Daily Bread for 4.21.22: Levine About Musk About Twitter

Good morning.

Thursday in Whitewater will be partly sunny with a high of 64.  Sunrise is 6:02 AM and sunset 7:44 PM for 13h 42m 41s of daytime.  The moon is a waning gibbous with 72.8% of its visible disk illuminated.

This day in 753 BC is the traditional date on which Romulus is said to have founded Rome.

Matt Levine writes, insightfully and artfully, Bloomberg’s Money Stuff column. Levine’s latest, Elon Checks His Pockets, ponders Elon Musk’s attempt to buy Twitter (all of it). Levine writes that

One problem with Elon Musk’s offer to buy Twitter Inc. for about $40 billion is that he does not have $40 billion. Of course he is very rich — the richest person in the world, worth $260 billion by Bloomberg’s estimate — but most of that money is tied up in the stock of Tesla Inc., SpaceX, the Boring Co., etc., and it is not obvious that he would want to sell enough of those things to buy a new thing. Nor is it obvious that anyone else would want to give him $40 billion to buy Twitter, given that he sees Twitter as “not a way to make money” and does not “care about the economics at all.”

Another problem with Musk’s offer to buy Twitter is that, if you ask him where the money is coming from, he says things like “I have sufficient assets” and “I am not sure that I will actually be able to acquire it,” which do not inspire confidence that he has actually thought about raising the money.

A third problem with Musk’s offer to buy Twitter is that in 2018 he mused about taking Tesla Inc. private for about $70 billion. “Funding secured,” he said, in an infamous tweet. It turned out that he had had a single casual conversation with representatives of a Saudi sovereign wealth fund in which they did not discuss the price of the deal or how much money the Saudis were willing to invest; ultimately Musk settled fraud chargeswith the Securities and Exchange Commission over this tweet. So the answer to the question “might Elon Musk have made an offer to take a large public company private, at a cost of tens of billions of dollars, without giving any real thought to where the money would come from?” is “absolutely yes, and he’s done it before.”

All of these problems mean that, if you are a Twitter shareholder and Musk says “I am going to buy Twitter for $54.20 per share,” you might not believe him. “Show me the money,” you might reasonably say. And in fact, when Musk did publicly announce his bid, the stock price dropped, closing at $45.08 on the day his bid became public. Musk’s proposal was contingent on “completion of anticipated financing,” and that is a big if.

Musk has a record of notable successes but also misses (often from overpromising).

And if the world’s richest man’s business plans haven’t always panned out, then it’s prudent to be cautious (if not skeptical) about the plans of government and businesses.

Dare, one might say, for the plans of local government and local businesses, too.

‘Putin’ the Boar Gets a New Name at German Zoo:

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