Business

Five Big Questions for Elon Musk and Twitter

Platform vs. power user.Credit…Dado Ruvic/Reuters

Now what?

Over the weekend, Twitter’s board put in place a poison pill provision in an effort to block Elon Musk, who, you might have heard, wants to buy the social media platform. The maneuver will give Twitter’s management time to assess the offer and potentially invite other buyers via a sale process.

At least one private equity firm, Thoma Bravo, is interested, though it’s unclear whether that will result in a formal offer. There are also other actions Musk can take to outmaneuver Twitter’s reluctant board. In the meantime, here are the big questions we have about where Musk’s bid for Twitter goes from here:

Will Musk go hostile? He appears to be threatening it; at least, that’s what his tweet quoting Elvis Presley’s “Love Me Tender” appears to imply. In a tender offer, also known as a hostile bid, Musk would go directly to shareholders, asking them to “tender” their shares at a given price (his offer is $54.20 a share, for now). This would require him to file a form with the S.E.C. that, among other things, provides details about the financing behind his bid. That’s important, because questions remain about how Musk would get the cash to pay for a Twitter deal.

Could a hostile bid override Twitter’s poison pill? No, but it could put pressure on Twitter’s board to remove the defense, if enough shareholders support Musk’s bid. In 2012, for example, CVR Energy removed a poison pill it had put in place to thwart the activist investor Carl Icahn after his tender offer earned widespread support.

What is Twitter worth? Several analysts said that they think Musk’s bid is too low, and the board is only likely to accept an offer of $60 per share or more. But that’s partially based on Twitter’s ability to reach lofty financial targets, which pushed its stock above $70 per share last year when they were announced. But Twitter’s stock has since fallen to around $45, as investors questioned the company’s ability to meet its goals and fend off competition from other social media sites.

What is an “uncensored” Twitter worth? That’s even harder to say. Musk has suggested that he would promote more “free speech” on the platform, but Twitter insiders point to stalled user growth in 2016, before the company tightened up content moderation, as a warning. “They’ve gotten users to grow meaningfully over the last few years,” Rich Greenfield, a media industry analyst at LightShed Partners, said of Twitter’s growth following the 2016 change that restricted more content. “To make the platform chaos, I think, is going to make users go in the wrong direction.”

Will other buyers step in? Maybe, maybe not. Antitrust concerns would likely make it hard for many corporate buyers, especially in the tech industry. It’s a sizable check for private equity, far surpassing last year’s $30 billion take-private of Medline, the largest leveraged buyout in more than a decade. Twitter’s limited free cash flow also makes it less attractive to finance with a lot of debt.

Further reading: Musk has often been described as a libertarian, but his true political philosophy is hard to identify.

HERE’S WHAT’S HAPPENING

Bank of America beats earnings expectations. The bank’s first-quarter profit fell by 12 percent versus last year, but held up better than its rivals. Lending grew by 10 percent in the quarter, a positive sign for the U.S. economy.

On Tax Day, the Treasury pleads for more I.R.S. funding. Staff shortages and a huge backlog of returns have made this tax season particularly complicated, but proposals to increase the I.R.S.’s budget have fallen flat in Congress.

China’s economic data hints at the cost of its “zero Covid” strategy. Economic growth of 4.8 percent in the first quarter was barely more than the previous quarter, and obscured a slowdown in March, as strict lockdowns shuttered factories and confined millions of consumers to their homes. The slowdown is expected to worsen this month.

President Biden tries again to fill a top regulatory post at the Fed. The White House said it intends to nominate Michael Barr to be the central bank’s vice chairman for supervision. Barr, a former Obama administration official, could have better luck securing support because he is seen as more moderate than Sarah Bloom Raskin, whose nomination was pulled amid a lack of sufficient Senate support.

Sri Lanka closes its stock market as its economic turmoil worsens. Starting today, the Colombo exchange will be halted for five days. The country recently defaulted on its debt as soaring inflation and shortages have led to growing civil unrest.

Crypto Twitter reacts to Musk’s moves

Twitter is the de facto platform for debate in the crypto community, so Elon Musk’s attempt to acquire Twitter has inevitably generated much discussion on the site. Musk’s libertarian streak aligns with the crypto ethos; Tesla holds about $1.75 billion in Bitcoin on its balance sheet; and his tweets about the joke token Dogecoin drive its popularity (and price), making Musk a cult figure in the community.

Many important figures on crypto Twitter have cheered Musk’s moves, especially his talk of making the social network more decentralized and integrating aspects of crypto into its operations, while a few others have questioned the wisdom of his takeover attempt. Here’s what a handful of crypto bigwigs have said about it all (in tweets, of course):

  • Charles Hoskinson, the founder of the Cardano platform and an early Ethereum contributor, wants to chip in: “Elon if Twitter rejects your offer, then hit me up. Happy to build a decentralized one.”

  • Sam Bankman-Fried, the founder of the crypto exchange FTX, also has a plan for how a decentralized Twitter might work: “Would this democratize social media, make the finances transparent, and remove single point of failure moderation? Yup.”

