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Posted April 28, 2022

Sean Ring

By Sean Ring

Nothing’s Going to Change at Twitter

  • While good theater, the “public square” will remain just that: square.
  • Elon Musk’s valiant attempt to free speech won’t move the needle.
  • European regulators are already licking their “hate speech” chops.

Bright, sunny, and brisk is the morning today in Asti.

Good morning to you.

I’ve just finished my cappuccino, mulling over the media storm Elon Musk has brought on.

The man has the brain of Einstein and the marketing skills of P.T. Barnum.

Bless his cotton socks.

I’ve studiously avoided writing about this topic because I think it’s a sideshow in today’s Clown World economy.

And we’ve got far bigger fish to fry.

But to take a break from the charts - the markets were pancake-flat yesterday - allow me to riff on the TWTR situation.

My Bias

I’d need to hire an astrophysicist and a supercomputer to calculate how much putotoy I think TWTR sucks.

I’ve always hated it.

You simply can’t articulate thoughts in 140 characters.  They eventually figured that out and expanded it to 280 characters.

It still isn’t even, but it wouldn't be a tweet if they expanded the characters anymore.

As it stands, TWTR is nothing but a dumpster fire for the purple-haired with PhDs in gender studies to vomit their frustrations on the world while earning zero income and trying to pay back $250,000 in student debt.

Oh, and for a few famous people like Elon Musk to snarkily reply to idiotic tweets made by said Hair of the Purple people.

@DefiantLs made an art of that very thing with tweets like these:

Oh, the irony.

But here’s why even cheap thrills are just that: cheap.

According to a landmark study conducted by Professor Albert Mehrabian in 1971, in ambiguous situations where an author or speaker is talking about their feelings or attitudes, non-verbal communication is more important than verbal communication.

That is:

38% of communication is the tone of voice, 55% is facial expression, and 7% is the actual content.

In ambiguous situations, paying attention to the tone and facial expressions is more important than the words.

Think, “It’s not you. It’s me.”

You know it's you when you’re experiencing that talk despite the words.

With Twitter, you don’t get the most important parts of communication because you can’t see the tweeter’s face or hear their voice.

Heck, even if you SHOUT in all caps, people get upset at you though you may be conveying a valid feeling.

This is part of the reason emojis and other modern hieroglyphics have become so important when communicating.

I recall Sir Francis Bacon, he of the famous Essays, once wrote:

Reading maketh a full man, conference a ready man and writing an exact man.

I agree, but with no non-verbal cues and only 280 characters, you can be neither ready nor exact.

Oh, and the stock has sucked since day one:

For some reason, I couldn’t go back to its exact IPO date, but for the last eight years and one month, this is how TWTR has performed compared to some of Silicon Valley’s finest:

Up 5.01%.  In total.  In 8 years.  Since its IPO date on November 9, 2013, it’s up roughly 16%.

Whoopdy doo!

One More Time, With Financing…

After TWTR’s board of directors rejected Musk’s initial advance, he returned with the financing that put a $54 valuation on TWTR.

That’s a considerable premium of what was then the current price of $31 or so.

Isn’t it sweet of the board to forget their biases for once and fulfill their fiduciary obligations to their shareholders?

Here’s how Musk is doing it, thanks to the Wall Street Journal:

Credit: The Wall Street Journal

What’s missing from this chart is that the banks surely would’ve “collared” the stock.

A zero-cost collar secures the stock against any moves very cheaply.

This is done by buying puts and selling calls simultaneously at roughly the same premium.

Hence, the zero cost.

This insures the bank against TSLA stock tanking and secures the loan.

Essentially, the banks aren’t carrying any risk by loaning Musk all this money.

And Musk is incentivized to keep TSLA rallying to the moon, so his stock doesn’t get called.

This is how the industry Captains use to unlock the power of their capital without selling any shares.

And to his credit, Musk plucked down $21 billion of his own cash.  But to be fair, that’s only about 10% of his current net worth.

This deal is hardly the risk the media is making it out to be.

Liberal Tears From the $15 million/year Lawyer

Here’s what Musk just tweeted that set off a firestorm:

Again, from the Journal:

The tweets from Mr. Musk, who has an outsize presence on Twitter, with more than 80 million followers, prompted online attacks toward Vijaya Gadde, Twitter’s longtime head of legal, policy and safety. Mr. Musk’s critique escalated despite an agreement as part of the takeover deal not to disparage the company or the people who work there.

On Wednesday, Mr. Musk tweeted an image of Ms. Gadde, overlaid with text that repeated allegations that Twitter has a left-wing political bias. Mr. Musk’s followers and others on Twitter soon retweeted his message more than 20,000 times, and some added racist and sexist messages directed at Ms. Gadde, including that she should be fired and should go back to India.

Let me unequivocally state there’s no need, or even reason, to pick on Ms. Gadde based on her race or gender.

It’s classless and distracts from the more important picture: her policies suck.

Don’t believe me?

Scroll up and take a look at TWTR’s performance.

It’s far too risky to be a Tweeter - in the same vein as those proud YouTubers used to scream from the rooftops - when your account can be canceled even if you haven’t broken the law.

You may think the platform needs some policing.  Fine.

But if you’re going to run your business somewhere, TWTR may be the last place you’d want to do it.

Sure, advertise there if you like.

But don’t risk the house on it.

Europe’s Fine(s) With It

And here we go: the EU’s already trying to make up for its tax shortfall:

Europe isn’t merely excited at the prospect of Musk crossing the line.

It’s wetter than April.

As a red-blooded American, the prospect of a European regulator telling an American company what it can or can’t do may offend you.

But it’s reality.

As a European, I’d start fighting for more free speech and not less.

There’s precious little of it enough over here.

Wrap Up

I hate Twitter, so my analysis isn’t objective.

Nevertheless, I wish Elon Musk luck.

Perhaps he can get the advertising right, make his staff happy to work for him, and skillfully sidestep the fine-hungry regulators.

I wouldn’t put much stock in it, but if anyone can do it, it’s him.

Until tomorrow.

All the best,

Sean

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