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Twitter 180 / The Bear of Wall Street / Airbnb – Remote Forever

Just a few weeks ago, the board of Twitter chose a “poison pill” manoeuvre to deal with a shocking offer from Elon Musk. The world’s richest man had, seemingly out of nowhere, offered to buy the social media company for 54.20 USD per share. A poison pill is a defense tactic used by a target company to prevent or discourage hostile takeover attempts. Poison pills allow existing shareholders the right to purchase additional shares at a discount, effectively diluting the ownership interest of a new, hostile party. In this case, Mr Musk was the “hostile” party. But within 11 days, Twitter had changed its tune entirely.

By that time, Mr Musk had lined up financing for his offer and was hounding the company on its own platform with repeated tweets. After hours of discussions and reviewing Twitter’s plans and finances, the 11 board members had to answer two main questions. First, could the company be worth more than 54.20 a share? And second, would any other bidder emerge? Within one day, Twitter’s board came to a firm conclusion: no and no, which led us to the 44 billion USD deal that shocked the world.

Though shocking, especially considering the very public about-face, insiders have revealed why it played out the way it did. The gist is that Twitter’s board had very few options, and Mr Musk represented a type of buyer that no one learns about in business school. There many types of buyers that deal advisers are prepared to fend off — hostile ones, aggressive ones, those who lowball and then are willing to negotiate — but with Musk, Twitter faced an unknown quantity, someone who would not budge on price and was prepared to publicly trash the company and wield his considerable fortune to get an agreement done with limited diligence. In the end, Twitter’s chairman had no choice but to announce that “the offer from Elon represented the best value for our shareholders”.

The Bear of Wall Street

While Twitter’s stock ahs performed relatively well, the rest of the market is struggling mightily. The S&P 500 plunged nearly 9 per cent in April, its worst monthly decline since March 2020, as rising interest rates and high inflation raised concerns about consumer sentiment. Amazon and Apple, two market bellwethers, reported subpar results for the start of the year, crystallizing fears of rising costs and supply constraints. Overall, the market is down more than 13 percent in 2022, a drop that shows many investors are coming to the same conclusion: the economy is about to take a hit, and everywhere they look, they see trouble ahead.

Runaway inflation, and the interest rate increases meant to contain it, will make life harder for consumers. A severe Covid lockdown in China due to Beijing’s Zero COVID policy, and the invasion of Ukraine are worsening disruptions in the flow of goods across borders, contributing to rising food and energy prices, and threatening corporate profits. Analysts say Wall Street’s pessimism isn’t likely to end until the major concerns are resolved, and when that will happen seems impossible to know. These results have led analysts to revise their expectations for 2023. Oxford Economics is forecasting that growth will slow to 2 percent, but others are predicting a recession.

Airbnb – Remote Forever

Airbnb, a long-time proponent of more flexible workplace models, previously set a September 2022 date for a return to its offices. The company’s CEO, Brian Chesky, chose to get rid of this September date and instead set a new standard for the tech industry. The company’s 6,000 employees now have the option to permanently work remotely. Its stance makes sense: about one in five of the company’s guests in 2021 used Airbnb properties to work remotely. Airbnb also told its U.S. employees that they could move to anywhere in the country without a reduction to their compensation. With only 10% of Americans still working remotely, this second point may end up being even more revolutionary; for decades, people have been paid far more in New York and San Francisco, but all of those increased earnings were offset by the insane costs of living in the those highly desirable locales. If someone can effectively do their job from the countryside, a position that pays a big-city salary will be especially appealing for the nation’s top introverted or nature-loving employees. If Airbnb can thrive with this model, then the Pandora’s employer-employee box really never will close.