Mentioned: TWTR, CFVI, DWAC
By Kevin Evans, StockPicking.com, April 15, 2022
Intrinsic Value is the value calculated on simplified assumptions. So what was Wall Street and investors around the globe assuming the day before Elon Musk made public an offer to acquire Twitter? After the buyout offer, Saudi Arabian investor Prince Alwaleed bin Talal (one of Twitter's largest shareholders) stated in a Twitter post, "I don't believe that the proposed offer by Elon Musk ($54.20 per share) comes close to the intrinsic value of Twitter given its growth prospects." Other investors stated similar beliefs. What growth prospects, I ask? Wall Street always looks ahead to future growth. Let us remember before the offer Twitter stock was trading at $33 a share and trending lower. The stock was trading near its 52 week low despite Elon propping the stock up as he was building a position to become Twitter's largest shareholder. That alone is a pretty good indicator. Twitter's 1st Quarter earnings report scheduled for Thursday morning may likely be another.
Once Elon made his offer, HE became the Intrinsic Value of Twitter. It's almost impossible to separate the value Elon brings to any endeavor he pursues and there in lies the value. Take Elon away and Twitter is a $33.00 stock. When offering $54.20 a share, Elon himself was likely valuing Twitter based on what he believes he can accomplish. Replacing the board and management at Twitter alone creates enormous value. Like I said, once inserted, its difficult to imagine the potential value without including Elon into the equation. I have no doubt under his leadership, the Company has a much greater chance of succeeded than without him. Whether they admit it or not, Wall Street, the Board of Directors, and Twitter shareholders all know that as well.
Why no offers from other bidders? There were rumblings of interested parties, but other than a handful of tech titans only a few could have pulled it off. Those same tech titans would likely run the social media company no differently than the way it is being run currently... a leftist bent toward allowing only those spewing their ideological narrative. Alienating more than half the country isn't a great way to run any business, let alone a social media platform that should be open to ideologies that make this country great... like Freedom of Speech. Without that, Twitter is doomed. What company or its shareholders wants to flush billions down the toilet, even if that toilet is feces-stained with their ideological agenda? Not many.
To get back to the real intrinsic value of Twitter, Elon might have had to sell all of his Twitter shares, pull his buyout offer, and maybe even join Truth Social, Rumble, Gab or any of the other free speech social media platforms. Maybe that would have reminded the Saudi Prince and others once again the real intrinsic value of Twitter... and oh how fun it would have been to watch the Board of Directors scramble around the office like a bunch of monkeys screwing a football to save themselves from an onslaught of lawsuits. Oh well, maybe next time when the left tries to silence the majority.