  • Justin Sun, the Tron network founder, said he would offer an even higher price for Twitter than Musk (with no other details): “We fully support the reform initiatives of @elonmusk and would love to see Twitter becoming crypto-native and Web3 friendly.”

  • Vitalik Buterin, the Ethereum network co-founder, has concerns: “Don’t oppose Elon running Twitter (at least compared to status quo), but I do disagree with the more generalized enthusiasm for wealthy people/orgs hostile-takeovering social media firms. That could easily go *very* wrong.”

  • Jackson Palmer, a co-founder of Dogecoin, isn’t so sure, either: “It takes some pretty impressive mental gymnastics to associate any type of ‘freedom’ with the richest man in the world initiating a hostile takeover and forcing one of the largest public social media platforms private.”


Seen and heard

“We are so divided today, so revved up, that even Disney is having a hard time bringing us together.”— ​​Martin Kaplan, a former Disney executive, on how the entertainment giant has been drawn into the partisan political fray.

“We didn’t know how this would turn out, but we knew there would be a heavy penalty if we didn’t swing for the fences.”— Jim Farley, the C.E.O. of Ford, on how the introduction of an electric F-150 pickup truck is crucial to the future of the Detroit automaker.

“Everyone has their breaking point. You can only feel unappreciated for so long.”Mary Gundel, who was fired as manager of a Dollar General store in Florida after her TikTok videos about difficult working conditions went viral.


An engineer working on a battery prototype at VoltStorage in Germany. Investors often shy away from companies that build complex, expensive hardware.Credit…Lena Mucha for The New York Times

It’s not easy being green

Late last week, European leaders began drafting a plan to ban Russian oil imports, which would cut off a key source of funding for Russia’s war on Ukraine. Even before Russia invaded Ukraine, the European Union had set aggressive targets to reduce carbon emissions. But the war has made Europe’s transition, which has served as a preview for the rest of the world, even more urgent. The biggest problem: In the competition for capital, green energy is losing out to “fast money” investments in sectors like crypto and the metaverse, The Times’s Eshe Nelson and Adam Satariano report.

Solutions are available if given a financial push. Almost half of the reduction in emissions to meet net-zero targets by 2050 will come from technologies currently in their infancy, according to the International Energy Agency. There is, in theory, plenty of capital available for the multitrillion-dollar task of funding this transition to greener energy.

But attracting investors to green-energy projects has been tough. Venture capitalists are more infatuated with other sorts of start-ups: Last year, venture firms invested $11.9 billion in renewable energy globally, compared with $30.1 billion in cryptocurrency and blockchain, according to PitchBook.

There are some signs of improvement. A growing number of funds focused on early-stage green technologies are launching, like the Bill Gates-backed Breakthrough Energy Catalyst, which formed in late 2021, and 360 Capital, a venture capital firm based in Paris and Milan, which is expanding its dedicated clean energy fund that launched two years ago. Even so, green-energy companies that specialize in software and A.I., rather than complex hardware like batteries, are getting the bulk of new investments.

Investors say governments need to play a bigger role in steering investment. Industries like steel and concrete could be forced to adopt greener methods of production, and tax credits could be offered for green innovators and venture capitalists. “We need to get real,” said Tony Fadell, the founder of Nest, who has put his personal fortune into Future Shape, a fund addressing societal challenges. “Too many people are investing in the things that are not going to fix our existential problems.”

THE SPEED READ

Russia-Ukraine war

  • At least seven people were killed in a Russian missile attack on the western city of Lviv. (NYT)

  • “How Russian Media Uses Fox News to Make Its Case” (NYT)

  • China is helping Russia evade a U.S. embargo on Russian-caught pollock, salmon and crab. (AP)

Deals

  • A court battle between Michael Klein and shareholders of the insurer Multiplan is raising concerns about the future of SPACs. (FT)

  • “The 26-Year-Old Dropout Lapping the Hedge-Fund Field” (WSJ)

  • As the NFT market cools, Jack Dorsey’s first tweet, which sold for $2.9 million a year ago, could fetch just $14,000 at auction. (WSJ)

Policy

  • How the Biden administration’s “single biggest policy success has turned, for now, into a signal political failure.” (Times Opinion)

  • Trump has outraised the Republican National Committee and turned Mar-a-Largo into a key campaign stop. (NYT)

  • Facing defamation lawsuits, Infowars and other companies owned by the far-right broadcaster Alex Jones filed for bankruptcy. (Bloomberg)

  • “Is Covid More Dangerous Than Driving?” (NYT)

Best of the rest

  • Deloitte has cut its office space in London by almost 250,000 square feet, as its employees work from home more often. (FT)

  • Mortgage payments as a percentage of income in the U.S. are the highest since the 2008 housing bubble. (Fortune)

  • “The Battery That Flies” (NYT)

  • Jordan Belfort, the inspiration for “The Wolf of Wall Street,” is now marketing himself as a cryptocurrency guru. (NYT)

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