Elon Musk is Paying Too Much for Twitter

Will Twitter's Board Agree to a More Reasonable Price?

Last week I was approached to participate in a Special Purpose Vehicle “SPV” to invest with Elon Musk to take Twitter private. The deal was straightforward:

Twitter SPV
Valuation: $44B
Min Investment: $250K
Fees: $18K (SPV formation)
Carry: 10%

With just 24 hours to express interest, I couldn’t help but think the valuation no longer made any sense. If the valuation didn’t work for me it certainly didn’t work for Elon, with Tesla falling more than 25% in the last month. It occurred to me that Elon really needed to find a way to renegotiate the price.

Early this morning Elon Musk tweeted that he was putting his acquisition of Twitter on hold citing concerns over fake accounts. I was disappointed and yet unsurprised given market conditions.

Elon Musk @elonmusk

Twitter deal temporarily on hold pending details supporting calculation that spam/fake accounts do indeed represent less than 5% of users Twitter estimates spam, fake accounts comprise less than 5% of users -filingTwitter Incestimated in a filing on Monday that false or spam accounts represented fewer than 5% of its monetizable daily active users during the first quarter.reuters.com

May 13th 2022

16,711 Retweets117,232 Likes

Then a few hours later the billionaire reiterated his commitment to completing the acquisition.

Elon Musk @elonmusk

Still committed to acquisition

May 13th 2022

7,675 Retweets113,122 Likes

Of course, Elon would owe $1 billion if he backed out of the deal so he is pretty much required to claim that he’s committed to the deal. I hope that he still wants to do the deal despite the massive correction in the market but I can’t help but think he’s really having second thoughts.