Posted on 05/17/2022 11:15:43 PM PDT by McGruff
The deal will likely still go through. This is about getting the best price. If the percentage is higher than 5%, he knocks a few billion off the offer. This falls under “due diligence”.
CC
If there are a significant percentage of accounts which are fake....and 20% sure would be significant, then Twitter has defrauded investors, advertisers, federal regulators, etc.
They certainly have a duty not to claim any account which is fake or which they have reason to think is fake. The CEO’s claim that their claims as to the traffic count are not subject to external audit are simply false. That is very much subject to audit. If those numbers are significantly inflated and they had reason to know, then Twitter has been committing fraud.
The value of the company is based upon earnings projections (think price-to-earning or p/e ratio). Twitter’s earnings mostly come from advertising revenue. Like with television, advertisers pay different rates based on the projected number of people who would see the ad. I’m sure you can see the implications on stock prices if something like over-inflated ad revenue collapses.
Interestingly, since Tesla advertises on Twitter, Tesla Corporation (not Elon personally, but any one or all of his companies) could make a fraud complaint with the Federal Trade Commission as well. Misrepresentation of the number of users would have caused any of his companies to pay waaaaaaay too much in advertising.
I think it becomes an issue for the SEC when Twitter includes "users" in their footnotes re: metrics.
See below from their 10-K (Source):
Key MetricsWe review a number of metrics, including the key metrics discussed below, to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans and make strategic decisions.
Monetizable Daily Active Usage or Users (mDAU).
We define mDAU as people, organizations, or other accounts who logged in or were otherwise authenticated and accessed Twitter on any given day through twitter.com, Twitter applications that are able to show ads, or paid Twitter products, including subscriptions. We believe that mDAU, and its related growth, is the best way to measure our success against our objectives and to show the size of our audience and engagement. Average mDAU for a period represents the number of mDAU on each day of such period divided by the number of days for such period.
Changes in mDAU are a measure of changes in the size of our daily logged in or otherwise authenticated active total accounts. To calculate the year-over-year change in mDAU, we subtract the average mDAU for the three months ended in the previous year from the average mDAU for the same three months ended in the current year and divide the result by the average mDAU for the three months ended in the previous year.
Additionally, our calculation of mDAU is not based on any standardized industry methodology and is not necessarily calculated in the same manner or comparable to similarly titled measures presented by other companies.
In the three months ended December 31, 2021, we had 217 million average mDAU, which represents an increase of 13% from the three months ended December 31, 2020. The increase was driven by product improvements, as well as global conversation around current events. In the three months ended December 31, 2021, we had 38 million average mDAU in the United States and 179 million average mDAU in the rest of the world, which represent increases of 2% and 15%, respectively, from the three months ended December 31, 2020
The SEC is apparently part of the federal government.
As such, I am not certain that the SEC can be sued.
However, perhaps the SEC does not need to be sued. Throwing shade on the SEC is simply not to be tolerated under any circumstances, since so many businesses rely on a working stock market to exist and thrive financially. Remove the stock market, and the US economy collapses. Prove that the stock market is corrupt, and the US economy collapses.
So most likely the attack is not on the SEC per se, but on deep politics control over twitter (facebook, google, etc), using the SEC as a blunt weapon.
The SEC is compelled to investigate, and investigate honestly, otherwise its “business goodwill” becomes suspect, which (imo) will not be tolerated by the US business community.
Jack Dorsey, CIA, and co. are probably scratching their heads and trying to figure out what to do next.
This might be why Elon released that “it’s been nice knowing ya” tweet a few days ago, because Elon is the source of the attack on twitter.
Hopefully Elon has a deadman switch and has quietly alluded to it in private to the deep state powers that be, as a form of life insurance.
If Twitter is claiming accounts it has reason to believe are fake, then it is defrauding advertisers as well as investors. Its advertisers would have claims against it for the revenues paid under false pretenses. Its filings with the SEC - namely its financial statements - would be false.
That’s a crime.
Yep. Whether Musk knew or not at the time that he bid for Twitter, he has them over a barrel now. Now a lot of people suspect a lot of their accounts are fake....ergo the value of the company is considerably less than what the market thought it was before Musk bid.
They will have to accept Musk’s lower bid when it issues it, OR they will have a bloodbath when the deal falls through. Also, the SEC will have no choice but to launch a thorough investigation and will require an extensive external audit. Its too politically embarrassing for them not to do so at this point.
The problem is this analogy doesn’t hold. The value of real estate is going to have a subjective component because a lot of the value of property is tied up in the goodwill. Real Estate developers will always estimate the value of their holdings highly. Banks will always do their own estimate of the value of real estate used as collateral and will never rely on the estimates of the developer/borrower. Letitia James’ case against Trump was ridiculous from the start. If it had stuck, you’d have to prosecute everybody in the real estate industry.
Twitter - if the fake bots are significantly more than 5% - has been defrauding advertisers and investors and they have been filing false financial statements with the SEC. There’s no question that’s fraud. That’s actually provable unlike a developer’s estimate as to the value of the location or the brand name of his property.....which nobody really relies on from the start.
They certainly have a duty not to claim any account which is fake or which they have reason to think is fake.
Gauging a customer base should not be difficult. I bet the NYT has padded figures, too.
It is the corporate officers— maybe the CEO, the CFO, and/or the CLO, among possibly others— who need to sign off on quarterly documents submitted to the stockholders and the SEC.
So those people are the people who are liable for any fraud (false figures) that may have occurred over the years.
The projections accounting needs to be sound. It’s probably based on statistics. So, statistical analysis can be legitimately used to examine and verify the projections claimed.
Statistical analysis should then be allowable in a lawsuit claiming that projections were based on fraudulent data. Evidence of fraud might be used to gain discovery of original data and original projection methods. It could be a mess if the corporation never expected this line of attack.
I wonder if Elon and Trump are colluding on this.
SEC is part of deep state.
Expect no justice from them.
Filing fraud. 100% SEC purview. Enron on steroids. Massive fiduciary duty malfeasance and fraud. Highway robbery of the stockholders.
SEC reports are the basic information upon which stocks are evaluated (priced). Twitter is essentially an advertising business. The number of eyeballs viewing adds is critical to their ad price structure. It would be as if a major retail chain lied about the number of brick & mortar stores it owned — something easily verified but no less important to the revenue potential of that business.
When a company buys advertising in any form of media, why would it ever accept the claims of that specific media about how many potential customers the advertisements will reach at face value? I mean — what stops CNN from selling ads and claiming that it has a billion viewers when it doesn’t even have 100,000?
If you read between the lines it was taken away from him...unclear to me if he made a deal with the devil in the very beginning or whether the devil took over later.
He was just a figurehead that they got rid of.
Twitter is imploding. It is a site to behold. The CEO can’t contain this.
What is interesting is that they have seem to have been warned about the impending video releases. I wonder who warned them
Supposedly their claims are subject to external audit and there is regulatory oversight so you can trust what they’re telling you is true……
That has obviously not been the case here and the SEC has been very slack in requiring that Big Tech’s claims be validated by external sources.
I found your guy
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.