Matt Levine On What to Watch In Twitter vs. Elon Musk

Tracy Alloway (0:10)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Tracy Alloway.

Joe Weisenthal (0:14)

And I'm Joe Weisenthal.

Tracy Alloway (0:16)

Joe, do we want Elon Musk to buy Twitter at this point? I can't decide. I feel uncomfortable with the idea of him owning Twitter, given the way he is, I guess.

But then secondly, I really like, I also want him to feel the full force of contract law and not get away with trashing the US legal system.

Joe Weisenthal (0:40)

Okay, my stance on this is I really like the way Twitter is currently run because it doesn't seem like it's a great business, but it has these positive externalities. Like I get a lot of value out of it as a journalist and it hasn't changed much and they haven't really ruined the product. So I like it the way it is. And I want it to never evolve or improve or anything. And I'm worried that if it's ever run like a really good business that it will be worse for me.

And so I don't care if it's Elon or anyone else. I just don't want anyone running it who actually has some good ideas about how to fix it.

Tracy Alloway (1:18)

Okay, well, on that note and without further ado, we are going to be talking about all of the thorny questions thrown up by the Elon Musk Twitter saga, which has now devolved into a court battle. You know, it started stupidly with the 13D versus 13G stuff. And it seems like inevitably it is going to end stupidly and in tears in some sort of drawn out legal drama. So who do we call for legal dramas?

Joe Weisenthal (1:46)

Who knows about Twitter and Elon? I don't know, do we know anyone?

Tracy Alloway (1:49)

Yeah, we do.

Matt Levine is with us to talk about everything that's going on. Matt, thank you so much for coming back on Odd Lots.

Matt Levine (1:57)

Hey guys, it's terrible to be here.

Tracy Alloway (2:01)

That's fair, that's fair. Okay, let's start with the first question. Elon Musk backing out of the Twitter deal. I think Twitter stock is down something like 30% since the deal was announced. It was a $44 billion offer back then, it is not now.

Is this just a tactic by Elon to try to get a lower price?

Matt Levine (2:21)

I have no idea, man. I write about this every day and I have no visibility into the way his mind works.

I mean, like a first level analysis here is that he's like an extremely whimsical guy. He whimsically wanted to buy Twitter, he got bored with it and now he wants to walk away. That's my best guess about what's going on. And so he is not really looking to recut a deal at a lower price, he's really looking to get out of it. That said, I mean, it is clear that one thing that changed between the time that he enthusiastically wanted to buy Twitter and the time that he wanted to get out of buying Twitter is that the market went down.

Twitter is a less valuable company, but also kind of more to the point, Tesla is a much less valuable company and he was sort of, gonna pay for this out of like pocket change from selling a few Tesla shares and now that is a somewhat more expensive proposition for him. And so it is like clearly the case that like economically this deal is worse for him and if he recut the deal at a lower price, it would be more acceptable. But I don't know, I mean like he's just going around trashing Twitter all the time and it seems like that would not be a great strategy if you then wanted to close the deal even at a lower price.

Joe Weisenthal (3:32)

All right, we pride ourselves at Odd Lots for asking the stupid questions that everyone else is afraid to ask. So I'm going to ask the big question that listeners will really appreciate someone finally saying out loud.

What is a chancery? Why do they call it the Delaware Chancery Court? What does that word even mean?

Matt Levine (3:52)

God, I feel like I'm gonna get this wrong.

So, okay. So like here's like, I went to law school a long time ago. I'm gonna try to remember, I'm just gonna do my best to remember, but no, so like in like old school, like English common law and like, you know, the 1400s, there were two things. There was a court of law and a court of equity. And like law was, you know, this is not quite right, but sort of like intuitively law was like written, sort of like clear law and then equity was like, well, we do what's fair.