On my April 28 Real money columnI wrote a heartfelt letter to Elon Musk, begging him to give up Twitter (TWTR). This morning, I woke up to the news that Musk tweeted that he had “paused” his Twitter bid. Musk followed up with a tweet two hours later saying he was “still committed to the transaction.”
He left the door open, as I advised him, “go away.” Why? Elon’s Twitter bid threads have been empty for the past two weeks. The reasons are as follows:
- Nasdaq retracement. The market was green this morning, but as of yesterday’s close, (QQQ)s is down 27.52% year-to-date.
- The Tesla Shanghai shutdown caused by the CCP’s Covid-Zero policy, combined with point one, has reduced the value of Elon’s main “currency”, which is his Tesla (TSLA) shares.
- Twitter employees worry about Musk’s leadership potential. May God forbid Elon break their pile of hate speech, lies, and selective censorship. How dare he!
- TWTR’s amazing 1Q results, including refuse Adjusted EBITDA.
- There is a huge shortage of other contractors for TWTR.
Last night’s letter from “angel investor” Jason Calacanis – as aptly reported by CNBC reporter Lora Kolodny – begs for cash from accredited investors to support Elon’s bid was the last straw. As Lora reported, Calacanis’ email begins like this:
“We’re collecting interest to invest in Twitter,” Calacanis wrote in an announcement calling for funds from Elon Musk’s network of high-net-worth individuals.
It was horrible. So sad. Get over the hat for poor Little Elon?
Yes, Elon is rich in assets and poor in cash. Who doesn’t know that? Has someone missed his TSLA stock sales (stock market for sure) tweets about selling all his home and a million other hints that he’s not particularly liquid?
As I have mentioned extensively in my research reports for OHM Research in Sao Paulo, by my calculations, TWTR is worth $10/share. However, keep in mind that as recently as July 23, 2021, prior to the recent Tech Wreck crash, Twitter had a market value of $57.4 billion. With the genius thinking of the TWTR Board of Directors, Elon will be allowed to control TWTR for $44 billion, 25% less than what the stock market valued 9 months before Elon made the offer. .
When insiders are selling — and selling an entire company is far more impactful than converting a few low-priced stock options, as Musk did with TSLA — they’re telling you something’s up. that’s not okay in their business
Problems with Twitter? The company ran out of cash because its core business just couldn’t make money. Dots. It is my fervent hope that Elon, an unbelievably talented man, has finally realized it after a month of thorough research.
But who are the real villains here? Elon’s advisor, Morgan Stanley (MISS). The fees Elon will pay them – advisory only, assuming the TSLA margin loan never goes into effect – will go straight to their bottom line. Also, in that case, they wouldn’t be willing to fund Elon’s bid for a company that is a Financial Black Hole.
But unlike Morgan Stanley, I don’t have very high self-worth. I don’t pretend to have any influence on billion dollar transactions. I just want my clients to make money. HOAX is beating its benchmarks, (ARKK), up 94% – HOAX + 34%, ARKK -60% – since inception on 12/23/21. Most importantly, I don’t want my clients to lose money doing idol worship instead of equity analysis.
Elon Musk left the door open to do exactly what I advised him to do in my April 28 column: Step away from Twitter!
I hope he does.
(Morgan Stanley is the holding company Action Alerts PLUS Membership Club. Want to be warned before AAP buys or sells MS? Learn more now.)
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