Dimon’s Prophecy & The Case Against Musk

Welcome back to Dry Powder, my biweekly email about what’s really happening on Wall Street.
‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌ ‌

Welcome back to Dry Powder.

Last week, Twitter’s lawyers filed their complaint in Delaware against Elon Musk for his decision, among other things, to allegedly “trash the company, disrupt its operations, destroy stockholder value, and walk away.” This seems like a fair assessment, in my view, all things considered. Discovery will be particularly ugly for Musk. Yet perhaps the case will reveal an answer to the fiasco’s chief existential question: What prompted Musk’s pivot?

But first…

Dimon’s Prophecy

No one can predict a recession or a financial crisis. Some economists say we are already in a recession, others say we will avoid one. Still others imply it is inevitable. At the Economic Club of New York this week, former Treasury Secretary (and the economic oracle du jour) Larry Summers said it was “very unlikely” that inflation will come down to the Federal Reserve’s 2 percent goal “without a significant economic downturn.” Consumer confidence is indeed spectacularly low but, perplexingly, consumer spending is actually quite strong. If we are in, or entering, a recession, it is an unusual one, or at least that’s the way things seem at this particular moment...

As a reminder, you're receiving the free version of Dry Powder at . For full access to Puck, and to each of my colleagues, you can subscribe here.

LEARN MORE

The Case Against Elon

The depths of Musk’s legal troubles are clearly laid out in the complaint that Twitter’s attorneys filed in Delaware this week. The legal war is just starting.

WILLIAM D. COHAN

Elon now has a fine mess on his hands, and he’s not going to be able to easily extract himself from it anytime soon, unless, say, he agrees to pay some sum—oh, I don’t know, perhaps $5 billion—that few people have on their Bingo cards. That prediction, pulled out of thin air, is obviously more than the $1 billion walk-away fee that no longer seems viable, or in play legally, but less than what Elon might have to pay per a court order, should he be required to close the deal as he agreed to do on April 25. It’s the kind of number that might get this sad dispute resolved outside of court more quickly.

My friend Scott Galloway suggested with merit on Pivot the other day that Elon will have to pay something more like $16 billion, the difference between the $44 billion he agreed to pay for Twitter and Twitter’s market value after the judgment in Delaware court goes against Elon, if it does, of course. (As a proxy for what that might be, I used Twitter’s roughly $28 billion market value these days.) Whatever the case may be, as I have written before, Elon is now operating from a position of weakness. He has signed a “seller friendly” merger agreement, and his buyer’s remorse over the alleged preponderance of bots on Twitter’s platform seems thin, despite what his lawyers wrote in a Friday filing that “false and spam accounts” are “fundamental to Twitter’s value.”...

SUBSCRIBE TO CONTINUE