[TOP STORY] Twitter and the deal Elon Musk has struck

Longer term [tech stocks are] definitely still the space to be in for above-average growth and companies that can deliver exponential returns for shareholders: Craig Antonie of AnBro Capital.

ALISHIA SECKAM: Elon Musk has found funding for the big-ticket item on his wish list. Negotiations began because investors were wooed by the financing details Musk released. Now it’s not just talk; Musk and Twitter have struck a $44 billion deal.

Read:
Elon Musk lands $44bn deal to take Twitter private
Elon Musk’s $21bn mystery …

There have been divergent thoughts on the price tag. You’ve got active long-term shareholders holding higher price expectations, short-term minded investors saying Twitter should accept the offer or ask for only a small increase.

Craig Antonie of AnBro Capital joins me now with his take. Thanks so much, Craig, for your time this morning. Now that the deal needs only shareholder approval, how close in your books is the offer that’s been accepted to Twitter’s intrinsic value, given its growth prospects?

CRAIG ANTONIE: Well good morning, Alishia, to you and your listeners. Thanks for having me. I’m always happy to be here. Twitter in itself has always been a pretty interesting investment. As a fund manager, we’ve always considered it to fall in the bucket of a business that’s a great idea and an amazing concept, but not necessarily a good investment. Looking at the performance of the business over time and the performance of the shares since pretty much IPO, it hasn’t really done very much. It’s been a bit of a dysfunctional business for many, many years. I think the ability now for it to go private is probably the right thing for shareholders in the very short term.

Obviously what Elon Musk decides to do with it longer term and the opportunities that he sees in it might mean that shareholders today don’t see the benefits of it in, say, five or 10 years’ time, though.

ALISHIA SECKAM: Absolutely. Like you say, the stock market value has lagged rivals over the longest while. The offer, however, is still coming in well below the $70 [per share] mark that Twitter had been trading at last year sometime. Having said that, we’ve got commentary doing the rounds saying that if public markets don’t value a company an acquirer will.

Let’s talk beyond better terms and price tag. Do you see Musk being able to turn things around? A lot of people [are] indicating that they believe Elon can create value at Twitter by cutting costs [and] improving the business model. Do you agree?

CRAIG ANTONIE: Well, I think if there’s anyone you probably do want to back in the public markets, it’s a guy like him. He has a bit of a Midas touch and whatever he seems to touch turns to gold. The one thing about him is that he is a prolific user of the platform.

He has 84.5 million followers. Perhaps using it as much as he does he sees both the potential and the stumbling blocks that Twitter has to offer and clearly he has an idea that things could be done better.

He said yesterday, after the deal was announced, that free speech is the bedrock of a functioning democracy, and that Twitter is the digital town square of this democracy. He probably thinks that things aren’t being managed as well as they could be or should be, and I assume he has some ideas there to make things better.

At the end of the day he is a businessman. He has put a lot of money into this business now, and I’m sure he would like to turn a profit. As I said, you’d probably back him as the one guy to do it. He’s been given the thumbs up by Jack Dorsey, the founder and previous CEO of Twitter, that he is the right guy for the job. So I guess let’s see; time will tell.

ALISHIA SECKAM: Absolutely. Do you see any past infringements, US regulatory ghosts, coming back to haunt him as we look to this deal being finalised?

CRAIG ANTONIE: Well, it’s never impossible. The one thing we’ve sort of learnt in our journey as fund managers at AnBro is that …

sometimes the people that make the biggest difference in the world, good or bad, tend to be a little different from the normal human being. They are oftentimes mavericks, they do things differently, sometimes to do big things.

You need to think a bit differently from the normal man in the street and evidence has shown that [Musk] has stepped on many toes in the past. That’s probably not going to change, particularly now that he, in theory, has the keys to the kingdom with regard to public discourse on a platform like Twitter.

But I guess we’ll have to see. That’s another one that’ll never sort of go away with a guy like this. He is never far from controversy.

ALISHIA SECKAM: Absolutely. Well, Craig, as we watch this evolution track, do you see it coming up against things like landmark fines under the EU’s new content rules? This makes it a very tough regulatory environment for these tech players and social media platforms, in particular, to operate in.

CRAIG ANTONIE: Yes, it does, definitely. I think social media platforms have an enormous responsibility to society as a whole. Something like Twitter, for example, is an amazing idea and an amazing concept, if you think that people of any race, colour or creed can share and express a view, thought or opinion in a single place and in real time.

Obviously the management of information is something that is very important across social platforms. If one looks at things like checking for the truthfulness and accuracy and credibility of information, that’s important. I think that’s often come up with the big regulators as well. They want to make sure that these platforms are used responsibly and not irresponsibly. There are lots of examples around Twitter and Facebook and Pinterest – well, not Pinterest, I rather mean TikTok – and these other places where you have bots that come out and they do nefarious things like trolling and propagating misinformation. I think that’s something regulators obviously need to be on top of and want to be on top of. I assume that this is not going to go away; maybe this just takes it down a different path.

ALISHIA SECKAM: Absolutely. Well, what’s your approach, Craig, to tech stocks at the moment? Are you still finding value out there? Yesterday we saw the Nasdaq propelled higher, finishing 1.3% to the good by its finish. Investors were seemingly enthused by what they should be expecting or could be expecting, as we’ve got these tech companies release their earnings reports during the course of this week.

CRAIG ANTONIE: Yes. The next couple of days are going to be pretty big from a tech and earnings perspective. Some of the bigger ones are coming out. I think when you look at markets and how they’ve behaved over the last few months, the tech stocks and growth stocks in particular have come down considerably.

Something we’ve looked at in the past is how you look at the growth that these businesses have delivered, and their outlook for growth for, say, the next five or 10 years, and there certainly is an abundance of opportunities that have started appearing in that space.

So, yes, the next batch of numbers is probably going to be quite important from a markets move on a day-to-day perspective. The sentiment toward that space has been very negative of late, and better results or better-than-expected results might help that. But longer term we think that’s definitely still the space to be if one’s looking for above-average growth and companies that can really deliver exponential returns for shareholders.

ALISHIA SECKAM: Yeah. Well we’ve got, like you say, a slew of big US tech companies [coming]. The highlight on the corporate calendar stateside this week is Microsoft and Google out today. Facebook tomorrow. Apple and Amazon on Thursday.

Let’s leave it there, Craig. Thanks so much for having joined us on the line this morning. We’ve had Craig Anthony of AnBro giving us his take on Twitter and the deal that Elon Musk has been able to strike.

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