On January 1, 2021, Twitter stock was selling at about $55.00. Today, after the idiotic decision to block Donald Trump, permanently, Twitter closed today at $45.79. That means Twitter has lost over 16% of its value since the first of the year. That is billions of dollars. Facebook lost even more.
The stockholders, many of whom could care less about the political views of Jack Dorsey or Mark Zuckerberg, are undoubtedly furious about this. If they don’t see this trend reverse, like right now, they will stop buying Twitter stock and may start dumping it. They didn’t buy stock because they liked the politics of the executives, they bought it to make money. Jack Dorsey may believe that he is all powerful, but that is not true. He, like every other executive of a publicly held corporation, reports to the Board of Directors that reports to the stockholders.
Even if the stock recovers, which is far from certain, there are certain to be class action lawsuits against Twitter and Facebook’s Board of Directors. That always happens when a lot of people lose big bucks. Having been the Risk Manager for a large publicly held organization, I had direct contact with the Board of Directors. They all had several things in common. They didn’t get there by accident and they were very anxious to preserve their own wealth. They were also terrified of stockholder’s lawsuits, since they knew they could be sued personally. My guess is that the Board of Directors for both Twitter and Facebook are very aware of what is happening, and they are beyond concerned. This will be magnified by the fact that they likely own large amounts of stock and have lucrative stock options. I doubt that many of them are finding this amusing.
I used to brief the Board of Directors annually regarding Board of Director insurance including the amount of coverage available to protect the Board Members distinct and above the protection provided to stockholders. They paid very close attention to these briefing and had a lot of questions. They are normally very supportive of the CEO, until they are not supportive. Nothing will change things more quickly than a rapid drop in equity, particularly when that is done by an arbitrary decision made by senior management. Ultimately, every board wants and demands the same thing. Make a profit and keep the value of the stock rising. Do that, and they can forgive a lot. Fail to do that and they can and will act.
A lot of those board members realize that whether you like Trump or not, if he goes, a lot of his 72 million followers go with him. Worse than that, a lot of people who don’t even follow Trump, but follow other people with conservative views, will leave too. This is already happening. Within days, if not hours, this trend may become irreversible. In the meantime, how many people do you expect to follow Joe Biden on Twitter or Facebook. Exactly!
We will soon know. Perhaps the Twitter and Facebook Boards will be more than willing to go along on the ride down, shedding billions of dollars in the process. Anyone want to bet on that? Warm fuzzy politically correct feelings are great, but they are not an acceptable substitute for cold hard cash. If I were on the Board of Twitter or Facebook, I would be demanding answers. Some Board Members are probably already demanding that this policy be reversed immediately, and that Donald Trump is provided with a strong incentive to stay with the program. It will take a lot more than an apology. Trump doesn’t need them, they need Trump.
There are already a lot of very powerful people, with enormous resources, more than willing to handle the baggage that always accompany someone like Donald Trump in exchange for a couple $billion. In this case closer to $50 billion.
Unless this trend changes, this won’t take long. This is true even if the accusations against Donald Trump have merit. But it is becoming increasingly obvious that they don’t have merit. Just imagine if this weekend and next week becomes extremely violent. It will be hard to blame that on Trump because he has given strong statements against violence, that even the MSM appreciated. Joe Biden, on the other hand, poured gas on the flames. It is one thing to be arrogant, it is something else to be arrogant and wrong. Imagine this phone call. “Nailed that one Jack! Way to go Mark! How are you going get my $51 billion back?”
Even Andrew Cuomo is talking about opening the state back up. Why? Because he has changed his opinion? No. It is because he desperately needs to stop the bleeding. Even Andrew has figured out that paying people more money to stay home and not work is a recipe for financial disaster. If you can make money for not working, why bother to work? This should already be obvious, but then we are talking about people who are very skilled at believing things that are demonstrably false. Ultimately, no matter what one believes, if you run out of money you run out of money. Pride goeth before a fall, but lack of money speeds up the process.
Trump is releasing the Russian conspiracy hoax documents. At least one of the people arrested in connection with the Capitol invasion is a well-known BLM agitator. Another guy, captured on video carrying a huge confederate flag, appears to be a liberal Democrat. There are rumors that the Acting Attorney General will appoint a Special Prosecutor to investigate Hunter and Joe Biden. Trump is rumored to be ordering a full audit of the Georgia runoff election. Remember, that the DNI is still required to give a report on foreign interference in the election. This could be a wild weekend for a lot of reasons. In the meantime, a lot of people busy celebrating would be wise to remember that all that Twitters is not Gold.
TDM