I woke up yesterday to the headlines: Elon Musk buys 9.2% stake in Twitter, making him the largest shareholder. It’s 2022 and the Fed has hiked, but we have a long way to go before the absurdity ends.
Before I get into a theory on why I think he did it (because, c’mon, we all need a theory) it’s important to understand the context of Elon’s battle with the SEC over the past few years and, more importantly, how he’s spent the last six weeks escalating things.
Okay, this is a years-long thing I’ll try to walk you through quickly:
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August 2018: We start this journey with the famous funding secured tweet.
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September 2018: Musk settles with the SEC. Him and Tesla pay some money, he’s no longer Chairman of Tesla, and the most relevant stipulation for today’s story was that Tesla would have to “put in place a system for monitoring Musk’s statements to the public about the company, whether on Twitter, blog posts or any other medium.” This was the birth of what came to be known as Musk’s “Twitter Sitter” – the internal legal process in charge of overseeing any sensitive tweets.
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February 2019: The next chapter. A few weeks after Tesla provided official guidance that in 2019 they’d produce between 360-400k cars, Musk tweeted that they’d produce around 500k (he walked the statement back four hours later):
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April 4th, 2019: One of my favorite moments in the saga. Regarding the 500k tweet and the original Twitter Sitter settlement, U.S. District Judge Alison Nathan tells Musk and the SEC to put on their “reasonableness pants”:
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April 26th 2019: In a joint effort to put on those reasonableness pants, the SEC and Musk came to a stricter settlement where there was a (un-exhaustive) list of topics he needed approval to tweet about, and now he would need to “obtain the pre-approval of any experienced securities lawyer.” Incredibly it took this clarification to specify the Twitter Sitter needed to know something about securities law.
Over the next couple of years, Elon kept tweeting but things were publicly pretty quiet. We’ve since found out that the SEC had quietly corresponded with Tesla over two tweets:
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July 29th, 2019: One of the specific clarifications in the April 2019 settlement was that Elon could not tweet specific production numbers that had not previously been published. Elon tweeted specific production numbers that hadn’t been published.
Tesla’s response to that violation just captures everything about how absurd this entire arrangement was:
Tesla told the agency that Mr. Musk hadn’t submitted the tweet for review and that a committee had later determined it didn’t require authorization because it was “wholly aspirational,” according to the SEC’s account of its correspondence with the company.
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May 1st, 2020: The entire fight has been over Musk making material statements about Tesla’s stock. Elon makes about a very material statement about Tesla’s stock.
That last one is truly the piece de resistance. Just imagine the SEC sitting there. Elon has already gone on national TV and said he doesn’t respect you and that is AFTER the first settlement.
He tweets a joke to the entire world about you sucking his cock (I felt the need to spell it out), but, of course, can maintain plausible deniability:
Judge Alison Nathan had insisted both parties act in good faith and just to be mature about the whole thing, yet….
The Twitter Poll
We all know there has been endless Elon tweeting of material things since the settlement. All the Doge and Bitcoin stuff. Humanoid robots. Stuff about competition. My favorite one was where he said an entire Hertz corporate partnership announcement had no contract associated with it. I mean, that was just so wild, yet we all just forgot about it. I still wonder how Hertz corporate folks reacted.
But the latest chapter is centered around this doozy:
There were endless theories about ‘why’ Musk was doing this, but whatever it was, saying you’ll sell 10% of your stock when you’re the largest shareholder of a company again…seems material. Elon Nation voted “Yes, sell your shares!”, and Elon obliged and started selling on November 8th, selling $16 billion over the next six seeks.
So that seems pretty crazy in itself, and Musk was apparently subpoenaed by the SEC about the tweet just 10 days later. But it gets so much better. The day before Elon tweeted the poll, it turns out his brother Kimbal made his biggest ever share sale (15% of his total holdings) at $1,229 a share.
The SEC is reportedly investigating whether this sale could constitute insider trading, because, well, timing. Musk told the FT that “Kimbal had no idea I was going to do a Twitter poll” and this was “simply more evidence of Stevie grinding his very tiny axe yet again” referring to the SEC’s Steven Buchholz.
It was in February that things started really escalating.
February 7th, 2022: Tesla di