Let me make a few things clear:

But I hate the idea of putting these things together. If that sounds like it lacks any sense whatseover, trust your instincts, but allow me 5 minutes of your time to elaborate:

This might be the coldest take of the year, but I'll say it anyway - I'm not convinced Musk is even gonna be able to buy Twitter. Sure he has around $255bn to his name (per Bloomberg), but it's not that simple.

With that $255bn net worth and $TWTR's $43bn market cap at Musk's bid price, that makes this purchase ~16.9% of his net worth. For the average American, that's the equivalent of taking out a ~$20,455 loan.

Doesn't sound too shabby right? I mean, it's not that hard to get a car loan, but here's the difference.

For the average American, a vast majority of their net worth is tied up in their home. While there is certainly variability, housing prices are generally stable and tend to trend upward in the long term. That makes housing a preferable form of collateral in the event of a default, as banks can come in and take ownership of the house, so it keeps the loan relatively low risk.

On the other hand, most of Musk's wealth is tied up in something that is without question a lot riskier from a lender's perspective than a house: Tesla shares. The absolute only way Musk can get the financing for this transaction is to borrow big against those Tesla shares. Realistically, it would take a consortium of the U.S.'s largest banks to put up the $ for this transaction (which I bet they're already working on), but given the risk of the collateral in question, this will likely be a lot harder than many people think.

$TSLA has boomed over 1,100% just since COVID began. But, along with that came an ungodly amount of volatility. The stock already has a 5yr monthly beta of over 2, meaning it is a helluva lot more volatile than most (every) other large-cap S&P 500 name. The stock has lost more than 20% in a single trading day previously, and could easily do so again.

So, let's just assume Musk is able to get the financing and acquire Twitter. What happens when $TSLA shares go through a sharp or protracted downturn? Those money-grubbers at Morgan Stanley and Goldman Sachs will demand Elon put up $ or increase the value of collateral through adding assets. The only way that occurs is by putting up more Tesla shares against the loan, or more realistically, by selling shares outright and putting up $.

This transaction would carry a large probability that Musk could eventually become a forced seller of $TSLA shares. Obviously in this scenario, if Elon is selling, $TSLA is going to continue to tank, and a vicious cycle is born. That's an L for Elon, an L for the banks, an L for $TSLA shareholders, and almost definitely an L for Twitter. Anyone out there a fan of lose-lose-lose-lose situations?

A few more caveats. It is undeniable that Musk is a Top 2 CEO of the 21st century (shoutout Bezos). He is a brilliant engineer, product manager, executive, and marketer and the world is an unimaginably better place because he exists.

But he will be terrible for Twitter shareholders.

There are really two perspectives to look at this - a societal lens and a shareholder lens.

For society, I think it would be great to have Musk running the show at Twitter. As I said, I'm all for maximizing free speech, especially on this global platform that is, whether we like it or not, the de facto town square. An edit button and long-form posts (two ideas Musk has already proposed) would be great for the promotion of public discourse.

But despite how abysmal Twitter's board has been in this regard, they have a legal, fiduciary duty to drive shareholder returns. As $FB well knows and I'm sure you've all heard this before, engagement = engagement, which in turn = $$$. They are incentivized to promote emotionally charged content, which in my view, is terrible for discourse but great for shareholder value. This is the unfortunate reality for the platform.

Musk, if handed the reigns, would no doubt clean up the rage, bots, and other deteriorating aspects of Twitter. This would be great for society, but horrific for shareholders.

Sure, $TWTR has traded sideways its whole life, but that's much better than the sharp downturn it'll take once Musk is in charge. Everything I can imagine that Musk would want to do to promote free speech goes directly against effective monetization of the platform, and as value is derived from earnings, shares would soon fall off a cliff.

Oh yeah, and Musk has literally come out and said he does not care about the money in this endeavor whatsoever. He has absolutely no incentive to drive Twitter towards a higher degree of financial success (see the $255bn he already has) and thus would act solely in the interest of public discourse.

Great for society, but a nightmare for shareholders.

With all that said, I really don't see any realistic way Musk goes through with the purchase.

The poison pill aside (because that's a whole different topic that isn't receiving the nuance it deserves) Twitter's board has a fiduciary duty to maximize shareholder value.

That very well could be achieved by selling to Musk for $54.20/sh. But, shares were trading close to $80 just over a year ago. Sure that was during the COVID boom, but that absolutely gives the Twitter board legal grounds to make the case that it is not in shareholder's interest to sell at $54.20.

Further, the stock was running up for more reasons than just general tech frothiness. The market gets real excited whenever Jack or Parag say the word "subscription", so the board could easily say "this is our product and monetization roadmap and given historical performance as well as reasonable assumptions, we believe Twitter is (or could be) worth more than $54.20/sh."

Lastly, does Musk really want to do this? It seems like there are a few changes he wants to make, like those aforementioned as well as things like open sourcing the algorithm (great idea), but that wouldn't take too much or too long. The guy is already running several companies, one of which holds a ~$1tn market cap and one that is literally attempting to get us to Mars. He's got bigger and better things to worry about long-term.

So what do you think? As always, let me know where I'm wrong!