Friday, April 15, 2022

How Musk Defeats Poison Pill

Wu wei. He waits and the problem solves itself.

Poison pill tries to increase the market cap of the company, so the hostile buyer can't afford them anymore. However, this is only an effective strategy if the company is chronically undervalued. (Twitter is chronically overvalued.) 

Step 1: Musk triggers poison pill. Step 2: institutional investors pour money into Twitter, Twitter debases their stocks so they can hand new ones out in exchange for this money. Step 3: Musk sells at new inflated price, retracts offer. Step 4: Musk waits for $TWTR to go back down to its equilibrium price; institutional investors lose their shirt. Step 5: Musk offers $43 billion again. 

They can poison pill again and lose even more money, or they can accept his offer. Repeat as necessary.

Unless Blackrock is in fact Fed-backed, of course, and doesn't give a shit about how much money it loses. It can dump cash into that hole endlessly, because it's not their own money. Of course America is already risking hyperinflation, so there's that.


BSRK Aditya said...

> Repeat as necessary.

Or, Twitter becomes private in the hands of institutions instead of Musk.

Arqiduka said...


Or else, merger into a bigger pot: say, an Alphabet allegedly eager to vertically integrate and explore synergies or whatnot.

They have hands to play.

Alrenous said...

If Alphabet/Blackrock take it private instead, it shows their hand.

If they wanted it private, why didn't they do it years earlier? Answer: corruption.

Contaminated NEET said...

Or, an official investigation finds Musk guilty of some crime, and the government offers to let him off with a warning rather than years in prison if he gives up on this Twitter idea.

Arqiduka said...

Nah, remember the idea is to preserve the illusion of Twitter as a free market aggregator of the will of the people, this would shatter it.