Why Elon Musk may have little wiggle room; Musk endorses Kanye West's antisemitic rants; Robin Hood Investors Conference tomorrow and Wednesday; My 29th anniversary
1) This morning, I sent this to my Tesla (TSLA) e-mail list (if you wish to subscribe to it, simply send a blank e-mail to: tsla-subscribe@mailer.kasecapital.com):
After my last e-mail, yet another person sent me a nasty message saying he was sick of my hatred of Tesla CEO Elon Musk and was "done with me."
Oh please...
I have two answers:
a) I created this e-mail list for a handful of friends and later decided to open it up to any of my 140,000 daily readers who are interested in all things related to Tesla and Musk. There are currently 4,055 people on this list and I truly don't care if that number is 100, 1,000, 10,000, or 100,000. If it's not for you, simply click the unsubscribe link at the top of every one of my e-mails.
b) I've repeatedly said that I think Musk is one of the greatest engineers and entrepreneurs of all time. I am simply in awe of what he's built, against all odds, at Tesla and, even more impressively, at SpaceX. He has revolutionized numerous massive industries, and as a result, humanity owes him a debt of gratitude.
But that doesn't mean that Musk gets a pass from me when he behaves badly – which is often. Someone as rich, powerful, and influential as he is should be a better role model.
I don't doubt him when he says he has Asperger's syndrome, but that is no excuse for his often nasty, petty, reckless, narcissistic behavior: attacking people, sticking his nose into areas about which he knows nothing, thumbing his nose (and going on personal vendettas) against government regulators, etc. He doesn't think regulations and laws apply to him (though I'm glad to see he's recently gotten an expensive lesson here).
And he's a pathological liar (though he's such a narcissist that he might well believe at least some of the nonsense that he regularly spews, such as promising – years ago – that a fleet of Tesla robo-taxis would be on the road a year hence).
2) Speaking of Musk, today's New York Times DealBook has an interesting (and, I suspect, correct) theory about why he is going to pay the full price of $54.20 per share for Twitter (TWTR):
Why Elon Musk may have little wiggle room
All manner of questions still swirl around Elon Musk's off-again-on-again $44 billion takeover bid for Twitter. One big puzzler: What was Musk thinking in returning to the $54.20-per-share offer after negotiations for a cut-price deal fell apart? That he really didn't want to do his deposition is one theory. DealBook has another one.
What we know about renegotiation talks: Possibly at the suggestion of the super-agent Ari Emanuel (who was friendly with both Musk and the Twitter board member Egon Durban), the two sides had talks last month about renegotiating the deal. Conversations ultimately settled around a deal that reportedly would have shaved about $4 billion from the asking price. We know a little bit about why those talks fell apart: Twitter was focused on certainty around closing the deal, and wouldn't let up on litigation. Could that be a reason Musk walked away?
What if a $4 billion cut was actually more expensive for Musk? The banks that are on the hook to lend Musk $12.5 billion to finance the deal may have viewed any reopening of negotiations as a possible out – to either walk away or revise the terms of their loans to Musk. That's what happened in 2007 during the leveraged buyout of HD Supply after the loan market imploded. Similarly, the financing environment has worsened since Musk first struck the deal, and the banks are now staring down a potential $500 million in losses.
Had Musk pushed Twitter to redo the deal, the banks could have tried to reprice their loans at higher interest rates, pushing financing costs up for the billionaire. Or they could have pushed to reduce the total amount of debt they funded, making Musk – who is on the hook for all of the remaining equity – personally responsible for a larger portion of the deal. (Most likely it would have been some combination of the two.) Was there a situation where shaving $4 billion off the total deal price was not actually worth it to Musk?
The banks' debt commitments appear to prevent him from altering the deal in "material" ways. That could give banks a "decent argument" to push for revised debt arrangements, since judges often view price as material, said Eric Talley, a professor at Columbia Law School. Regardless of what happened in recent weeks, a price cut may now be even less likely. Twitter is asking Musk for interest on every extra day the deal drags on past last month's shareholder vote endorsing the transaction. That means it is costing Musk more than $54.20 with each passing day.
3) Musk disgraced himself last week by betraying Ukraine and then Taiwan, sucking up to Russian President Vladimir Putin and Chinese President Xi Jinping (see: Elon Musk proposes China-Taiwan 'solution', days after his Russia-Ukraine 'peace plan poll'), but by endorsing the antisemitic rants of deranged rapper Kanye West (now known as Ye) he's taking it to a disgusting new level...
What's next? A warm welcome to Twitter for white supremacist David Duke if he starts tweeting racist garbage and using the n-word?
Here's what happened...
It started during last week's Paris Fashion Week, when Ye debuted a new clothing line that included a shirt with the phrase "White Lives Matter," which he wore (along with conservative commentator Candace Owens):
The phrase "White Lives Matter" emerged as "a racist response to the Black Lives Matter movement" in 2015, and has been adopted and promoted by white supremacist groups and sympathizers, according to the Anti-Defamation League.
Then, yesterday Ye posted a text exchange with Sean "Diddy" Combs in which he invoked antisemitic tropes, accusing the other musician of being controlled by "the Jewish people."
Then, when Instagram removed his post and locked his account temporarily, Ye turned to Twitter, posting (for the first time in two years) a crude complaint to Mark Zuckerburg – the founder and CEO of Meta Platforms (META), which owns Instagram.
So did Musk respond to this by decrying Ye's despicable behavior? Of course not! He welcomed Ye back to Twitter, calling him "my friend":
Apparently emboldened by the tweet from the soon-to-be owner of Twitter, Ye doubled down, tweeting that he would go to "death con 3" on "JEWISH PEOPLE," an apparent reference to Defcon, the U.S. military's defense readiness system. He then tweeted about Jews, "You guys have toyed with me and tried to black ball anyone whoever opposes your agenda" and then claimed he couldn't be antisemitic "because black people are actually Jew also."
What a total disgrace by both Ye and Musk!
4) I never miss the Robin Hood Investors Conference, which is taking place at Spring Studios in New York City tomorrow and Wednesday. The conference brings together the brightest and most influential policy experts, investors, and innovators to share actionable, moneymaking insights.
Even better, Robin Hood makes sure that 100% of ticket sales go directly to organizations helping New Yorkers in need.
This year's lineup includes David Einhorn (Greenlight), Philippe Laffont (Coatue – in my June 23 e-mail, I wrote about how Laffont was one of the few growth investors who didn't get clobbered in the downturn), Paul Tudor Jones II (Tudor), Ben Bernanke (former Fed chair), Jon Gray (Blackstone), Steven A. Cohen (Point72), Larry Robbins (Glenview), John Griffin (Blue Ridge), Paul Singer (Elliott), Sam Bankman-Fried (FTX), and more.
Click here for more information and to register.
If you're going to be there, please say hi!
5) My wife Susan and I are celebrating our 29th anniversary today. Here are the oldest and newest pictures of us, along the banks of the Charles River in Boston, where we met, and at the 5K Terry Fox run for cancer research this weekend in Central Park:
Best regards,
Whitney
P.S. I welcome your feedback at WTDfeedback@empirefinancialresearch.com.