media platform.

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