Twitter tries to poison Elon

The little bird's newest move to avoid a takeover signals weakness, not strength; the company is Musk's if he wants it to be

This afternoon, Twitter said it had adopted a “poison pill” defense against Elon Musk’s $41 billion takeover bid.

The details of the pill are tricky, but essentially Twitter is threatening to dilute Musk’s shares and raise his cost to buy the company.

Here’s the thing.

Poisoners almost by definition are in a position of weakness. They cannot win a fair fight, so they have to resort to stealth.

And that’s exactly the position Twitter is in. The little bird has two very big problems in its race to escape Elon’s grasp.

The first is that Musk probably doesn’t have a lot of competition to buy Twitter, even if it does put itself up for sale.

The other major social media companies - Facebook and Google/YouTube - are big enough to buy it, but doing so would create huge antitrust problems.

For other media and technology companies, Twitter would be a politically explosive headache with a fuse getting shorter by the day. Would Microsoft want the hassle? Apple? Why spend $50 billion to get called before Congress at least once a year, no matter who’s in power? AT&T just got OUT of the media business.

Legacy media companies have the same concerns, plus they’ve generally done terribly with technology acquisitions. Few if any of them have the financial firepower to take on Twitter in any case.

Amazon might be the most plausible candidate, but Amazon is already a huge political target, and social media is one of the few places it HASN’T tried to compete.

Okay. Maybe Twitter should stay independent.

Except independence hasn’t been so great for Twitter. Or its shareholders. While investors in other big technology and social media companies have made fortunes, those in Twitter… have not.

Just how bad an investment has Twitter been? If you’d put one dollar in the little bird the day it went public in 2013, you’d have one dollar and eight cents today.

Yes, you would have made more money in a savings account than in buying one of the world’s core social media companies at a time when social media has become the dominant platform for communications, journalism, and advertising worldwide. Worse, before the news that Elon had bought shares, you would have been down.

Twitter is incredibly important culturally and as a platform for journalism, but as a company it has simply proven terrible at running its business as a public company - not for a year, but for nearly a decade.

It doesn’t seem to be improving, either. The stock was down almost 50 percent in the last year. (Maybe turning itself into a woke echo chamber - and having to spend millions to defend itself from lawsuits for breaking its promises to users - hasn’t been the best business move.)

You know who’s good at running public companies?

Elon R. Musk.

The chart below compares shares of Twitter with those of an electric vehicle company you might know. Five letters. Starts with T. Okay, I’ll just tell you, it’s Tesla.

That soaring blue line showing a 200-fold increase? That’s Elon’s baby. That grubby pathetic grey flatline? That’s Twitter.

Which is why Musk has the money to buy Twitter. He can pay $54.20. He can pay $104.20 if he likes. That would be about $80 billion. Elon could pay $80 billion for Twitter, write it down to zero, and STILL BE THE WORLD’S RICHEST MAN.

Elon’s not going to pay $104.20. But he might pay $75 ($74.20), which would be about double what Twitter’s stock had been before he made the bid, and within a whisker of Twitter’s all-time high. And if he offers a price in the range, how can Twitter’s board say no? As Musk noted, they would face “titanic” legal liability if they did.

That would be a rich price, more than the company is worth based on its economic value alone at this point. But Elon can afford it. And even aside from the free speech considerations, in the long run it might even turn out to be a good investment. Twitter has a huge user base, and a return to its free speech roots would probably invigorate it.

So ignore the whining coming out of Twitter HQ at San Francisco. Ignore the bluechecks.

If Elon wants Twitter badly enough, he’ll get it. Does he? I don’t know.

I sure hope so, though.