Elon Musk takes over Twitter

This is for real, though. He's on the hook to buy the company for $54.20 a share. ... even the most optimistic analysts at this point put the value of the company at $20 to $25 a share in the current environment. I could make a good argument for fair value being $15 a share max based on the business as it exists.

As equity valuations have crashed over the last few months, people are being much more value conscious. I can't imagine he is going to be able to find anyone willing to pay for equity at more than twice what it is worth. Which is why even some of the options people were talking about a month ago, may not be returning his phone calls anymore. I'd guess he can still find financing, but anyone willing to finance it for him is going to want dollar-for-dollar collateral.

 

You are right about him potentially owing way more than the $1 billion break up fee.

The more people settle on a real value of Twitter being closer to $15 billion than the $44 billion he offered, the more likely that the company will take his ass to court in Delaware for breach of contract. The break up fee is not a "walk away" fee. He made a binding offer.

They will not get an offer for the company anywhere near the $44 billion he offered, so the lower they think the valuation really is the more incentive they have to tie themselves up in court -- the time / cost of the litigation makes more sense when an excess $20 to $30 billion is on the line for the current equity holders.

I don't think he thought he could "flip" the company, but who knows? Even before the bubble started to burst right after he made his offer, the price he offered was insane. Who would he have thought he was going to sell to for a higher price?